The Demanding Charitable Beneficiary

A few years ago, I met a couple who had served as co-executors for an aunt’s estate. This aunt had left a large residual bequest to three well-know charities. Her executors were quite bitter about the way the charities had handled the bequests. The charities had the temerity to question the executor fees and demand that there be a passing of accounts.

Upon reflection, I was struck not by the details of the story, but the sense of righteous indignation the couple expressed. They presumed the charities should be grateful, issue a receipt, and sign release without comment. The charities were “lucky” to have received this generous gift, and therefore should feel beholden to the donor’s trustees.

With a bit a distance, it is easy to see that this couple were inexperienced at the estate administration process. Perhaps they were also nursing a sense of injustice that their share in the estate was not larger. But the underlying assumption was that charities should play possum because it was a gift. This thinking continues to be widespread.

It is important to remember charities that receive regular bequests are experienced participants in the estate administration process. They know their rights and routinely talk to other charities named in the will — and they share legal costs if a gift goes off the rails. To my mind, this ensures a system where there are checks-and-balances. I don’t always agree with every action of a charity during the estate administration process, but I strongly endorse the right of the charity to protect its legal interest. It is important to remember that charities are not second-class beneficiaries – and to make plans accordingly.