As with most legal questions, the answer to the question above is “it depends.” A charitable pledge (oral or in writing) is defined as a contract between a donor and a charity in which the donor promises to make a contribution in the future, such a pledge may be enforceable. In Mt. Sinai Hospital, Inc. v. Jordon, 290 So. 2d 484 (Fla. 1974), the Florida Supreme Court set forth a two-prong test to determine if a charitable pledge is enforceable. To be enforceable, “the pledge must recite with particularity the specific purpose for which the funds are to be used” and “the [charity] must affirmatively show actual reliance of a substantial character in furtherance of the specified purpose set forth in the pledge instrument.”[1] While this two-prong test is Florida specific, many other states require proof of at least the second prong of the test before they will enforce a charitable pledge.
An example will help explain the requirements in Florida. If a written pledge states that the donation is for the construction of a school and prior to the donor’s death the charity shows it had started construction of the school in reliance on the pledge it will likely be enforceable against the donor’s estate. Many pledges, however, are not as specific and a charity cannot always show that it relied on a specific pledge before commencing construction, hiring additional staff or committing funds to a new outreach program.
Whether you live in Florida or another state, it is the gray areas that place your trustee or personal representative in a difficult position should your heirs disagree with the fulfillment of your charitable pledge after your death. To avoid any issues if you die before fulfilling a charitable pledge, you should inform your estate planning attorney of the pledge and discuss if it should become part of your last will and testament or your revocable trust. By doing so, you clearly outline your intention to fulfill the charitable pledge and thereby ensuring its enforceability against your estate.
[1] Mt. Sinai Hospital, Inc. v. Jordon, 290 So. 2d 484 (Fla. 1974).Additional articles from this issue:
2018 First Quarter Review and Commentary
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