Have you been named Executor? Trustee? Possibly both?

When clients have estate plans prepared, they must choose people they trust to fill certain roles in estate plan documents.  The biggest shoes to fill are the executor of a will, and the trustee of a trust (if the client is getting a trust).  The duties for both roles are different because the documents do different things.  Sometimes the same person fills both roles, if that’s what the client wants and if the person they choose agrees.

Executor

An “executor” is the person named in your Last Will and Testament to wrap up your affairs after you die.  You might be expected to:

  • Pay financial obligations including taxes of the decedent from estate assets
  • Manage the estate by possibly submitting a will for probate, gathering the decedent’s assets and holding them until they are sold or distributed
  • Contacting government institutions and agencies to stop benefit payments
  • Represent the estate in legal matters

The role of an executor typically lasts for 13 months or under in Ohio.   You are wrapping up someone’s affairs and distributing their assets as their will dictates.  Once bills are paid and assets are sold or distributed, your role ends.

Trustee

A “trustee” is the person named in your trust (often, a “revocable living trust”) to perform the duties stated in your trust.  You might be expected to:

  • Manage the assets in the trust, which might be monetary assets, a home, etc.
  • Distribute trust assets according to the terms of the trust.  Common terms include the trustee paying for a beneficiary’s college expenses, distributing portions of the assets of the trust at certain ages
  • Communicating with the beneficiaries

The role of a trustee lasts for the lifetime of the trust.  A trust ends once final distributions are made or assets are exhausted.  A trust can also be terminated, which mostly happens when the value of the assets of the trust make administering the trust impossible–the trust’s assets diminish in value to the point of the trust not being able to pay trustee fees or other expenses.

Both roles carry some amount of personal liability, impose fiduciary responsibility, and can be time consuming.  If you were named in either role, then the person creating the documents trusts you, your abilities and judgment.

If you have been named the executor or trustee in someone’s will or trust, and you have questions or need guidance, please email me at julie@juliemillslaw.com.

For Nonprofits: Classify your donations correctly

When someone donates money or something else of value to a charity (typically tax-exempt nonprofit, or 501c3), that donation is restricted or unrestricted–a charity’s assets are classified as either with donor restrictions or without donor restrictions.  Charities must know the difference between these terms and what problems might arise with any restrictions, and keep track of donations appropriately.

If I donate $500 to my favorite charity with a statement somewhere (could be written in my donation letter or email, or even on the memo line of a check) that my donation is to be used for a specific purpose of the charity–my gift is to the Humane Society of the United States to fight puppy mills, then my donation must, by law, be used for that purpose, to fight puppy mills.  This is a restricted gift.

If I donate $500 to the United Way with no statement anywhere about what purpose it is to be used, or I state that my donation can be used however the United Way sees fit, then the United Way can use my donation however it determines–operating expenses, any of its programs, etc.  This is an unrestricted gift.

What if a nonprofit that provides assistance with medical bills, raises money through GoFundMe or something similar, for a specific event–a person facing a specific surgery, then that surgery is no longer needed?  Or all of the funds raised aren’t needed–$50,000 was raised but only $30,000 is needed to pay medical bills?  The nonprofit has $20,000 remaining of a restricted gift.  Just because the bills only total $30,000 does not mean that the nonprofit has $20,000 to use as it wishes, since the donors who gave that money did so to pay for that specific surgery.  Your state’s Attorney General would become very interested in what happens to those donations.

If the purpose for the gift no longer exists, it is possible for the charity to remove donor restrictions from a gift/donation.  It can:

  1. Talk to donors.  You can go back to donors, tell them that the purpose for their donation no longer exists and ask them what they would like you to do with their donation, or for permission to put it towards another use.  If you use due diligence in this effort, then the Attorney General might not intervene since their purpose is to protect the public.  Perhaps you would put a notice on your website or Facebook page to reach the specific donors, try to contact them directly, or publish something in the newspaper asking for donors to the campaign to come forward.
  2. Talk to the Court.  It is possible to go to court requesting a modification of the gift’s restriction if the purpose for the gift no longer exists, has become unlawful, impossible to achieve, or wasteful.
  3. Talk to the Attorney General.  If the donations total less than $250,000 and are more than 10 years old, you could provide 60 days’ notice to the Ohio Attorney General of your intention to modify or release the restriction. If the Attorney General does not object, then you can release or modify the restriction–the $20,000 from the GoFundMe surgery campaign could be used for another medical bill, another program, overhead, or whatever the charity determines.

The best advice for nonprofits is to keep detailed financial records of donations and any restrictions that are attached.

If you have any questions regarding donations, charities or anything in this post, email me at julie@juliemillslaw.com.