There is a move afoot at my institution for our foundation to begin offering ongoing services as executor of estates and trustee of estate trusts. I'm trying to be a team player, but I have concerns (such as our staff's lack of a trained legal professional) and am therefore reaching out for insight. Our sole procedural guidance at present: The Foundation, "including any of its individual employees or agents, is not in a position to serve as the executor, personal representative, or trustee for the will or trust of a donor except in limited circumstances that would require concurrence from the Foundation Executive Committee." But I'm told that some donors have asked, and some administrators would like to proceed, so self-dealing aside, concurrence may loom as a mere formality. It's understood that in cases where the Foundation is a beneficiary, it would ultimately receive residual funds (one situation under current consideration would benefit heirs across 25 years), such directed money clearly a gift. However: What about management fees the Foundation anticipates levying against these estates (some have suggested up to 20%, though I interpret state law to restrict that to 2½) -- any such funds received as compensation for the Foundation's service would then equate to a fee for services and would not, should not be counted as a gift -- correct? I've consulted the National Committee on Planned Giving's Model Standards of Practice for the Charitable Gift Planner, and though approaching it with bias, I still see annoying loopholes. What if the nonprofit advises the donor to seek "competent independent legal and tax advisors," but the donor insists on entrusting their estate to that very nonprofit? I foresee numerous "What could possibly go wrong?" risks, and I'm wondering as well if there are other foundations who have attempted (or waved off from) such a high-wire act, and any cautionary tales which may inform us.
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Tim Dempsey
Director of Prospect Management
Athens State University
tim.dempsey@athens.edu------------------------------