Estate Planning -Donating A Collection To Charity

• Thursday, September 24, 2015
• Category: Wills, Trusts and Estate Litigation

Importance of Gift Agreement

It’s important to take the time to draft a gift agreement specifying how the charity will use or display the collection. The agreement should also cover what will happen if the charity can no longer use it for the purposes specified or if the charity ceases to exist. Although a gift agreement can be somewhat expensive and time-consuming, it’s invaluable in ensuring that the owner and the charity agree on the terms of the gift.

Passing it on After Death

The big question is whether the owner wants to keep the collection intact. Even if he plans to give the assets at death, it’s important to have a conversation with it in advance, so that it’s clear if it will be willing and able to accept the gift. While the related use rules don’t apply to gifts at death, a charity might still decline the gift, if it isn’t a good fit for the charity. The same topics covered in a gift agreement should be included in a testamentary gift, whether by will or trust. For very large collections, a donor can even consider creating his own museum, which would be a very big undertaking. And of course, it’s important to communicate with the family about any plans for the collection, even if it doesn’t include them. Avoiding a surprise at the owner’s death can save a great deal of unhappiness and possibly litigation against the charity.

Communication and planning are essential when a collector plans to donate a collection. Understanding the detailed income tax rules that govern the gift, and selecting the right charity to receive it, will help the collection survive for others to enjoy. Communication to the family of any charitable plans is equally important; without communication a large charitable gift may lead to family upset and, at worst, expensive and distressing litigation pitting the family against the charity. With upfront planning, a collection can survive as a collector’s legacy and a valuable gift to the community.

Reference: Carol Kroch, Trusts & Estates (June 9, 2015)

Filed Under: Estate Planning; Charitable Gifts

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