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Bequest Management

The Problem of Affiliate Bequests – Part 1

March 10, 2022
The Problem of Affiliate Bequests - Part 1

Many charitable organizations are multi-layered, with a national organization (National) and multiple local subordinates or subsidiaries (Locals).  There are various relationships that may exist between National and Locals.  They may be independent entities, related only by a common name and mission.

Alternately, the organizations may be bound together in an IRS “group exemption,” which gives National certain responsibilities with respect to Locals.  In other cases, National and Locals may constitute a single unit for financial and regulatory reporting purposes.

While the nature of the National/Locals relationship may take on great significance in certain bequest-related situations, these posts will not attempt to parse out all the possible variations of challenges.  In Part One of this series, we identify two common situations (Problems #1 and #2) that typify the issues arising with respect to affiliate bequests.

We will summarize the law likely to govern the resolution of these issues.  In addition, we will present some insights that may help charities avoid these thorny issues or resolve them internally.

Our hypothetical affiliated organizations are: the Nickelhoffer’s Disease Foundation (a National entity, located at 1 Main Street, Boise, ID and referred to as NDF-National) and the Nickelhoffer’s Disease Foundation of Ohio (a Local entity, located at 2 Main Street, Columbus, OH and referred to as NDF-Ohio).

Affiliate Bequests: Problem #1

Hermione Wilson was an active supporter and volunteer for NDF-Ohio for many years.  Known to be a woman of some means, she never discussed her estate plan with anyone but her lawyer. 

When she died, her will included a large bequest to “Nickelhoffer’s Disease Foundation,” with no further description.  The Local entity claimed that Ms. Wilson’s long association with the Ohio organization made it clear that it was the intended beneficiary.  The National entity, not surprisingly, took a different view.


Although one can never predict with certainty how a case will turn out, our experience and the (little) available case law suggest that NDF-Ohio has an uphill battle on its hands.  In general, unless the language of the will is ambiguous and can be interpreted in more than one way, the court will distribute a bequest as the testamentary document directs.

One of the best illustrations of this rule is a judicial decision from pre-statehood Alaska.  In that case, the decedent’s bequest was made to the “Red Cross,” and there was an issue as to whether the gift was intended to go the American National Red Cross or the local Red Cross chapter.  In Re Lanart’s Estate, 9 Alaska 535 (D. Alaska 1939).

The Lanart court relied on the plain language of the will and opined that “there is some presumption at least when one speaks of the Red Cross or of the Red Cross Society that the speaker, when not limiting and specifically pointing out the fact that he has in mind a different organization, such as the local chapters, he means the American National Red Cross.” Lanart at 556.

Even more forcefully, the opinion declared that “if it were the wish of the testator to bestow upon the Wakonda Branch of the Clay County Chapter of the Red Cross, it is quite natural that he would have used appropriate language to refer directly by name or some suitable way of designating the local chapter or organization.”  Id.

The reader may wonder why the court would not inevitably consider Ms. Wilson’s long relationship with NDF-Ohio.  The answer is to be found in the longstanding tradition in Anglo-American law that testamentary distributions should be determined by the decedent’s written instructions unless those instructions are themselves inherently ambiguous.  While some courts will strain to find an ambiguity to arrive at a desired result, many probate judges, such as the one in Lanart, will read a will “as written.”

Sometimes, however, the circumstances are reversed.  Our second hypothetical follows.

Affiliate Bequests: Problem #2

Albert Patterson was a major donor to NDF-National for most of his adult life.  He had been actively “courted” by the Gift Planning Department of the organization and was expected to make a large bequest gift.  Although Albert lived in Ohio less than a mile from the NDF-Ohio office, he had little contact with the Local over the years.  

When Albert died, his will contained a multi-million-dollar gift, larger than any ever received by NDF-National.  Unfortunately, a controversy arose over the precise bequest language.  The will directed the windfall to “Nickelhoffer’s Disease Foundation, 2 Main Street, Columbus, OH.”  Both National and Local claimed the gift.


The outcome of this case is not as clear as Problem #1.  We believe that some courts would find the bequest to be clear on its face and award the gift to the Local, the address of which is in the will.

However, there is a good chance that aggressive advocacy would convince a probate judge that the beneficiary designation was ambiguous, even patently ambiguous.  Although the local address was included, the name of the benefitting organization (which does not include “of Ohio”) belongs to NDF-National.

Should an advocate succeed in establishing ambiguity, the extrinsic evidence would result in the bequest going to the parent organization, assuming that it had admissible evidence to document Patterson’s long and loyal support.  Bear in mind, however, that some courts (albeit a minority) would reject a claim of ambiguity.

Part Two of this posting will discuss several other issues that surround the question of affiliate bequests.