Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity.
Today’s question comes from a nonprofit employee who wants advice on what to do when you get notified of an estate gift of which you were previously unaware.
Dear Charity Clairity,
Do you have a form that you can send a trustee/financial institution/custodian to fill out when they notify your organization of an estate gift that wasn’t documented? For example, the form would ask about the designation, contacts/background of the donor, timelines to expect funds (for future planning purposes), etc.
I’m looking to create such a form, and I would appreciate ideas if this is something that is already in practice at other organizations.
— Organizational Forms
Dear Organizational Forms,
While I love a good form, let’s remember that form follows function. If you first consider what you want to accomplish, you’ll be better positioned to secure the outcome you desire.
The first thing you should do when you receive an initial gift notification from the estate trustee, administrator, or institutional custodian is express appreciation for the gift.
I prefer to do this via a phone call, as this is more direct and personal and helps with establishing rapport. After thanking the administrator for their work on your behalf, lead with how you can be helpful to them rather than beginning with how they can be helpful to you.
You can also ask questions like:
- What do you need besides the nonprofit’s tax ID number and 501(c)(3) letter?
- Who should we thank for this gift and how can we get in touch with them to show our appreciation?
Next, you can ask how long the estate administrator expects the process of settling the estate to take and when your organization can expect to receive the gift.
Don’t be shy about asking for a copy of the will or trust agreement and account and distribution statements; irrevocable beneficiaries of trusts are entitled to a copy of the trust accounting in all states. That said, the laws vary from state to state as to whether or not contingent beneficiaries are entitled to accountings.
Ask to be kept informed of the progress of the estate’s administration and plan to check back periodically to see how the process is coming along and if there’s an updated estimate of the distribution date.
After your conversation, it’s appropriate to write a confirming memo that puts everything you discussed in writing. If you weren’t able to reach anyone by phone, go ahead and mail a form that includes all of the above. I don’t have a template, but you’re on the right track as to what to include.
I recommend first leaving a phone message or sending an email letting them know that you’re sending this form. Include your contact information in your message so they can reach you if they have any questions.
When the gift takes the form of a “pay-on-death” beneficiary designation from a financial account or life insurance policy, the process is more straightforward and immediate. The company should notify you directly, but if you have a donor who notified you about the gift during their lifetime, you can contact the administrator to find out what they require from your nonprofit. Generally they’ll want a certified copy of the death certificate and signed copies of their own forms; these forms may require notarization, a corporate resolution, or even a “medallion signature.”
You’ll want to instruct the company in writing not to withhold taxes—make sure to send your tax-exemption letter—and ask them when you should expect to receive the distribution. Again, be sure to follow up if the gift is not received in a timely manner.
If you run into any roadblocks, ask to be referred to the company’s legal department. Sometimes the problem is the company’s generic forms aren’t suitable for nonprofits and administrative staff aren’t aware of how to handle things.
You’re right to take a proactive role in ensuring your donor’s wishes are fulfilled. I hope this helps you develop your form and understand how best to move forward in these situations in the future.
— Charity Clairity
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