Divorce and Philanthropy: How to Handle Shared Charitable Endeavors
You and your spouse have decided to go your separate ways. For most couples, that means dividing assets and making decisions about the children and custody issues.
Some couples grow their wealth while married and are committed to charitable endeavors. The Family Wealth Report estimates in 2020, charitable giving amounted to $471 billion. The majority of high-net-worth families, nearly 90 percent, contributed to this amount.
Whether you have a private foundation, a donor-advised fund, or volunteer your time because philanthropy is vital to you, these forms of giving must be reassessed when a couple divorces.
Family law attorney Crystal Collins Spencer specializes in high-net-worth individuals changing their family structure. A consultation with her will help send you in the right direction for your future needs.
Assessing Your Commitment
As is sometimes the case, one of the soon-to-be-ex partners may have more of a commitment to charity than the other. During your divorce discussion, the couple should honestly assess each person’s degree of dedication. Is your standing in the community based on giving to charities? How will you continue to fulfill that commitment? Or is that commitment important to you in your new life?
Your shared value to philanthropy may go through a significant shift when you become single.
Some things to consider are:
- Can one partner be more active in any charitable organization and its future growth?
- Can the other partner remain present in name only with less of a contribution?
- What is the role of individuals –donors, advisors, or trustees, and how does that impact their gift after a divorce?
- To what extent have financial contributions represented your spending together, and can that continue?
- To what degree do finances versus volunteer hours represent your contribution?
It’s entirely possible that one of the partners may want to launch in an altogether new direction after the divorce. That may be represented by a new charity, even in a different area of the country.
If you both remain committed to the same charity, will you be comfortable working together in the future, even when you are not married? You may both decide that your generosity and commitment to a cause override any animosity between you, ultimately benefiting both parties and the cause you are both committed to.
All of these possibilities must be considered, preferably under the guidance of a third party.
Philanthropic Settlement Agreement
Attorney Spencer may suggest if you are committed to moving forward with your philanthropic efforts, she can help craft a settlement agreement to define charitable assets. If you use stocks, real estate, or cash directed to the charity, you must ascertain which person will continue owning those assets.
A charitable mission statement may help define gift-giving objectives in the future.
Will your new arrangement require you to rearrange a board of directors in the future? If you have a foundation, how will that be handled when you are no longer married?
Contributors no longer own the charitable entity but may be able to advise its direction moving forward. Should a donor-advised fund be divided into separate funds? Alternatively, a charitable trust can name a charity as the beneficiary and include both heirs and a charity.
The agreement should specify the stated goals for the future of the organization.
Also, what contribution each individual will make, whether financial or volunteer hours, will be decided.
Tax consequences will be attached to your charitable giving, and the couple needs to ascertain which option is best.
Your Florida Divorce and Family Attorney
Dividing a couple’s assets into charitable purposes can be complicated and must include advice from estate planning, tax, and non-profit specialists.
Attorney Crystal Collins Spencer represents couples throughout Florida and in the Pensacola, Ft. Walton Beach, and Sandestin, Florida, areas focusing on family law.
In her 35 years advising couples, she has encountered many high-net-worth couples with complicated uncoupling needs. Ms. Spencer will counsel you with sound, aggressive strategies to allow you to move forward with your new life, with particular attention to maintaining your strong sense of personal responsibility.
Call our Pensacola office at (850) 795-4910 to arrange a consultation on your needs moving forward.
Family Wealth Report