Oct 1, 2010 12:00 PM

Donors want tight knots; charities sometimes need scissors

By Heather J. Rhoades

In business transactions, each party generally seeks to maximize his advantage. But for charitable gifts, typically the donor and the charity have the same goal — to best further the charity's mission. Nevertheless, donors want their directions for the uses of their gifts followed, and charities want flexibility if other needs become more important or the original restrictions are no longer appropriate. In a perfect philanthropic world, the gift agreement would give flexibility to the charity while striving to honor the donor's directions. But that world isn't always perfect. So how can donors turn the use strings into steel cables? Is there a buzz saw that charities can use if necessary, being mindful of maintaining enthusiastic relationships with donors and their heirs and with potential donors who are onlookers? What role does the state attorney general play? The courts? Read on.

Leona Helmsley famously observed that only the little people pay taxes. She didn't comment, however, on how some of the big people are unable to control the use of their charitable gifts. She left the bulk of her $4 billion-plus estate to her private foundation (PF), The Leona M. and Harry B. Helmsley Charitable Trust, to benefit dogs. She also created a $5 million testamentary charitable remainder trust for each of two grandchildren, with the proviso that their life interests would terminate if they failed to visit their father's grave annually and sign the registration book proving their presence at the gravesite. So she retained some control over her grandchildren. But a New York Surrogate's Court broadened the purpose of her bequest to her PF so that it's not required to use the funds solely for the welfare of dogs. Several animal welfare organizations followed the proceedings closely and were disappointed with the court's decision to broaden the trust's purpose.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

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