Avoid These Issues When Giving to Charities in Your Will

Imagine you just started creating your will, the legal document that states how you want your assets to be distributed once you pass away. You decide to donate to charity because what could go wrong? You’re doing a good thing and a portion of your estate will help those in need.

Before discussing things that could go wrong, let’s consider your options overall. There are three typical ways to donate to charity. These include donating while still alive, providing a set amount to be distributed upon your death, or offering a percentage of your entire estate. The best way to donate depends on the circumstances of the will’s creator specifically. Here are some examples that demonstrate the benefits and drawbacks of the different options.

Avoid Vague Wording

If you decide to go the route of donating in a will, there are important things to consider. You have to be very specific when stating how much you want to designate in a will – whether it’s a set amount or percentage of the estate. An attorney can help determine the best choice, which will depend on the will creator’s specific circumstances. Vague wording and nondescript language could cause problems once you are gone. Consider this scenario:

Alison decided to leave $100,000 to her favorite charity because she had a net worth of $500,000 at the time she created her will. Her home, which she planned to leave to her children, was worth $400,000, with the remainder in investments. At the time she dies, the economy is in worse shape and her $100,000 account has shrunk to $50,000. Now, the house needs to be sold or mortgaged (depending on the equity situation) to cover the additional $50,000 promised to the charity. Even worse, the failing economy has decreased the value of the home as well. As a result, Allison’s children do not end up with the size of inheritance she had hoped they would receive upon her death.

Especially now as the economy is unpredictable, this situation can easily occur in real life. An attorney, if Alison had consulted one, would have looked at her estate at a high level and discussed the potential pitfalls of giving such a significant portion of her assets to charity while also wanting to preserve the house for her children. Then, a solution that works best for her based on these circumstances would have been proposed.

Beneficiaries Contest Donations

A common issue regarding wills is beneficiaries contesting the will, or claiming that it is either incorrect or invalid in some way. This often occurs when a party, typically a child or spouse, believes that they deserve more than what the will states. Unfortunately, even if the claim that the will is invalid isn’t true, defending the will is still going to take time and eat up money in the estate for attorneys fees. Let’s look at the following scenario:

Jack decides to donate $200,000 to a local charity and specifies that in his will. His will provides his surviving three children and wife with the rest of his assets, all receiving a generous amount. But one of his children, Heather, didn’t know that he was planning to donate to the local charity as well. She argues that she, as the youngest and still in graduate school without a stable income, deserves that $200,000 to pay off her undergraduate student loans. She contests the will and claims that her father was not in the right mind when setting up the charity donation.

Challenging a will is especially common if beneficiaries don’t know that someone added a charity donation to their will. A court will need to consider Heather’s claims and any evidence she provides, which can result in both unnecessary attorney’s fees that erode the total estate and family disputes – two consequences that no one wants. Had Jack consulted with an attorney, steps would have been taken to prove that Jack was of sound mind when he executed the will. An attorney would make it clear that Jack’s intention was to donate to the charity.

This outcome can be equally detrimental to charities as well because they take time to litigate and shrink funds that could’ve been distributed to the charity. St. Jude’s hospital, well known for its charitable work in childhood cancer, has been embroiled in lawsuits with donors’ families who dispute donations made to the organization. In one such case, a financial planner challenged his father’s will, which directed a $100,000 donation be made to St. Jude’s from the proceeds of the sale of a home. The family argued that the home, along with other assets had been placed in a trust which made three grandchildren the beneficiaries. In this case, the family ultimately won, but only after a years-long legal battle.

How Can Rosenblum Help?

Rosenblum Law has expert attorneys who can help you create a will that best fits your wishes. We have an online questionnaire that makes the process streamlined and cost effective. We offer a free initial consultation and most wills can be created on an affordable, flat-fee basis. Call us today at 888-815-3649 to get started on your estate planning.

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