Copyright 2017 The Timothy Group

 

Bequest Language in Sync with your Donor’s Heart!

Bequest Language in Sync with your Donor’s Heart!

I recently helped my mom update her estate plans and discovered three significant problems: 1) One of the non-profits is no longer in business, 2) Several organizations have new leadership and may drift away from their original mission that first attracted my mom, and 3) Over the past 15 years, my mom has begun supporting new ministries that were not reflected in her estate plans. Organizations and donors’ giving interests tend to change over time. How can donors keep their estate plans in sync with their giving desires?

Planned giving officers usually suggest four basic bequest statements that a donor can take to his or her attorney when designating a legacy gift.

  1. Specific Bequest. A specific bequest involves making a gift of an asset such as real estate, a car, other property or a gift for a specific dollar amount.
    • Bequest of Specific Real Estate

I hereby give, devise and bequeath all of the right, title and interest in and to the real estate located at ADDRESS OR DESCRIPTION OF PROPERTY to my favorite charity.

    • Bequest of Specific Personal Property (like my red pickup truck).

“I hereby give, devise and bequeath DESCRIPTION OF PROPERTY to my favorite charity.”

    • Bequest of a Specific Dollar Amount.

“I hereby give, devise and bequeath _________ and No/100 dollars ($DOLLARS) to my favorite charity.”

  1. Percentage Bequest. A percentage bequest involves leaving a specific percentage of the donor’s total estate. Each of the specific bequests remain proportionate to each other, despite fluctuations in the value of the estate.

“I hereby give, devise and bequeath ____ percent (___%) of my total estate, determined as of the date of my death, to my favorite charity.”

  1. Residual Bequest. A residual bequest is made from the balance of an estate after the will or trust has given away each of the specific bequests. A common residual bequest involves leaving a percentage of the residue of the estate to charity.

“I hereby give, devise and bequeath to my favorite charity ALL OR A PERCENTAGE of the rest, residue and remainder of my estate to be used for their general use and purpose.”

  1. Contingent Bequest. A contingent bequest is made to a charity only if the purpose of the primary bequest cannot be met. For example, a donor could leave specific property, such as a home, to a relative, but the bequest language could provide that if the relative is not alive at the time of the grantor’s death, the home will go to the named charity.

“If my primary beneficiary survives me, I devise and bequeath ALL or ___% of the remainder and residue of property owned at my death, whether real or personal, and wherever located to my primary beneficiary. If my primary beneficiary does not survive me, then I devise and bequeath ALL or ___% of my residuary estate, whether real or personal property and wherever located to my favorite charity.”

 

Another Solution

These are helpful statements to suggest, but they don’t address the donor’s problem of how to easily manage their changing giving interests. A bequest is usually a revocable gift, which means it can be modified at any time. However, once a donor goes to the trouble of drawing up their estate plans, they often don’t revisit them. That’s good news for charities that make the list, but it may be challenging for your charity to get a donor’s attention and break into the club.

As I reviewed my mom’s plans we decided to solve this problem by syncing her estate plans to her current giving.

“The balance of the Trust assets shall be administered as follows: 20% to charitable organizations with the amount to each determined pro rata per the amount contributed by Grantor in recent years.”

I liked the idea so much that my wife and I included this wording in our trust:

“Upon the death of the survivor of us, our trustee shall allocate and distribute an amount equal to Twenty Percent (20%) of the remaining trust property to each determined pro rata among the charitable organizations to whom we had given at least Five Thousand Dollars ($5,000) in the twelve months preceding the second of us to die. If any of these organizations is no longer in existence, then that share shall lapse and be redistributed among the remaining charitable organizations.”

Why would a gift officer suggest this wording to a donor? From a donor’s perspective, this is a creative solution because their estate plans will always mirror their current giving interests. From a nonprofit’s viewpoint, this seems like a bad idea because it requires constant monitoring to stay engaged with your donors. If the donor’s annual giving interests move to another organization, their potential estate gifts will follow. That’s a real possibility whether a donor uses this wording or not. This in sync language creates an early warning alert system that flags when your donors are losing interest and gives you an opportunity to win back their support. Some organizations are guilty of taking donors for granted, assuming a donor will never change their mind on an estate gift they once designated. We would love to lock in every estate gift with an irrevocable plan, but your donors might not be ready for a deeper commitment.

One of the biggest barriers to estate planning is motivating the donor to act. Many people only update their plans after a major life event occurs such as the death of a close friend or relative. The prophet Isaiah came to Hezekiah with a sobering word from the Lord, “Put your house in order, because you are going to die; you will not recover” (2 Kings 20:1). Most of us won’t get this end-of-life heads up, so we delay our estate planning. In a recent feasibility study, I asked annual fund donors, “Have you named this charity as a beneficiary in your estate plans?” Not surprisingly, the most common response was “not yet.” I shared the in sync bequest language I used in my planning and every donor thought it was a great idea. If this suggested bequest wording starts an estate planning conversation with the donor, good things will follow.

Major gift officers should always inquire, “Have you remembered our charity in your estate plans?” However, if your ministry doesn’t rank high in a donor’s annual giving, how can you expect to be the number one beneficiary in their estate? Perhaps this in sync bequest language will break through the barrier and land your organization on your donor’s list. However, just getting on a donor’s list doesn’t guarantee your standing. The real lesson from this suggested wording is to prompt you to stay current with donor relationships no matter what bequest language they have inserted in their legacy plans. Giving priorities are fluid. Some charities are moving up the giving scale, some are moving down and some are moving off each donor’s list. Your job is to consistently demonstrate to your donors how your ministry closely aligns with their giving interests.

If you treat your donors with genuine love, kindness, and care, your organization may move to the top of your donor’s beneficiary list and yield a legacy gift that will transform your ministry for years to come.

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