The team at the North Carolina Community Foundation is honored to work with attorneys, CPAs and financial advisors to help clients turn generosity into lasting impact. In your work with your charitable clients, you routinely determine the best way to incorporate their philanthropic intentions into wills, trusts and beneficiary designations. But how frequently do you document clients’ charitable intentions explicitly as part of incapacity planning? 

Sadly, incapacity is no longer rare. Longer lifespans, higher rates of dementia, and more complex family structures are increasing the likelihood that your clients’ decisions may be made by agents, trustees or caregivers rather than clients themselves. Indeed, courts and advisors are seeing more estate and trust disputes rooted in lack of capacity and undue influence, especially when late-stage changes to an estate plan take heirs by surprise. Notably, a recent industry overview describes a surge in challenges to last-minute trust amendments, typically framed around diminished capacity or pressure from a third party.  

As you are putting together incapacity plans for clients, we urge you to incorporate questions about your clients’ charitable intentions.  Because charitable goals are often values-driven, many families may not know, misinterpret, or ignore a loved one’s charitable intentions if intentions are not clearly documented.  

Unlike most other planning objectives, charitable intent can sometimes be vague and easily reinterpreted. Consider this general example based on our team’s experience: If a file says, “she cared about education,” heirs can disagree on what that means or whether it still applies – did she care about supporting teachers?  Providing scholarship support to graduates of public school? Supporting her private school alma mater? Moreover, a significant charitable gift made late in life without documented context may look suspicious to disappointed beneficiaries, inviting capacity or undue influence claims.  

As you are putting together incapacity plans for clients, we are happy to provide suggestions for how to clearly document clients’ charitable intentions, including: 

• Specific bequest language in wills or trusts, including gifts to clients’ donor advised or other types of funds at NCCF;
• Incapacity-ready giving instructions, including continuing annual gifts if capacity declines and the conditions under which an agent under a durable power of attorney can pause them; 
• Ideas for aligning intentions across all instruments, including trusts, wills, retirement and insurance beneficiary designations, and business succession plans; and 
• A contemporaneous statement of charitable intent to be maintained with the plan files, showing consistency over time and rationale for giving. 
• To avoid future challenges, document a client’s reason for making changes. Clarity protects your clients’ values and reduces the ambiguity that could be seized upon in disputes.

The NCCF team can help your clients’ generosity survive cognitive decline, family conflict, and the rising wave of capacity-based challenges.

This article is provided for informational purposes only. It is not intended as legal, accounting or financial planning advice.