Attaching Strings to a Gift

monet.jpgA recent article in the New York Times addresses the interesting question of whether a testator (a person who has made a will) can “attach strings” to a bequest (a gift by will of personal property). Wealthy philanthropists have left collections of artwork to museums and have specified conditions on the bequest, such as all works of art need to be displayed together or never sold. When a donor leaves such property in a will and the intent of the bequest is no longer being met, the museum or other institution to which the donation was made cannot request that the donor change the conditions or request a clarification of the donor’s intent, because the donor is deceased. In some cases, institutions have sought Court intervention to address donor intent and request a change in conditions so that donor’s intent is achieved.

The most well-known case in recent years involves the Barnes Foundation. Dr. Albert Barnes possessed a comprehensive collection of post-impressionist and early modern artwork. He specified the specific manner in which the artwork was to be displayed and that it was to be displayed together in a building owned by the foundation in suburban Philadelphia. The foundation was to conduct educational programs and never move from its location. Over time, the foundation experienced financial problems that jeopardized its very survival. In order to maintain the institution at all, the Attorney General and Governor brought suit to request an order permitting the foundation to move from suburban Merion to downtown Philadelphia. The Court agreed that relocating the foundation was necessary to preserve the foundation.

There are many situations where an arts institution has requested the Court’s intervention in revising the terms of a bequest in a will or a gift in a charitable trust. The Attorney General, as the supervisor of charitable organizations, may also participate or lead such lawsuits. The reasons behind requests to reform the conditions of a bequest could be based on financial considerations. Perhaps the institution needs to sell the artwork to raise funds in order to avert bankruptcy, or the artwork is later deemed not to be attributed to the artist as assumed by the donor.

Although most of us do not have an original Monet painting to leave to a museum in our will, the cases with respect to donor intent and museums can be instructive to all of us. When drafting trustee language in a will or trust , we recommend that the fiduciary (person or institution who manages money or property for another) be given broad and non-specific powers. For instance, if the instruction is that all estate assets be invested in fixed-rate bonds, the fiduciary may be limited in a future low interest rate environment and be unable to generate as much income for beneficiaries as it would without the restriction. Also, any condition that a fiduciary invest in a specific stock or industry is a potential problem because the stock or the industry could become extremely unfavorable for a prudent investor’s attention. In general, we suggest that a fiduciary, who inherently is trusted by the person leaving the property, be given broad discretion so that he is able to implement the donor’s intent for the best interests of the beneficiaries and as current conditions dictate.

Nonetheless, there are situations where it is appropriate to leave very specific instructions for the acquisition of assets. The most common is a trust that specifies that the child beneficiaries obtain certain assets when they reach certain age milestones, such as 25, 30 and 35. This may prevent an immature young adult from inheriting a substantial sum all at once. Also, if a beneficiary has a substance abuse problem, there may be justifiable conditions on access to assets.

Our firm is available to counsel you with respect to the most sensible drafting provisions for your will and trust and with interpretations of such documents under which you are a beneficiary.