In the Planned Giving world, we like to think that IRA and other account beneficiary designations are easy for donors, and potentially a huge source of untapped wealth in the future. This is true, but with a word of caution.
I am attaching a court decision below regarding a Pay on Death (POD) account designation of a person trying to name a charity to receive funds on their death. The bank, not the donor, somehow messed it up and ultimately, the funds were sent back to the estate and the charity lost out. The opinion is about how the charity then sued the bank for negligence in messing up their planned gift.
There are two reasons why I am posting this story and the case.
For me, this is just a small example of how an attempt by a donor to name a charity through an account beneficiary designation or POD might not work out. If the paperwork is not properly filed at the bank or other institution, the gift is not likely to happen. The case showed how it was the bank that failed to properly process the request by the donor and yet, the surrogate court had no choice but to direct the funds back to the estate.
Fundraisers cultivating these types of gifts: take notice and try to confirm paperwork is in order, especially for potentially larger commitments.
The second reason for posting the case and for you to read it: it is chock full of really fascinating legal issues surrounding privity of contract and other legal stuff that will bore most. So, for those legal nerds like me, you might enjoy reading it!
About Jonathan’s firm Planned Giving Advisors
Planned Giving Advisors, LLC provides nonprofit organizations with the resources, support and expert guidance to successfully run a planned giving program and close more gifts – regardless of tightened budgets and staff limitations. During the past 15 years, Planned Giving Advisors has helped more than 300 organizations with their planned giving programs, resulting in over $250 million in closed gifts. For further information, please see our website at www.plannedgivingadvisors.com, or contact us directly at firstname.lastname@example.org.