The Gift that Kept on Giving
What happens when a gift to a charity remains unfulfilled during the life of the donor? The factual scenario is common. A couple are devoted to and passionate about the mission of a charity. During life, each makes pledges and gives gifts to the charity in support of the mission. A pledge of $1.5M is made during life but is not paid in full during life. The executors and the charity cannot agree on what should happen to the pledge when the surviving spouse dies.
The gift was made via a letter of understanding, pledging 6 annual payments of $150,000 each, followed by a $600,000 payment in the 7th year. Three years into the agreement, an amended letter of understanding was executed; the amended agreement reduced the annual payment and extended the number of years for payment. Payments were made during life, but upon testatrix’s death, her executors took the position that specific bequests in the will and other smaller gifts made during life satisfied the remaining obligation to the charity.
The executors did not argue that the pledge was invalid or non-binding on the estate; they argued that the pledge had been satisfied. Their argument was bolstered by the fact that the letter of understanding specifically stated that the testatrix would make provision in her will for the payment of the pledge.
The Westmoreland County Orphans’ Court disagreed with the executors. The Court summed up the matter eloquently
It should come as no surprise that a person imbued with a generous attitude and affection toward an institution may make numerous gifts at different levels of giving, each intended to address a specific and timely need, and that such a pattern of giving is likely to continue even in the presence of a particularly large gift…[H]uman nature suggests that regular gift giving will persist contemporaneously with the larger contribution. Rather than confining their generosity, a person of means is more likely to continue donating in order to meet existing needs where it is within their ability to do so.
Charities can breathe a sigh of relief. The Court ordered the fulfillment of the pledge in addition to the payment of specific bequests in the will.
Brownfield Estate v. St. Vincent Archabbey, 28 Fiduc. Rep.2d 231 (Westmoreland Co. 2008).
