Motive, Duty, and the Management of Restricted Charitable Gifts

Set against the backdrop of fiduciary duties governing nonprofit organization management, this article explores donor restrictions imposed upon gifts made to charitable recipients. The particular focus falls upon charitable gift restrictions that prove difficult for the recipient organization’s management to implement as time passes from the date of the gift. This article examines the trust doctrine of cy pres as the traditional remedial device for addressing such concerns, but ultimately finds that doctrine wanting - particularly so in an environment of increasingly corporate charitable governance. After explaining the long-noted vagaries of cy pres in practical application, this article reveals the basic irrelevance of that doctrine to the often lengthy period during which management is charged with stewarding a gift in compliance with the donor’s restrictive mandates. As further detailed, any such influence likely flows in the direction of a managerial incentive to circumvent application of cy pres doctrine, frequently at the expense of the very donor intent that the doctrine professes to protect. Ultimately, this article rejects the constraints imposed by prior doctrine. Thus freed, the approach offered here provides a more structured and objective analysis for dealing with the difficulties that arise when static donor directives confront evolving societal needs and charitable objectives. Central to this analysis is a new and fundamentally different way of understanding “donor intent” when evaluating problematic gift restrictions. That new perspective, in turn, supports this article’s radical recasting of how decision-makers should approach service to this foundational donor intent notion. Importantly, such service comes not only in the context of cy pres adjudications, but also in relation to the restricted gift management that precedes invocation of that remedial doctrine. The resulting analytical framework therefore better serves the modern managerial context in which restricted charitable gifts are so often put to use

Home From the Islands: Domestic Asset Protection Trust Alternatives Impact Traditional Estate and Gift Tax Planning Considerations

As the US becomes increasingly litigious, US citizens are more frequently sheltering their wealth in offshore asset protection trusts, or OAPTs. This article provides a thorough overview of the topic, discussing a variety of pertinent legal information

Home From the Islands: Domestic Asset Protection Trust Alternatives Impact Traditional Estate and Gift Tax Planning Considerations

As the US becomes increasingly litigious, US citizens are more frequently sheltering their wealth in offshore asset protection trusts, or OAPTs. This article provides a thorough overview of the topic, discussing a variety of pertinent legal information

Motive, Duty, and the Management of Restricted Charitable Gifts

Set against the backdrop of fiduciary duties governing nonprofit organization management, this article explores donor restrictions imposed upon gifts made to charitable recipients. The particular focus falls upon charitable gift restrictions that prove difficult for the recipient organization’s management to implement as time passes from the date of the gift. This article examines the trust doctrine of cy pres as the traditional remedial device for addressing such concerns, but ultimately finds that doctrine wanting - particularly so in an environment of increasingly corporate charitable governance. After explaining the long-noted vagaries of cy pres in practical application, this article reveals the basic irrelevance of that doctrine to the often lengthy period during which management is charged with stewarding a gift in compliance with the donor’s restrictive mandates. As further detailed, any such influence likely flows in the direction of a managerial incentive to circumvent application of cy pres doctrine, frequently at the expense of the very donor intent that the doctrine professes to protect. Ultimately, this article rejects the constraints imposed by prior doctrine. Thus freed, the approach offered here provides a more structured and objective analysis for dealing with the difficulties that arise when static donor directives confront evolving societal needs and charitable objectives. Central to this analysis is a new and fundamentally different way of understanding “donor intent” when evaluating problematic gift restrictions. That new perspective, in turn, supports this article’s radical recasting of how decision-makers should approach service to this foundational donor intent notion. Importantly, such service comes not only in the context of cy pres adjudications, but also in relation to the restricted gift management that precedes invocation of that remedial doctrine. The resulting analytical framework therefore better serves the modern managerial context in which restricted charitable gifts are so often put to use

Private Motive and Perpetual Conditions in Charitable Naming Gifts: When Good Names Go Bad

This article explores the problems that often result from a charitable naming opportunity contribution. A charitable naming opportunity contribution exists when a donor transfers money or property to a charitable organization upon terms that result in an individual\u27s name being associated in some way with the organization, its institutions, activities, or facilities. Implementing such arrangements can become problematic as circumstances change over time. Matters considered here include the meaning of charity as affected by a donor\u27s personal desire to perpetuate a name. This article also highlights the quite varied doctrinal analyses that may apply when deviation from the precise terms of a charitable naming arrangement is suggested. The enduring nature of naming agreements, imprecise donor-charity dealings, malleable equitable doctrines, and the vagaries facilitated through reverence to donor intent are shown to contribute to this variability. Specific examples are employed to demonstrate relevant points. Those examples include the well-publicized, but as yet unresolved, charitable naming dispute over the Lincoln Center\u27s Avery Fisher Hall. Also considered is the modern spate of philanthropically inclined, but ethically challenged, bad actors whose notorious names now adorn various charitable facilities and institutions across the nation. This article ultimately presents suggestions for dealing with both existing and future charitable naming arrangements where some deviation from the original charitable naming scheme is suggested

Policy, Logic, and Persuasion in the Evolving Realm of Trust Asset Protection

The concept of using legal structures to protect property from those who might otherwise have some claim to it is an idea with deep roots. The trust device is one such legal structure, and its evolution as an asset protection device has not been without controversy. The recent and noticeable break with the traditional denial of self-settled trust protections is one such area of modern controversy, but not the only notable recent development. The self-setted asset protection trust movement is accompanied by the recent completion of two major law reform projects. The drafting and recommendation for state adoption of a Uniform Trust Code is one such project. The Restatement (Third) of Trusts is the second. Taken together, these developments have recently affected and will undoubtedly continue to influence the evolution of trust asset protection. This article considers these developments and their potential impact on the future course of trust asset protection. Among the observations presented is the idea that the UTC holds a significant place in the development of trust asset protection - not so much because of the conclusions its drafters reached as to particular rules, but more because of the express invitation the UTC presents to state legislatures to ponder their own trust protections and corresponding placement in the modern asset protection community. Finally, this article provides insights into both the current and evolving status of trust asset protection by relating the noted reform projects to several trust protection developments seen in the last decade or so. That exploration proceeds from a recognition of interest group politics as related to the UTC movement. The discussion progresses to an evaluation of potential ideological influences on the future course of trust asset protections. Along the way, consideration is given to the federal influences on that course. Those influences are at least in part derived from the potential repeal of estate and generation-skipping transfer taxes, recent bankruptcy reform legislation, and the status of the federal/state Medicaid program. Among the observations presented is the idea that these ideological and federal concerns push in multiple directions, often at the same time and in a conflicting manner, with a very uncertain but potentially significant effect on the future evolution of trust asset protection

Policy, Logic, and Persuasion in the Evolving Realm of Trust Asset Protection

The concept of using legal structures to protect property from those who might otherwise have some claim to it is an idea with deep roots. The trust device is one such legal structure, and its evolution as an asset protection device has not been without controversy. The recent and noticeable break with the traditional denial of self-settled trust protections is one such area of modern controversy, but not the only notable recent development. The self-setted asset protection trust movement is accompanied by the recent completion of two major law reform projects. The drafting and recommendation for state adoption of a Uniform Trust Code is one such project. The Restatement (Third) of Trusts is the second. Taken together, these developments have recently affected and will undoubtedly continue to influence the evolution of trust asset protection. This article considers these developments and their potential impact on the future course of trust asset protection. Among the observations presented is the idea that the UTC holds a significant place in the development of trust asset protection - not so much because of the conclusions its drafters reached as to particular rules, but more because of the express invitation the UTC presents to state legislatures to ponder their own trust protections and corresponding placement in the modern asset protection community. Finally, this article provides insights into both the current and evolving status of trust asset protection by relating the noted reform projects to several trust protection developments seen in the last decade or so. That exploration proceeds from a recognition of interest group politics as related to the UTC movement. The discussion progresses to an evaluation of potential ideological influences on the future course of trust asset protections. Along the way, consideration is given to the federal influences on that course. Those influences are at least in part derived from the potential repeal of estate and generation-skipping transfer taxes, recent bankruptcy reform legislation, and the status of the federal/state Medicaid program. Among the observations presented is the idea that these ideological and federal concerns push in multiple directions, often at the same time and in a conflicting manner, with a very uncertain but potentially significant effect on the future evolution of trust asset protection

Retirement Security Through Asset Protection: An Evolution Of Wealth, Privilege, and Policy

This article examines post-1974 progressions in congressional and judicial thinking about asset protection as it relates specifically to the attainment of federal retirement policy goals. The article first considers the link between historical trust protections and modern federal retirement policy. That analysis reveals a more recent trend towards defining the scope of retirement plan asset protection by reference to statutory rules that grant favorable treatment to certain retirement savings devices. Those rules provide an incentive for funding future retirement through current savings. This article explains how, and why, asset protection could be similarly tailored to foster retirement income security goals. Inconsistencies in the protections currently afforded, however, call into question the logic of the existing retirement plan asset protection framework. This article ultimately argues that Congress should incorporate a more comprehensive view of asset protection into federal retirement policy. After explaining the objectives of federal retirement policy and the modern evolution of retirement plan asset protection, the author develops this argument by evaluating the usefulness of retirement policy objectives as a benchmark for establishing asset protection boundaries - both within the retirement plan setting and in the context of more traditional trust devices