By: Mark A. Conway, Esq.
Ashley A. Weyenberg, Esq.
Donors and charities need to be aware of recent changes to Ohio law that may prohibit the payment of a donor’s charitable pledge by the donor’s estate.
Ohio case law has long provided that a pledge made in writing to a charitable institution is considered an enforceable debt of the donor’s estate unless the writing itself or surrounding circumstances indicate otherwise. Typically, a donor and charity expect the donor’s estate will pay the balance due on the donor’s pledge in the course of administrating the donor’s estate. However, recent changes to Ohio law prohibit a donor’s estate from honoring a pledge if the charity fails to make a timely claim for payment of the pledge in the specific manner the law demands.
The Ohio statute that provides the requirements to present claims against an estate was amended effective April 3, 2023, to require any claim against a decedent’s estate to be presented (i) to (or otherwise actually received by) the executor or attorney of record for the executor, or to the probate court referencing the open probate estate case number of the decedent, (ii) after the appointment of an executor or administrator for the estate but before the closing of a probate case, and (ii) within six months after the date of the decedent’s death. A decedent’s estate will be barred from paying a claim (including a charitable pledge) if the presentment requirements are not met.
It is important to realize that each of the requirements identified above to present a claim must be satisfied. First, the charity must present a written claim to (or ensure that the written claim is received by) the appropriate party. Second, presentment must occur after the executor is appointed by the Probate Court. Third, the first two requirements must occur within six months after the decedent’s death. A presentment of a claim to a person who is named as executor in a donor’s will, but prior to the probate court’s appointment of such person as executor, does not meet the technical requirements to be a valid presentment of the claim. (Note, Ohio law provides a special procedure that a charity may use to present a claim to the probate court within the six-month claim period if an estate for a donor is not opened or the executor for the donor’s estate is not appointed by the court within the six month period. Charities, contact your legal advisor for the requirements of this procedure.)
The strict nature of the presentment requirements will surprise many charities. Donors and charities should consider the following to ensure their intentions are satisfied.
- A charity should keep records of its donor pledges and establish a system to identify when a donor dies so the charity can present the claim for the donor’s pledge in the manner required by law within the six-month claim period.
- A donor should consider providing a bequest in the donor’s will or estate-planning trust that provides for the payment of the balance due on the donor’s pledge at death under the terms of the donor’s will or trust. A payment of a bequest is not subject to the six-month presentment requirement for payment of estate claims.
Advisors, please ask your clients about charitable pledges when you review the client’s estate plan. You can help your clients to take actions to make sure their charitable pledges will be honored as they intended and their charitable legacies will be preserved upon their passing.
Mark A. Conway, Esq., is the group leader of Thompson Hine’s Personal & Succession Planning practice. He works with families of significant wealth throughout the firm’s offices, focusing on their tax, business and estate planning needs. Mark has been selected multiple times by peers for inclusion in The Best Lawyers in America© and named a Best Lawyers® 2024 Lawyer of the Year (Dayton) in Trust and Estates Litigation, among other distinctions.
Ashley A. Weyenberg, Esq., is partner, Personal & Succession Planning Tax, for Thompson Hine. She focuses her practice on high-net worth, business-connected individuals and families, advising clients on a wide range of matters including estate planning and administration and charitable planning. She also assists clients with matters involving the IRS, including obtaining advance private rulings and audit disputes.
Please note: The Dayton Foundation does not practice law or offer financial or tax advice. The Foundation recommends that people considering establishing funds or legacies through the Foundation consult their financial, tax or legal advisor.