I recently spoke to an estate lawyer who told me she would never recommend certain charities to clients. Why? Because of the way these charities treated estate trustees. Some charities are unduly litigious, grind on fees, and are obstreperous about releases. It’s not the first time I’ve heard this comment from estate professionals – and some traumatized lay executors and family members.
Sympathy for Charities
It’s hard to evaluate the validity of these accusations. I have worked at four major charities over the last 32 years. I sympathize with charities and their challenges with estate administration. There are administrative delays, clueless executors, double-dipping lawyers, legal challenges, family dysfunction, and in a few cases, outright fraud.
Major charities that are frequently named in wills typically have experienced estate administrators. They all know each other. When named in the same will, they coordinate on administration and legal matters – partly to reduce costs and partly to provide a united front. They try to be responsible and uphold the testator’s charitable intent. This should be applauded.
Second-Class Beneficiaries
Yet charities are often treated as second-class estate beneficiaries. That is, not family. These interlopers should be grateful for what they receive and not cause trouble. I’ve heard this view repeatedly over the years and actively repudiate it. Individuals have testamentary freedom, which exist in most provinces. Charitable beneficiaries are not only legitimate, but important to society.
Difficult Charities
I do know a few charities that have a reputation for being “difficult” in estate matters. The translation of “difficult” is a charity that asks for clear estate accounts and fee justifications. That’s just being professional.
Nonetheless, some charities get reputations. They use litigation lawyers extensively for routine estate matters and are institutionally hostile to executor fees. One charity has been called “toxic and greedy”. Another serves as executor for their donors to reduce costs, blithely ignoring the conflict of interest.
So-called difficult charities conduct business in a way that erodes trust, or at least that is the perception among estate professionals. Some charities estate administration habits damage their reputation in the community, which could ultimately reduce donations. Charities, however, have a duty to be good fiduciaries and protect charitable property from estates. Done right, the fiduciary obligation outweighs the potential reputational risk.
10 Comments
Ian Keay
October 20, 2022 - 1:34 pmGood article. I appreciate both sides. Ultimately, the Will-drafting lawyer acts as a gatekeeper. So Charities’ actions during estate administration, whatever the motivations, are at their peril.
Malcolm Burrows
October 20, 2022 - 8:13 pmHi Ian – Thanks for your comment. As you can see I’m a “on the one hand, and then on the other” type. There are frustrations on both sides.
Malcolm
Christie Geen-Difede
October 20, 2022 - 3:42 pmI really appreciate this article! Having had experience in a law firm on the estate admin side as well as from within the charitable sector. In the former, I heard about the charities that are “difficult” and in the latter I have asked for clarification. The fiduciary duty of a charitable beneficiary is important and focuses on protecting and upholding the testator’s intention, this should be equally important to both sides. It would be wonderful if we could view estate admin collaboratively and when questions arise, answers be given – simply facts – without wondering if the other is up to something.
Malcolm Burrows
October 20, 2022 - 8:11 pmChristie – Couldn’t agree more. It’s essential to have a bit of mutual good will in the process, as we are all part of the same community and interact with each other regularly. Malcolm
greg anderson
October 20, 2022 - 5:07 pmAs one old lawyer told me -he had a client who wanted the lawyer to be estate trustee and the estate go to charity x -the lawyer told the client “you can have me as estate trustee or you can have charity x as the beneficiary -but you can’t have both “
Malcolm Burrows
October 20, 2022 - 8:09 pmHi Greg – Oww. That’s a sentiment that I have heard in the past, but never hear it raised to the level of epigram. Malcolm
Evelyn Adams
October 20, 2022 - 6:56 pmCan you name the problematic charities? Please!
Malcolm Burrows
October 20, 2022 - 8:08 pmHi Evelyn – Thanks for your comment. They are good charities have been assertive in the past about estate administration. I don’t feel comfortable calling out any organization in writing. Malcolm
Jill Nelson
October 20, 2022 - 8:13 pmThank you for this sympathetic and balanced view, Malcolm. As in any field, there are players who are perhaps too rule oriented and cautious, and that would be irritating to deal with. On the other hand, if a lawyer and/or executor prepares clear, transparent accounting and manages the estate administration properly, they should have no fears because there will be no need for beneficiaries to ask questions or delve into accounts and expenses. One might consider that the donor/testator’s wishes will be well protected by a charity that reviews the administration.
Malcolm Burrows
October 20, 2022 - 8:44 pmJill – Well said, and thanks for expanding on the charity’s fiduciary’s duty. Charities have a job to ensure gifts are received as intended.
Malcolm