Wills, Trusts and Charitable Estate Planning


James, R.N. (2009). Wills, trusts, and charitable estate planning: An analysis of document effectiveness using panel data. Journal of Financial Counseling and Planning Education, 20(1), 3-14.

Brief Description: This study compared pre-death charitable estate plans with post-death distributions using a large national data set with over 26,000 individuals. It found that most respondents with charitable estate plans ultimately generated no charitable estate gift after death. The likelihood of making charitable gifts was significantly higher for those who funded an inter vivos (i.e., living) trust than for respondents who had only a will. Possible reasons for this include the greater care to preserve estate documents and/or greater wealth among those who went through the process of funding a trust. In addition, some people may falsely describe their gifting plans or make last-minute changes.

Implications: There is a substantial gap between charitable intentions and estate distributions. Thus, it is precarious for charitable organizations to count on promised estate gifts, especially from donors with a spouse or child as asset co-owners or beneficiaries. Another finding was that, among decedents with a will and charitable estate plans, 40% of estates did not use the probate process. These wills, which may have contained charitable bequests, were, thus, functionally irrelevant. An important take-away from this study is that a will with charitable provisions may not have control of any assets, especially if there are no titled assets without co-owners or named beneficiaries. By contrast, a funded trust with a charitable provision will definitely generate a charitable distribution.