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New Texas law protects donor intent
By Shant Boyajian
The New York Times reports that the Texas legislature recently passed a law protecting donor intent for orphan trusts -- trusts that are administered by lawyers or banks after the original donor has died.
The danger recognized by the Texas legislature is not a new one. When none of the original family members are present to oversee compliance with a donor's wishes, trusts and foundations often stray from the donor's original purpose. The onus for such wayward disbursements rests not solely on the trustees, however. While trustees have the fiduciary responsibility to use donors' money in a manner consistent with their original purpose in giving, donors must take great care to specify how they want their money to be used. Better yet, donors could avoid gifts in perpetuity altogether, opting instead to give away their money while they are still living.
ACTA discusses these considerations in The Intelligent Donor's Guide to College Giving. This booklet contains sage advice for any philanthropist or potential donor. As noted in the guide, short-term gifts are preferable because you will have more control over your gift if you can supervise it personally and because you will also be able to see the fruits first-hand. We are currently revising and updating this guide. The new edition, available this fall, will include case studies and additional considerations for donors to note in lieu of the Robertson settlement and the recent dispute between Trinity College and the Davis family over the use of an earmarked donation.
Shant Boyajian is ACTA's Friess Family Fellow and a third-year law student at The Catholic University of America.
Posted by David Azerrad on June 30, 2009 at June 30, 2009 05:13 PM
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