There are many reasons why fundraisers should consider acting as an estate trustee or an attorney under a Power of Attorney only in the rarest of occasions. Firstly, in such situations, the fundraiser becomes subject to the legal duties of a trustee. Under common law, this will include duties of loyalty, not to delegate responsibilities, to avoid conflict of interest, to exercise a “prudent man” standard of care, to maintain an even hand in dealing with beneficiaries, to maintain detailed records of capital, income, receipts, and disbursements, and to provide information to beneficiaries. Under the Trustee Act, their statutory duties will include restricted powers of investments unless the will or the power of attorney provides otherwise, and a statutory standard of care.

In addition, the fundraiser becomes exposed to personal liability for negligence or improvident actions, such as giving assets away to unnamed beneficiaries instead of selling the assets for fair market value, not paying all debts of the estate, failing to invest monies on a timely basis, making improvident investment decisions, and unnecessarily delaying the sale of property. There may also be a liability for indemnification between co-trustees, to say nothing of liabilities for actions of others if they act outside of their professional area of expertise.

Encourage donors to participate

There are other duties for attorneys under Powers of Attorney that fundraisers should remember, not the least of which is their duty to explain to the grantor the powers and duties of an attorney. Other responsibilities include a duty to encourage donors to participate in decisions about property matters, and to encourage visits and regular contact between the donor and family members. Finally, an attorney must consult with supportive family and friends, and apply all monies pursuant to a statutorily imposed order of payment: first to the donor, next to dependents, next to meet other obligations, and only then payments for charities and gifts.

Careful planning can avert the above risks in structuring an estate planning program. Firstly, you can shift the risk away from the fundraiser and the charity by downloading it to professionals whenever possible. Use lawyers for legal documents and advice to establish evidence of “due diligence”, and turn to accountants for tax and accounting matters. You can (and should) raise the shield of insurance as necessary, by written disclosure of fundraising activities to insurers, and by requests for written confirmation of insurance coverage of fundraising activities. You should return any original wills or codicils to donors or their lawyers, and do not accept any gifts of real property without a prior environmental assessment to avoid “flow through” of liability under the Environmental Protection Act to the charity as the new owner.

Don’t store the will

Refrain from directing work to a particular lawyer, paying for a portion of legal costs, preparing a will or power of attorney, and providing advice on how to structure disposition clauses in a will or recommendations on how much of the estate should be given to charity. Don’t complete the will guide on behalf of the testator; rather simply assist. Don’t meet with the lawyer when the donor gives instructions for the will; stay away when the will is being signed; and don’t offer to store the original will, codicil to a will, or power of attorney.

Instead, fundraisers should provide donors with information on why a will and power of attorney are essential, what happens if there is no will or power of attorney, how to complete a basic will guide, the correct legal name of your charity, and sample general bequest clauses for making gifts to a charity.

Your charity is NOT a clearinghouse for gifts to other charities Always discourage donors from placing impractical restrictions on gifts, using your charity as a “clearing house” for gifts to other charities, transferring real property to the charity that exposes its directors to environmental liability, and dealing with funeral arrangements or organ donations in a will.

Finally, you can best help your potential donors by recommending that testators complete a detailed estate inventory, retain their own lawyer to prepare the will or power of attorney, obtain the correct name of all charities to be included as beneficiaries, and provide the charity with a copy of the will after it is signed, so that the estate can be monitored.

Terrance S. Carter is a partner in Wardlaw, Mullin, Carter & Thwaites, 235 Broadway Ave., Orangeville, Ontario L9W 2Z5. Telephone (519) 941-1760, fax (519) 941-3688.