Do you have the freedom to leave your estate to charity, rather than your own children? You may be surprised to hear that the law imposes a moral obligation on you to adequately provide for certain poeple – usually your spouse and children, at least – before you decide to leave your estate to charity.
Leave Your Estate To Charity: University Sues For Pledged Gift
A private university in Florida, Stetson University, is fighting a legal battle with the estate of a deceased donor hoping to recoup the bulk of a $1.5 million pledged gift. The university alleges that the deceased made a promise that his estate would pay the full gift, but the executor of his estate has so far refused to honour the pledge.
Chauncey Paul Johnson’s connection with Stetson ran three generations for more than a century. From 1905 to 1947, his grandfather was a trustee at the private college and he donated the family home to Stetson. Johnson’s parents fell in love there when they were both students. Eventually, Johnson himself became a trustee there in 2006.
Perhaps with that history in mind, the school’s president sent a letter to Johnson, a successful Chicago banker and entrepreneur, seeking a donation in 2005 for its 125th anniversary. The deal was donors could obtain the naming rights for a new dormitory in exchange for giving a legacy gift, a federal lawsuit said. Johnson promised to pay $1.5 million if the school named the facility Hon Hall after his mother’s maiden name. The school unveiled the plaque for the dorm in 2007, inviting Johnson and his family and Stetson officials to a ceremony.
Johnson made six payments equaling about $600,000 over five years, but the 83-year-old died last year from complications from a blood disorder.
Now, the university has sued the estate, as well as Johnson’s charitable foundation to recoup the $900,000 plus interest and court costs.
Before his death, Johnson sent a handwritten to note to Stetson that said “Incidentally Just FYI – The entire amount is paid in case of death,” the lawsuit says. Part of his agreement also said his estate would continue to make payments if he died, it also said.
The personal representative of Johnson’s estate refused to pay, which led Stetson to sue.
Leave Your Estate To Charity: Son Challenges Will
After 84-year-old Zopito Di Cesare died in February, his estate was left to the Disabled Children’s Foundation, the WA Foundation for Deaf Children, Rocky Bay and Ronald McDonald House Charities in line with his will. But his son Ivano Ferrante has challenged the will in the Supreme Court against the beneficiaries, claiming there is no guarantee the money would only go to the causes specified by his father.
Mr Ferrante also claims the lawyer who prepared the will, Stephen Rando, did not follow Mr Di Cesare’s instructions or properly explain the document to him. Mr Ferrante says his father asked Mr Rando to personally research charities that benefit only disadvantaged or disabled children but his lawyer delegated the job to his secretary.
He claims Mr Rando witnessed his father sign the will after leaving him alone in a room for five minutes with the document in March 2014. Mr Ferrante argues his father did not approve the contents of the will because he could not read English well enough to understand what was in it.
Leave Your Estate To Charity: More People Challenging Wills
It is becoming more common for families to contest the wills of their loved ones over generous bequests to health charities.
The Heart Foundation WA said relatives, often adult children, were challenging wills on the basis they had been hard done by. Foundation executive director Maurice Swanson said some people were leaving their entire estate to be shared by the foundation and the Cancer Council WA.
This was probably because they were well-recognised and established charities, and heart disease and cancer were responsible for many premature deaths.
People often wanted to repay them for the research and support services they funded.
“But we’ve noticed a greater number of wills being challenged, where children believe they’ve been inadequately provided for under the Family Provision Act,” Mr Swanson said.
In one case a farmer had left most of his assets worth about $1.5 million to the two charities in the belief he had provided for his children in other ways.
“But the children don’t think they’ve been adequately provided for, and it hard to objectively measure that, so they want the whole lot,” he said.
In another case a donor had left the bulk of his estate to the charities but it had been contested by two siblings. To avoid a lengthy court battle, the foundation had offered to accept $50,000 — well below the bequest amount.
The foundation received up to 60 per cent of it incomes from bequests, so relied on the generosity of people making their ultimate donation.
A study by the Australian Centre for Philanthropy and Nonprofit Studies at the Queensland University of Technology found that challenges to charitable bequests by the testator’s family members have become more common. The report, Family Provision Applications and Bequests to Charity says: ”Courts are vigorous in upholding proper family provision as against charitable bequests, portraying the family provision as based on moral obligation. The original purpose of family provision law was to enforce the proper maintenance and support of a testator’s spouse and children.Testamentary freedom is now seriously challenged in Australia.”
The study set out to explain why there were more applications under family provision law and why the courts are extending the concept of family provision. It says contributing factors include multiple marriages, with partners and children of each blended family vying for a share of the estate.
Another factor is the change in what constitutes a family relationship, with the recognition of de facto and same-sex partners. Cultural change has also had an impact. In a more litigious society, it is no longer considered inappropriate to challenge a will. Growing personal wealth means people leave bigger estates to be divided, so there is something worth fighting over.
It seems that the courts will favour claims made against your estate if you decide to leave your estate to charity. This means that you don’t necessarily have the freedom to make this decision.
What Should You Do If You Want To Leave Your Estate To Charity?
Give gifts while you are alive. If you plan something out of the ordinary, such as give different amounts to different family members or leave a chunk of the estate to charity, it might be better to do those things while you are alive.
It’s also important to receive advice from a specialist in wills and estates. A carefully prepared will is more likely to withstand a challenge, and there are a number of strategies you can employ to ensure that your wishes are carried out. Contact us today for expert advice – we offer a free, 10-minute phone consultation.