Donating to a charity in your estate plan has become more common. For younger couples with children, a charity may not be the first thing on the list for your estate plan. But as you mature, and your children become self-sufficient, a charitable donation can be a great way to leave a lasting impact. It’s often a simple matter of adding a specific bequest to your estate plan.

After a long week of political chatter, thinking about the good that charities do in the world can be a positive distraction. While you may be supportive of the charity overall, what happens if you want to tell the charity how they can use the money?

Can I Place Restrictions On My Gift?

The short answer is: Yes. You can place restrictions on your gift. But the timing of when you place the restrictions is very important.

If you’re in Minnesota, Minn. Stat. 309.73 requires charities to follow your restrictions. This includes endowment restrictions and restrictions on the purpose for which the funds may be used. The restrictions can be modified by:

  • Your approval;
  • Attorney general approval;
  • Court approval; or
  • A provision in your document that allows for modifications of the restrictions.

The timing aspect works like this: you can’t add a restriction after you’ve given the gift to the charity. So, if you want to place some kind of restriction on the gift, make sure you spell out the restriction before you give the gift. If you are giving the gift to the charity while you are alive, and want to have restrictions, you can use a letter of understanding or memorandum of agreement. Make sure this is in place before you give the gift.

If you are going to put the gift in your will or trust, then the easiest way to ensure the restriction is recognized is to put it in the will or trust itself.

Quick Tip: If you’re going to give a gift to a charity with a restriction, check with them first. It’s a good idea to confirm that they can carry out your intentions with the restriction. If the restriction isn’t something they can honor, they may be forced to disclaim (not accept) the gift. After you’ve spent all that time creating your will or trust, you don’t want to have it undermined when a simple phone call could have determined if the charity could even accept your gift with the restriction.

Next Steps

If you don’t have a will yet, or if you have one that you may need to update to give a gift to a charity, call my office to set up a Legal Strategy Session and we can review the best options for you – (877) AMAYERS.

Andrew Ayers
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I work with business and estate planning clients to craft legal solutions to protect their legacies.