Outline (7 17 17)

Getting Started: Testamentary Language I. Testamentary - Direction or instruction to transfer money, property, or other assets to charity at death. a. Charitable bequests in wills & trusts b. Beneficiary designations on financial instruments, life insurance, accounts.

II. Fiduciary a. Trust = Trustee b. Will = Personal Representative; Executor NOTE: Gifts outside of trust or will = Plan administrator (Retirement assets; IRA); Insurance company (Life insurance); deed (your charity).

III. Charitable Gift a. Asset? We all prefer cash and marketable securities, yet consider that the average estate holds a much greater percentage of illiquid assets (i.e., real estate; closely held business interests).

• Consider your ability to convert illiquid assets to cash. Use 3rd parties such as realtors, attorneys, or HCF to assist you.

• Your gift acceptance guidelines should provide guardrails on due diligence to reasonably accept non-cash assets. See “Gift Acceptance Guidelines”.

• What about tangible personal property? b. Specific Bequest - Specific asset or amount is left to charity.

• “The trustee shall transfer $50,000 outright to...”

• “The personal representative shall distribute my knife collection to...” c. Percentage Bequest - A share, percentage or fraction of the estate is left to charity.

• “The trustee shall transfer 50% of my estate to...”

• “The executor shall transfer one-half of the remainder to...” d. Residual Bequest - Directs what’s left, if anything, after expenses and specific bequests are made, to charity.

• “The rest, residue and remainder of my estate shall go to...”

• “The executor shall transfer one-third of the remainder to...” e. Contingent Bequest - a contribution is made to charity only if certain other things happen first.

• “If none of my family members survive me, then my estate shall go to...”

IV. Charity Name a. Use the legal name of your charity. b. Check on your organization’s name and status via the DCCA: https://hbe.ehawaii.gov/documents/search.html?mobile=N&site_preference=norm al

V. Use a. Documenting Intent i. Flexible language is key ii. Age matters - avoid appearance of undue influence iii. Address the “what ifs” b. Restrictions - though we all prefer unrestricted dollars, consider the following i. Local chapters of national organizations - restrict/earmark use to Hawaii ii. Consider safety valves to clarify or make practical restrictions that become old and cold in the future.

1. Memo of Understanding - a happy medium. See “Memorandum of Understanding”.

2. Language to allow flexibility to change restriction or modification: If the Board determines that a restriction or condition on my charitable gift becomes, in effect, unnecessary, incapable of fulfillment or inconsistent with the charitable needs served by the charity, they may modify such restriction or condition without approval of any court or participating fiduciary in a manner which it finds reasonably expresses my original intent. See “HRS 517E-6” (Hawaii’s UPMIFA).

3. Language to allow flexibility to terminate small fund (endowment): I agree that if the fair market value of the endowment fund is such that the charity determines that it would be uneconomical, imprudent, or unwise to continue the fund, the assets may used in full or be combined with another fund(s) with similar purposes.

VI. What to do when donor passes and you are notified of gift? a. Look into your records b. Who has notified you? c. Gift acceptance process - do your due diligence; be willing to walk away. d. Do you have to accept the gift? legal vs. reputational consideration. e. Back story due diligence is invaluable - Just do it! f. Administration - hiring attorney, outside experts to assist if necessary.

VII. Resources a. HCF Resources Page - https://www.hawaiicommunityfoundation.org/plannedgiving i. Suggest a look at Breakout 3: Building & Maintaining a Legacy Gift Pipeline ii. See “A Legacy Gift Created by Trust or Will”. b. HGPC Resources page - https://hawaiigiftplanning.org/resources/ i. Active links to many associations, other resources and publications

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