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Estate Planning, Charitable Pledges, and Community Property

Many people pledge money to charity as part of their estate planning. In California, charitable pledges are generally not enforceable in court unless the donor receives some consideration, thereby creating a binding contract. For example, if a college offers to name a building after you in exchange for your gift, that would be consideration for your pledge. If you pledge money contingent on other people making similar donations, that would constitute mutual consideration among all of the donors.

If you do make a binding pledge as part of your estate plan, however, make sure you consider the wishes of your spouse. Under California law, any community property held by a married couple is owned one-half by each spouse. This means you may not make a gift of your spouse’s share of such property without his or her consent.

Ex-Husband Cannot Pay for Pledges With Ex-Wife’s Share of Community Property

A California appeals court decided a case addressing this subject. This was actually a divorce case, not a probate matter, although it involved the couple’s estate planning. Specifically, the wife challenged a number of irrevocable charitable pledges made by her husband on their behalf.

The couple divorced after 19 years of marriage. The wife appealed numerous decisions of the divorce court related to the classification and valuation of the couple’s community property. As relevant here, the wife said she never consented to four “due-on-death charitable pledges” made by the husband to various Jewish charities. The pledges totaled $3.25 million.

California law requires “written consent” for any non-probate transfer of community property. The wife said she never gave written consent to any of the four pledges. The husband replied he “would not have made the pledges without talking” to his wife first and she never objected to any of them. Furthermore, three of the pledges were made in exchange for putting the couple’s name on buildings, and the husband said his wife attended events related to the pledges, thereby demonstrating her consent.

The divorce court sided with the husband, noting “the parties spent a great deal of time and effort during the marriage on charitable endeavors.” But the Court of Appeal reversed, holding this was not sufficient proof of the wife’s consent to these specific pledges. Indeed, “the evidence is undisputed that [the wife] did not sign three of the pledges,” the appeals court observed, and “generalized evidence” of the wife’s overall charitable endeavors did nothing to rebut this. Accordingly, the appeals court held the husband “alone is obliged to honor the pledges that he alone signed.”

Need Help With Estate Planning?

Even when divorce is not an issue, couples should still be mindful of one another’s legal rights in community property. This extends to estate planning. If you wish to pledge money as part of your will or trust, make sure you obtain your spouse’s consent to pay for it with community property; otherwise your estate plan should make it clear the gift is to be paid entirely from your separate property. If you need to consult with an experienced California estate planning attorney on this or any other subject, contact the Law Office of Scott C. Soady in San Diego today.

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