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Posted August 1st, 2017

Let’s Take a Look at Charitable Bequest Planning, Part 3

Read Part 2 here

Charitable bequests fall into three categories:

  1. a bequest of a specific dollar amount
  2. a bequest of a portion of the donor’s residuary estate
  3. a bequest of a specific asset

The specific dollar bequest should be paid by the executor relatively early in the settling of the donor’s estate. So should the bequest of a specific asset. These two types of bequest take priority over residuary bequests and are inferior only to debts, expenses and taxes.

Residuary bequests are usually paid in installments by the executor. The final installment is often eaten into by legal and accounting fees.

What causes a delay in estate distribution? There can be any number of reasons. Some of the more common reasons are:

  • There’s a lawsuit involving the estate, which is hanging things up.
  • The executor is having difficulty disposing of a major asset, typically real estate.
  • The executor is a no-show.
  • The executor is wrangling with the charity over the terms of an endowment agreement.
  • Some asset (e.g., an IRA payable to the estate) is causing the executor to sit tight because of tax or other legal uncertainty.

Executors always want the charity the sign a receipt, release and re-funding agreement in connection with an estate distribution to the charity. These agreements are commonplace, but a charity should not agree to refund more than the charity receives from the estate.

If you have a question about your estate settlement process or would like to arrange a review, contact Sharpe Group by clicking here.

by Jon Tidd, Esq

 

Sharpe Group has several donor communication tools to help you inform your constituency about giving through wills, including booklets and brochures: How to Make a Will That WorksGiving Through Your WillHow to Protect Your Rights With a Will37 Things People “Know” About Wills That Aren’t Really SoQuestions & Answers About Wills and BequestsHow a Will Works for YouThe State Has Made Your Will, Has Congress Changed Your Will? and You Never Need to Change Your Will Unless …

In addition, Sharpe Group experts can tailor articles for Newsletters and Gift Planning Website clients.

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