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In good economic times, it may make relatively little
difference if an estate or trust distribution takes 12
months, 24 months, or even somewhat longer. In lean
times, however, when funding may be harder to come
by, the process of making certain estate gifts are distributed in their totality
and in a reasonable amount of time should receive
extra emphasis.
When there is general economic expansion, growth
in asset values can sometimes make it possible to actually distribute
more than an estate was worth at the death
of a donor. In such cases, dividends or interest income
can also be more than sufficient to cover the expenses
of administration. In times of low interest rates and
slower or no growth in asset values, however, estates
tend to stay open longer, and fees and expenses are
more likely to reduce the amounts finally distributed
from an estate. This
can have an especially
significant impact on
residuary bequests—often
the largest ones received
by charities—as the
growth or reduction in asset values may be more fully
reflected in those bequests (see article 1).
In the current environment, when other gift
sources may not be as certain, it is more important
than ever that gifts from estates be received as quickly
as possible. As the saying goes, “time is money,” and
that is certainly true when it comes to the oversight of estate administration
where charitable dispositions are included. Experience
shows that organizations with systems in place
to monitor the estate settlement process will tend to
receive full or partial distributions sooner than those
that do not.
While a complete discussion of the steps involved
in the effective administration of estates is beyond the scope of this article, here are a few tips that may help
speed up the distribution and maximize the amounts
received:
- Pay special attention to residuary bequests,
i.e. those that leave amounts to charity after leaving
specific amounts to others. As these bequests
cannot be received until all expenses are paid and
the estate is otherwise ready to close, these often
take the longest time to settle. After a reasonable
time period, 18 months for example, it may be
wise to begin making increasingly frequent inquiries as
to the status of the bequest.
-
Review settlement sheets. If your bequest
comes from the residue, pay special attention to
sales of real estate and other assets that are not
sold on public exchanges. Remember that every
dollar that is not received because of a “below
market” sale price reduces a residual charitable
bequest.
-
Monitor legal and executor fees. Again, if the
charitable bequest comes from the residue and
other heirs receive specific amounts, only the
charitable legatees may have a monetary interest
in making sure fees are reasonable. Statutory
fees that a court will regularly allow without
question can be out of proportion in some cases
to the amount of work actually performed.
-
Make calls to executors of all estates that
have been pending for a period of time near the end of your fiscal year. It may be possible to receive
a partial distribution, particularly if you previously established a good working relationship with the executor.
These steps can help minimize problems with estate settlement and may serve to speed up the process as well.
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