Probate & Trust Law Section Conference Manual ... - Minnesota CLE

d. Specific gifts to charity. Frequently people will make a specific
gift to a preferred charity in their will or trust. Often these are
charities that the donor has also been making annual gifts to during
their lifetime. The drafter must exercise care to be certain that the
testaor’s intent is clear as to whether lifetime gifts are intended to
reduce the specific gift. The issue can become even more
problematic if in addition to the specific gift the testator makes a
gift to the charity with nonprobate assets. See Estate of Gill v.
Clemson University, 725 S.E.2d 516 (S.C. 2012) in which the
court helod that the charity was entitled to both a $100,000 specific
gift under a will as well as a $100,000 gift under an IRA
beneficiary designation.
C. Rough Justice – Achieving Fairness with Formulas
1. Charge-Backs for Lifetime Gifts and Prior Trust Distributions. Many
clients desire to achieve fairness by equalizing distributions for their
beneficiaries to take into account differing amounts previously received by
the beneficiaries. Before drafting this type of provision, you should
explore with the client the following issues:
a. Does fairness mean exactly equal amounts to each beneficiary, or
should you acknowledge that different beneficiaries have different
needs and circumstances?
b. Does it matter what the purpose of prior gifts or distributions was?
For example, if a beneficiary received a gift or trust distribution for
a medical emergency should that be treated the same as if the
gifted property was used for a vacation? Is paying for college the
same thing as an outright gift of money?
c. If you are charging back for distributions from a trust for multiple
beneficiaries, might it be appropriate to establish multiple separate
trusts in the first place?
d. How will the exact amounts of prior gifts or distributions be
determined?
(1) Does “gifts” include all gifts down to birthday presents and
going out to dinner?
(2) Does it include only taxable gifts reported on a gift tax
return? What if the gift tax is repealed? What if there are
unreported gifts? What about the fact that paying $100,000
to send a child to college is completely excluded from gift
tax but paying $100,000 to help a child start a business (or
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