Gifts of Real Property to Charity – How Can You Avoid the Fate of Janet Reno’s Estate?
The late Janet Reno, the former United States Attorney General and first woman to hold that position, provided in her Trust a gift of her historically significant home to the University of Miami with the intent to “see the home and surrounding, undeveloped acreage preserved in perpetuity.” Unfortunately, after her death, the University declined the gift because of the costs associated with fulfilling her wishes. Subsequently, Miami Dade College agreed to accept the property upon the conditions required by the trust.
Ms. Reno’s niece, Janet Meliha Reno, had other ideas. She sued the Trustees to prevent the gift to Miami Dade College instead asserting that the property should be sold and the proceeds distributed to Ms. Reno’s nieces and nephews pursuant to other provisions of the Trust. The Court of Appeals ultimately applied what is known as the “Cy Pres” doctrine, determining that the gift to Miami Dade College was consistent with Ms. Reno’s charitable intent and therefore upheld the decision of the Trustee to transfer the property to that college instead. The attorneys for Ms. Reno’s niece indicates that she intends to appeal this decision.
Regardless of how this particular saga ultimately turns out, there is a principal at play that should always be considered in gifting illiquid property to a charity. The consideration is whether the charity is willing and able to accept the gift. Gifts to charity of publicly traded stock or cash are very easy to accomplish. A gift of illiquid assets, such as real estate, especially where the gift requires the charity to keep the same is not so easy. Some charities have very specific guidelines on what they can and cannot accept. Even without strong guidelines, a charity may simply determine it is inadvisable to accept the gift.
Regardless of the type of gift, it is always nice for a charity to be aware it will be receiving a gift as part of an individual’s estate plan. In part, this is true so that the charity can make sure the gift actually occurs as you intend. It also helps the charity plan and prepare for the future. Often a charity may wish to recognize you for your gift while you are still living. But a very important consideration is determining if the charity is willing to honor your wishes.
I do not know whether Ms. Reno consulted with the University beforehand and circumstances changed, or she simply failed to discuss the matter with the University. However, the lesson is the same either way, if you have such a gift in your planning or are contemplating the same. Here are several boxes that should be checked:
Discuss the gift thoroughly with the charity and ascertain its willingness and ability to honor your wishes.
If possible, a written gift agreement should be put in place detailing your wishes and how the gift will be handled after your death.
List an alternate charity (or multiple alternates) if the first is subsequently unable or unwilling to accept the gift.
Give the Trustee or Personal Representative authority in the estate planning documents to find a similar charity that is willing to accept the gift under your desired terms.
Charitable giving is a fantastic way to accomplish any number of great and noble objectives. Make sure your plan is sufficiently detailed and thought through so that you don’t push your family or other loved ones into the courthouse as a result of unforeseen circumstances.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.