Show Me the Money: When Does Your Endowment Fund Actually Receive a Bequest?

​For decades, bequests have been a small but relatively steady component of total charitable giving in the United States. You certainly understand the importance of bequests to growing your endowment fund at the Community Foundation. To that end, your fundraising materials likely include language to encourage donors to include endowment bequests in their wills or trusts. A donor can leave a particular dollar amount through a “specific” bequest, or leave a portion of the estate or trust remaining after taxes, expenses, and distributions to family and other beneficiaries (known as a “residuary” bequest). A donor can also name your organization’s endowment fund as the beneficiary of an IRA or other retirement plan. 
 
So, after a donor passes away, when does your endowment fund actually receive the money? It depends on the type of bequest, and the money rarely arrives quickly. But, the Community Foundation can help. For example:
 

• If a donor names your endowment fund at the Community Foundation as the beneficiary of an IRA, the Community Foundation will pursue a transfer of the proceeds from the IRA administrator as quickly as possible. 

 

• In the case of a donor who names your endowment fund as the recipient of a bequest in the donor’s will, which is subject to probate, full distribution of a residuary charitable bequest will typically occur after the probate process is completed. A specific bequest of a certain dollar amount may be released in a “partial distribution” earlier in the probate process. A complete probate process can take several months or even more than a year, depending on the complexity of the estate.

 

• If a donor has left a charitable bequest in a trust rather than a will, and therefore the estate is not subject to probate, distribution of the bequest may happen faster, but still, especially in the case of a residuary bequest, the trustees will want to ensure that all expenses, taxes, and other liabilities of the deceased donor can be covered before the trustee makes any distributions to beneficiaries, including to your endowment fund at the Community Foundation.

 
One of the benefits of working with the Community Foundation is that the Community Foundation team will take the lead on pursuing distributions from donors’ bequests to your organization’s endowment fund. Please reach out anytime with questions and to learn more.

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