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Posted May 29th, 2018

The Role of State Law in Charitable Gift Planning

Good charitable gift planning often requires an understanding of applicable state law.

Pledges: The enforceability of a pledge depends on the law of the state whose laws govern the pledge. For example, Donor lives in New Jersey and makes a spoken (non-written) promise to give $X to a charity located in Kentucky. If New Jersey law governs the pledge, it’s likely enforceable, because of a fairly recent New Jersey appellate court decision. In any event, there should be a written pledge agreement that should state explicitly whether New Jersey law or Kentucky law governs the pledge.

Gift Annuities: Gift annuities are subject to extensive state regulation. A charity is badly advised to ignore these state laws.

Trusts: Whether a trust, such as a charitable remainder trust, is valid depends on the law of the state whose laws govern the trust.

Bequests: When a charity in State X receives notice that it is a beneficiary under the will of a donor who died in State Y, there may be any number of issues that turn on the laws of State X or State Y.

Document formalities: Document formalities, such as notarization provisions, depend on applicable state law. That’s why, for example, it can be dangerous for a charity in State X to send a written deed of gift to a donor living in State Y.

Local lawyers need to deal with matters of local law.

And by the way, in this arena, what one doesn’t know can hurt one and one’s organization.

By Jon Tidd, Esq

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