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I realize that the following is technically a legal question, but it
is also a financial planning issue. So here goes.
A decedent's Personal Representative is required to settle all
outstanding debts before distributing assets to beneficiaries. I
assume for this purpose that "debts" means legally enforceable debts
where a signed note exists (credit cards, car loans, etc.).
What about church pledges? For example, if person X had pledged $1000
to his/her church but dies before it is completely paid, is the
Personal Representatiave supposed to treat this as a debt and honor
it?
-HW "Skip" Weldon
Columbia, SC
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"HW \"Skip\" Weldon" <s...@y...com> writes:
> assume for this purpose that "debts" means legally enforceable debts
[snip]
> What about church pledges? For example, if person X had pledged $1000
> to his/her church but dies before it is completely paid, is the
> Personal Representatiave supposed to treat this as a debt and honor
> it?
The answer it, wait for it, "probably" and "it depends".
Charities may have legal recourse and a valid lawsuit
if they pursue these things. Most often, they don't
because the amount it too small and the publicity from
suing donors is really really bad.
The Fidelity Charitable Gift Fund explicitly states
that you cannot use gift fund "grant recommendations"
to pay off pledges to charities. From their Helpful
Hints page
<http://www.charitablegift.org/learn-about-charity/n
ews/07-02-2008.shtml>
Don't recommend a grant to support an enforceable pledge
because it creates a legally binding obligation or commitment
that the Gift Fund can't support.
Here's another interesting recent article which touches
on this:
<http://www.chicagotribune.com/news/local/chi-donors
_17apr17,0,1395807.story>
What constitutes an "enforceable pledge" is not clear,
but it seems that unless following through on this is
going to cause hardship to the estate, it should be
paid, particularly if the pledge is documented.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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HW "Skip" Weldon wrote:
> A decedent's Personal Representative is required to settle all
> outstanding debts before distributing assets to beneficiaries. I
> assume for this purpose that "debts" means legally enforceable debts
> where a signed note exists (credit cards, car loans, etc.).
>
> What about church pledges? For example, if person X had pledged $1000
> to his/her church but dies before it is completely paid, is the
> Personal Representatiave supposed to treat this as a debt and honor
> it?
That sounds like one right out of law school, contracts I. I think you'd
need to determine whether a pledge makes the church a creditor, which
probably hinges on local contract law. Without researching it or knowing
the state in question, my WAG would be that a properly documented,
bona-fide pledge is enforceable, following general principles regarding
contracts after death. But that's begging the question, because what is
a bona-fide pledge and what documentation (if any) would be required
under the local statute of frauds? The nature of the pledge could be
relevant as well (e.g. "I'll give $1,000" vs. "I'll give $100/month" -
the latter implicitly doesn't mean "until the Apocalypse").
Assumedly if they are a creditor of the estate they'd need to be dealt
with as one, notification & all that.
Not legal advice, "I really have no idea", etc.
-Tad
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On Sep 9, 1:46 pm, B...@f...net wrote:
> "HW \"Skip\" Weldon" <s...@y...com> writes:
>
>
>
> > assume for this purpose that "debts" means legally enforceable debts
> [snip]
> > What about church pledges? For example, if person X had pledged $1000
> > to his/her church but dies before it is completely paid, is the
> > Personal Representatiave supposed to treat this as a debt and honor
> > it?
>
> The answer it, wait for it, "probably" and "it depends".
>
> Charities may have legal recourse and a valid lawsuit
> if they pursue these things. Most often, they don't
> because the amount it too small and the publicity from
> suing donors is really really bad.
>
I remember a university suing the estate of a donor for a pledge,
probably several years back.
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Legally, the answer is, of course, "it depends". Ethically, I think
the answer is usually "yes".
Tad's correct in that contract law is the go-to authority on this
situation. In practice, the cases are almost always highly fact-
specific because the donor/donee "contract" has historically been an
extremely loose one. It is not uncommon to make a pledge via index
card or even verbal confirmation. In those cases, it's easy to argue
that the terms of the contract were misunderstood, or that there was
no "meeting of the minds". It also doesn't help charities in that
ambiguous or omitted statements are commonly interpreted in favor of
the donor.
Nowadays, many (most) organizations that deal in substantially large
donations actually use full-blown, legally sound contracts, and
lawsuits have been pursued. Of course this is bad for PR, but the
logic is that they (the charity) weren't going to get any more money
from the donor anyway and it is unlikely that potential future donors
will sympathize with the "indian giver". Keep in mind it's also bad PR
for the donor (read:embarrassing). I recall the WSJ had an article on
this a while back. If memory serves, the majority of donors that
reneged on large sums were also caught-up in some other legal trouble
(e.g. Scrushy, Enron, Tyco, et al.) thus the charity was able to avoid
bad PR completely.
Ethically, unless I had reason to believe the charity is lying, I
would pay up.
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