Charitable giving is a common feature of many estate plans. In addition to providing for family, individuals may wish to support their favorite charitable organizations or causes by making specific bequests in their will or trust. In some cases, a person may create a charitable lead trust or charitable remainder trust to ensure his or her generosity continues to yield benefits for years, even decades, after death. But whatever form you adopt for charitable giving after you’re gone, it’s important to make your intentions known in writing. Ambiguity over promised donations can lead to significant litigation.
The Difficulty of Proving Oral Promises to Give
Consider the case of Roland Arnall. The son of Eastern European Jews who fled Europe during the Second World War, Arnall built a fortune as the owner of Ameriquest, at one time the largest holder of sub-prime mortgages in the United States. Arnall’s estimated fortune was $1.5 billion, and his generous donations to the Republican Party led President George W. Bush to name him ambassador to the Netherlands in 2005.
Arnall also supported numerous Jewish organizations, such as the Simon Wiesenthal Center, which he co-founded. Rabbi Boruch Shlomo Cunin, president of the Jewish group Chabad of California, claimed Arnall was so generous as to pledge $18 million to help fund new capital projects. Unfortunately, Arnall died from cancer in 2008 and Cunin was the only witness to this alleged oral promise, which was not included in any of the ambassador’s estate planning documents.
Chabad later sued Dawn Arnall, the ambassador’s widow and executor, to enforce the alleged $18 million promise. At trial Rabbi Cunin testified that he’d received three $180,000 payments from Ambassador Arnall as “installments” towards the promised $18 million-although none of these donations were recorded until after Arnall’s death. Overall, the trial judge found the rabbi’s testimony lacked credibility and could not be corroborated.
The court noted its job was not to determine whether Arnall had actually pledged $18 million, but whether Chabad and Cunin could prove based on a “preponderance of evidence” that such a pledge was made. Aside from Rabbi Cunin’s discredited testimony, the only other alleged evidence of Arnall’s pledge was an Excel spreadsheet that listed of all the ambassador’s charitable contributions. Chabad claimed Dawn Arnall improperly suppressed the existence of this spreadsheet. However, Chabad did not raise its objections until after the trial ended and the judge rendered an initial decision in favor of Dawn Arnall.
As the California Court of Appeals noted in an unpublished February 2013 opinion supporting the trial court’s final decision in favor of Arnall, since the spreadsheets were never part of the trial record, it would be improper for the courts to speculate as to their contents. Furthermore, Chabad could not prove its case-that Ambassador Arnall had, in fact, pledged $18 million-merely by casting doubt on the credibility of his widow. Indeed, the trial court found that all of Chabad’s witnesses lacked credibility to some degree, which ultimately made it impossible to prove Roland Arnall ever promised any donations beyond the money he actually gave Chabad during his lifetime.
Make Your Charitable Giving Intentions Clear
In a “he said-she said” case like this, the truth will never be known. Maybe Dawn Arnall suppressed evidence to get out of a legitimate charitable pledge her husband made. Or maybe Rabbi Cunin abused the judicial system in a failed attempt to extort a grieving widow. Whatever the case, the lesson for the rest of us is that you should never make (or rely upon) an oral promise to give large amounts of money to charity. Even if it’s just a few thousand dollars and not several million, if it’s worth giving then it’s worth putting in writing.
If you plan to make a gift over a long period of time, then it’s essential you incorporate such pledges into your California estate planning documents. A qualified California estate planning lawyer can advise you of the best practices for carrying out your charitable giving and ensure there’s no misunderstandings after your death. If you have any questions or concerns, please feel free to contact the Law Office of Scott C. Soady at 1-858-618-5510.