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Bequest Management

Tips for Managing Your Organization’s Charitable Bequests

June 20, 2019
Tips for Managing Your Organization’s Charitable Bequests

What Are Bequests?

When preparing a will, life insurance policy, or retirement account, you must designate an individual or organization, (i.e. the beneficiary), to receive the benefits or proceeds when you pass away. Bequests are gifts, including personal property or financial assets, that are made as part of a will, trust or beneficiary designation. A bequest can be to a single individual, or it can be a charitable bequest to a nonprofit organization, trust, or foundation.

There are four main types of bequests: general, demonstrative, specific, and residuary. Importantly, many wills and trusts contain more than one type of bequest. Charitable bequests can fall into any of these four categories and serve as a major source of funding for a large number of organizations. As a result, it is important for organizations to establish procedures for handling the bequest administration process.

What Should an Organization Do When It Is Included in a Donor’s Will?

Generally speaking, when an organization is included in the will or other estate plans of a donor, it will receive notification by mail that establishes it as the beneficiary. After receiving such notification, it is important for the organization to determine the nature, or type, of the bequest it will be receiving. If the organization is the beneficiary of a life insurance policy or retirement plan, it should contact the appropriate plan administrator or other agent used to ensure the transfer of the gift.

However, if the organization finds out that the gift has been left from a will or trust, it should take the following actions:

  • Contact either the attorney or executor for the estate
  • Request a full copy of the will or trust document
  • Ask that the attorney or executor for the estate copies the organization on all documents filed with the court by any party
  • Review all documents before proceeding further

Contacting the Executor

It is important for the organization to establish a relationship with the attorney or executor of a donor’s estate as the bequest administration process can be lengthy at times. The executor will often work closely with the organization to ensure it is aware of important dates and deadlines, such as the last date for creditors to make claims against the estate, timing for the spouse’s distribution, and when to expect partial or full distributions of the amount of the bequest.

Furthermore, the executor can also provide valuable insight about the donor’s surviving loved ones including their feelings regarding the charitable bequest and whether to expect potential problems throughout the process. Maintaining contact with the executor is also helpful for the organization in making sure it receives the intended bequest in a timely manner.

Contacting Family Members

Organizations should be sure to express gratitude to the appropriate persons for the charitable bequest it is receiving. In most cases, thanks should be given to the surviving spouse and children of the donor, or the next closest relative. When expressing such appreciation, it might also be beneficial to include information explaining the organization and its mission. It is possible that a charitable bequest can form the foundation of a lasting relationship with surviving family members that can result in their continued support of the organization.

Checking for Restrictions Within the Charitable Bequest

When receiving notification of a charitable bequest, the organization must determine if any restrictions have been placed on the use of the funds. For example, the bequest could be designated to endow research or award scholarships. It is crucial that an organization’s use of the bequest is consistent with the donor’s expectations and any agreements that were previously established.

Issues with Charitable Bequests

If an organization discovers any issues surrounding the charitable bequest, it is important for the organization to contact its counsel regarding these concerns. In this case, it may be helpful for an organization to find counsel that focuses on bequest management. From there, the organization should continue to closely monitor the situation to be sure its interests in the estate are protected.

What to Do After Receiving a Charitable Bequest

After an organization receives a charitable bequest, it should once again take the opportunity to thank the donor’s surviving family members. It is recommended that the type of thanks should reflect the type of gift that was given. Various forms of appreciation can include a handwritten letter from the president of the organization, an invitation to a special event, and more.

Contact Chisholm Chisholm & Kilpatrick LTD for Help Managing Charitable Bequests

Effective management throughout the bequest administration process will ensure that a donor’s wishes are fulfilled and an organization’s interests are preserved. Chisholm Chisholm & Kilpatrick LTD has a dedicated team of attorneys and professionals focused entirely on Bequest Management, with whom our clients work closely and get to know. To learn more about how we help nonprofit organizations manage charitable bequests, call 800-544-9144 today.