legally binding pledges

If you pledge money to a cause and then die, is the pledge enforceable?

I saw this question (the title of this post) pop up on the WordPress feature that shows me what search terms or phrases people are using to reach this site and thought it was worth while sharing a general answer since I have dealt with this issue so many times.

Typical lawyer:  it depends.  Here are all the “depends” on this one:

  • Was the pledge in writing and signed by the donor?
  • Is it clear from the pledge document that the donor knew and intended to be legally bound by the pledge?  Inferring knowledge from notes or donor letters or even donor payments isn’t great for this.
  • What state did the donor live in?  Some states enforce pledges based on some of the following additional “depends.”
  • Is there “consideration” spelled out in the pledge document?  In other words, did the donor receive something of value in return for the promise to make the specified gift? (just not tangible enough to ruin his/her deduction)  In New York, a naming opportunity (building, scholarship, etc…) is considered consideration even if it only happens once the pledge is fully paid.
  • Was there reliance by the charity on this pledge to the charity’s detriment?  Some states rely on this legal theory to enforce pledges (including New York again – which by the way happens to be very favorable toward pledge enforcement from a case law standpoint).
  • Do you live in a state like New Jersey that holds that pledges are enforceable by virtue of “public policy?” I believe only one other state has this approach.
  • Most importantly, is there opposition from the family or executor?  (THE MOST IMPORTANT QUESTION!)

Almost every Will starts off by asking the executor to pay off all debts, pledges, etc…  If you represent a charity, don’t cheer just because you have some sort of pledge form signed by the deceased donor.  IF your signed pledge form doesn’t meet the donor’s state law requirements for legal enforceability, an executor can reject it right off the bat.

And, even if you do have a clear pledge form under the applicable state jurisdiction, executors can push back anyway if the family doesn’t want to pay the pledge.  Then, you would be forced to file a claim with the Surrogate (or other state equivalent) court WITHIN what ever time frame the state requires for filing claims against estates.  I believe it can be several months from the date of date or longer depending on the state involved, but not that long and charities notoriously sit on their rights on this point (or, the charity may not even be informed of the donor’s passing in time since the estate is only required to notify heirs and named beneficiaries and publish a tiny notice in some obscure paper letting potential creditors know about the death).

Too many times have I seen estate paperwork a few years old and a charity wondering if they will ever get paid on that pledge from the deceased donor’s estate. Sorry Charlie.

But, do you file a claim if the executor doesn’t readily accept your pledge documentation as a valid claim against the estate when you are sure your form should have worked?

So tricky.  So many times I have explored this option and NOT ONCE has the charity involved decided to file a claim (often with strong pledge evidence).

Why not file?  Charities hate the thought of angry family or a story in the local press about how a charity is “suing” a poor widow.  Whatever the reason, charities are generally not in the business of inflaming and/or exacerbating anger against them for a few dollars.

For new readers to this blog, don’t misunderstand my approach on this topic, I am very in favor of the use of legally enforceable pledges that even include intent that an estate pay off any unpaid amounts of the pledge should the donor pass away.  But, you will find a lot pieces of advice (search the site) on how to ensure your charity gets paid and it usually involves making sure the donor actually includes your charity in the estate, avoiding the need for even thinking about going to court to enforce a pledge.

So, the answer to the question is:  it depends!