Using Donor Advised Funds to mitigate the risk of legal issues with an estate gift
When long-time philanthropist Steve McEachern and his wife Mary laid out their estate plans, they named Rotary Foundation Canada as a primary charitable beneficiary of their $40 million fortune, save for the living expenses needed to sustain the lifestyle expenses of the surviving spouse. But before he passed at age 99, Steve had a change of heart and endeavoured to diversify his estate giving plan. He and Mary decided that they instead preferred to spread their generosity among multiple local charities in Edmonton, and throughout Alberta.
However, Steve passed away suddenly during the COVID-19 pandemic—before he was able to amend his will to reflect these revised gifting wishes.
We were saddened but not surprised when Canada Gives’ Western staff discovered this article outlining Mary McEachern’s ongoing legal battle with Rotary Foundation Canada. The organization has gone to court to secure the full amount of the original $40 million gift. Both sides have attempted some form of compromise, which neither found acceptable.
The McEachern’s story is an all-too-common example of a well-intended estate gift becoming a decidedly negative life event, while becoming a legal albatross for the surviving spouse. Mary, now 101, is locked in a bitter court battle with Rotary Canada to gain control over the distribution of Steve’s charitable gift.
The situation raises an important question: could such a conflict be avoided? And if so, how? For individuals interested in securing a flexible, lasting charitable legacy, a Donor Advised Fund (DAF) offers an easy and very strategic solution. Unlike designating individual charities in a will, making the bequest to a DAF account (or as we call it, a Canada Gives Foundation account) achieves the same goal, but simplifies the process of adjusting charitable beneficiaries.
Donors can add, remove, or modify their designated charities without rewriting their wills. They can also designate a successor to the DAF, which is often a surviving spouse or other family member, who could carry forward the donor’s intentions.
At Canada Gives, we establish a Letter of Wishes with each of our DAF donors, so we know their intentions. If their choices change, they simply update the Letter. There’s no need to incur the expense and time to change their will, and no need to inform any of the charities of these changes. It’s a simplified, elegant solution to what can be a significant—and highly stressful—challenge for surviving spouses and their family members.
Why highlight this issue? The purpose is not to make light of the difficult situation outlined in the article, of course, but to underscore the value of flexible structures such as DAFs, which allow donors to adapt their charitable goals in real-time and without incurring hefty legal costs.
Donors often identify new causes or experience changes in their personal connections to certain charities, making flexibility crucial. With mechanisms such as a Donor Advised Fund, donors retain the freedom to alter their legacy—right up to their final wishes.
In the end, philanthropists and their families want to know that their generosity is making a meaningful difference to the causes, and across the communities, they support. Ensuring they have a significant influence over how that generosity is spread in the service of doing good is a vital aspect of achieving their charitable giving goals.
The Canada Gives Team
To explore how a DAF might help you build a legacy that reflects your charitable values, consider opening a Foundation account with Canada Gives. Our team is here to help guide your charitable giving with flexibility and foresight. To learn more, contact a member of our team.
