Planning Matters | Sharpe Group
Posted April 1st, 2000

Planning Matters

Most planned giving specialists are well aware of the importance of bequests via wills as one of the greatest sources of maturing planned gifts each year. Many charitable entities regularly encourage potential donors to take care of friends, relatives, even other charitable organizations first and then consider their organization or institution as a final beneficiary in their wills.

Being considered “last” often means being included in the residuary portion of the estate, or whatever is left after those considered “first” have been given their specific property or a fixed sum as the case may be. Being “last” in the will does not necessarily mean you will get the “least.” Often the beneficiary(ies) that receive all or part of the residuary probate estate will actually receive the largest gifts. In fact, studies show that residuary bequests are generally two to three times the size of the average bequest of a specified amount.

Assets may be overlooked

In most instances, even when there is a program in place to actively administer estate distributions, charitable organizations and institutions must typically wait as long as a year or two from the date of death of the donor to receive the entire amount they are due from the estate of a deceased benefactor. In some cases, the entire amount of a charitable bequest may never actually be received for various reasons. (See page 1 of the March 2000 Give & Take.)

With today’s increasingly mobile society and multitude of complex financial transactions, it is possible that nonprofits are foregoing many millions of dollars in lost assets each year. In fact, Federal and state governments currently hold tens of billions of dollars in lost or unclaimed property. These funds include lost IRS refunds, undeliverable Social Security payments, uncashed dividend checks, forgotten security deposits, abandoned bank accounts, insurance proceeds, stocks, etc.

If such property is deemed lost or abandoned, it is turned over to the state or Federal Government for safekeeping. If and when the rightful owner identifies himself or herself and makes a claim on the property, the government is obligated to pay the owner. Eventually the property “escheats” to the ownership of the state.

Finding unclaimed property

In the past if a donor with unclaimed property left his or her estate to charity, that property was usually simply overlooked and went unclaimed. After all, if the donor was unable to keep up with the property during life, how could the charity or personal representative of the estate locate it after the donor’s death? Unfortunately, every dollar of estate assets that was “missed” was paid for by the charitable recipients while the specific bequest beneficiaries received their bequests “off the top” of the estate.

Today, technology and the various guardians of unclaimed property, among others, have joined forces to help the public locate this type of property. The National Association of Unclaimed Property Administrators has a Web site designed to assist people in their searches. Many individual states also post unclaimed property on their Web sites under the Treasury Department division.

In the past, searching for such assets – which are often less than $1,000 per claim – simply did not pass the cost/benefit analysis. In the future, charitable organizations and institutions and others involved in estate settlement and administration may routinely use the Internet and other technologies to locate and claim lost property that has become a “ward of the state.” With the accelerating transfer of wealth, it is likely that charities with more active estate administration efforts stand to claim millions of additional dollars every year.

For additional information see the November 22, 1999 issue of Time and the December 6, 1999 issue of U.S. News & World Report.

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The publisher of Sharpe Insights is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Sharpe Insights may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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