Houston Estate Planning Law Blog

RECLUSIVE MAN LEAVES MILLIONS TO ORGANIZATIONS IN HIS WILL

Anyone who has read our blog knows that making plans for your estate after you pass is an important decision that can never be considered too early. But what seems to stop many people here in Texas from continuing forward with their estate planning stems from the fact that they do not have any family members to share their wealth with.

Such was the case for an elderly man in Washington, but instead of halting his estate plans entirely, he decided that he was going to give back to a community that had given him so much over the years.

When the president and chief executive of the group Family Matters-an organization that helps under-privileged people in the community-got the phone call from the elderly man’s attorney she says she cried; not just because the man had passed away at the age of 100, but because the generous donation left to the organization in his will was more than twice the charity’s annual budget in a given year. She tells reporters that it took her some time to compose herself before returning to the conversation with the trust officer.

In total, the 100-year-old man had left $43 million to three separate endowments, $28 million of which was promised to Family Matters. The remaining $15 million was divided evenly among the National Symphony Orchestra and the Washington National Opera.

The man’s 62-year-old cousin, who helped oversee his affairs over the course of the last few years, says that it’s no surprise to her that he left money to them in his will. He had no family of his own-many of them already gone-and mostly kept to himself because of his considerable shyness. When he did go out, he spent much of his time attending theater, music and ballet performances.

“It’s almost as if he did appreciate the great fortune of his life and knew that with a stroke of a pen in his estate plan he could do something wonderful for people less fortunate,” his cousin explains adding that his secrecy surrounding his donations until after he passed was fitting for a man who kept such a considerably low profile all his life.

Source: The Washington Post, “Philanthropist Richard A. Herman leaves fortune to D.C. charity, symphony, opera,” Annie Gowen, Feb. 5, 2013

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LAWYERS TELL TEXAS COLLEGE TO USE ENDOWMENT TO HELP PAY MORTGAGE

“Where a charity’s endowment money goes after a bankruptcy filing is a gray area for the Bankruptcy Code, and it’s rarely explored.” It’s a statement made this month by the Wall Street Journal that highlights the issue some Texans have been having with Lon Morris College recently.

The problems began when the college was struggling to pay the mortgage on its dorms. It wasn’t until after the school’s collapse that bankruptcy lawyers suggested that they pay off their final bills using charitable funds located in the school’s endowment fund. Though this would likely solve many of the school’s financial problems, this is unlikely the wish many people had when they left the school approximately $11 million in various wills and family trusts.

Despite the fact that the money could right the school’s financial situation, the Texas Methodist Foundation, which holds the money, has filed a lawsuit to protect some of the endowment money stating that spending the money on creditors “‘is not consistent with the charitable intent’ of the endowment.”

This isn’t the first time that courts have had to decide on whether an endowment, left by people in their wills and trusts, can be used to bail organizations out of bankruptcy. In fact, in 1987, a court denied a request from a college’s bankruptcy attorney to take charitable money declaring that it was not property of the bankruptcy estate.

As for the recent case, the attorney for the Texas Methodist Foundation says that “each of the endowments was created with the intent and the purpose of furthering educational, charitable and religious endeavors” not to pay off the school’s debts. It is unclear who the court will rule in favor of at this time.

Source: The Wall Street Journal, “College’s Bankruptcy Lawyers Target Endowment Money,” Katy Stech, Nov. 26, 2012

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MAN WILLS A HEFTY DONATION TO 22 NONPROFITS

As Texas residents know, nothing is more inspiring than when an ordinary person donates their estate money to organizations in need. This was exactly the case for a Whirlpool worker who recently died at the age of 73. This man left behind a large estate; however, he had no heirs.

In sum, this generous person donated his $1 million estate to 22 nonprofits through his will. Some organizations received as much as $48,000.

So, where did this money come from? Sources say that the man had hefty personal savings. He also had retained some inheritance money.

Some organizations never knew of the man; they had no idea why he chose them as beneficiaries. Nevertheless, the selfless act is greatly appreciated by the recipients.

In this particular case, the man did careful research and came up with a list of 22 organizations that were important to him. Children’s charities, health foundations, nature organizations and other causes received some of the money.

One organization, the Ronald McDonald House, intends to use its money to help pay expenses for families who stay at the facility. According to the facility’s executive director, “The impact of this will be tremendous.”

Are you the kind of person who makes plans to do something good for your community? Unfortunately, life can be very busy, and sometimes we don’t have the time to assist those in need. If this is case, you may want to consider formulating your estate plans to include charities or organizations that you believe in. Many organizations scrap by with little funding. If you have always intended to assist specific nonprofits, like this man, you may have the opportunity to do so through a solid estate plan.

Source: Evansville Courier & Press, “Late Whirlpool retiree’s $1 million estate divided among 22 nonprofits,” Susan Orr, April 18, 2012

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