By Kevin W. Weigand

You’ve just learned that one of your largest donors has passed away and left a sizeable portion of her estate to your organization. The bequest will be transformational. Budgetary concerns will ease, and the organization will be in a better position to fulfill its mission on a wider scale.

And then you are served with a lawsuit. Your donor’s daughter is unhappy because the inheritance she expected is leaving the family and going to charity. The daughter is further insulted because she helped take care of her mother during the final months of her life, and there was no way her mother would have wanted others – strangers — to get more than her own family.

The daughter recalls that mom’s Last Will and Testament was created within the past year before she died, so there can only be one conclusion: Mom lacked the requisite mental capacity and was unduly influenced in her estate planning, and as a result, a court needs to void the will so your 501(c)(3) gets nothing.

The excitement and anticipation associated with this transformational bequest suddenly is replaced with disappointment, dread, and the thought of legal fees for a lengthy court battle that will hinder the organization’s operations.

Your initial reaction might be “it’s just not meant to be and it’s better to throw in the towel.” But don’t be deterred just because there is a legal challenge. You might be able to defend your bequest without breaking the bank.

Here are five potential considerations and options for 501(c)(3) organizations faced with these types of challenges:

1. Will Challenges Face Significant Hurdles. Jurisdictions throughout the United States have enacted statutes that impose significant burdens on individuals challenging the express terms of a Will. That’s for good reason. After all, the testator took the time to memorialize their intentions in writing and follow statutory requirements to give them legal effect. While certain circumstances might give rise to a presumption of undue influence, courts will generally look to enforce the intentions of the testator unless there is substantial evidence of wrongdoing or an intention otherwise.

In other words, if the testator designated your organization as a beneficiary of her estate, you may have the advantage because the challenger will need to demonstrate why the bequest is legally deficient and the terms of the Will should not be enforced.

2. The Personal Representative Owes Fiduciary Duties. The personal representative of an estate owes fiduciary obligations to act in the best interests of its beneficiaries. When a claim is brought to challenge the terms of a will, the personal representative will be a necessary party to the claim and will nearly always be permitted to use funds from the estate to hire attorneys to defend the claim.

However, not all personal representatives — who do not necessarily have a personal stake in whether your charity gets paid — will be as proactive as you might want in keeping your organization informed. Therefore, it is in your organization’s best interest to ensure that the personal representative has notice of the lawsuit, is retaining counsel, and plans to respond to the claim.

Since the personal representative is often a family member or has a relationship with the deceased (and likely her family), they might also be able to share additional background and context concerning the individual bringing the suit, the mental condition of your donor when she executed her estate planning documents, and the merits of the claim.

Again, however, the personal representative’s role in protecting the interests of the beneficiaries and furthering the intentions of the testator frequently gives your organization another line of defense. Notwithstanding, the personal representative should be viewed as a resource but not a substitute for hiring your own attorney, as discussed further below.

3. Your Own Records Can Help Prove Your Donor’s Intent. In the all-too-familiar scenario discussed above, the family member maintains that if the testator was of sound mind or was not unduly influenced, they would not have made the bequests that they did. A key component to challenging these claims is to demonstrate that the donor intended to make a bequest to your organization.

It is helpful to produce evidence establishing specific ties to your 501(c)(3) and demonstrating the donor was a dedicated supporter to your organization and its mission. You will want to gather all documentation and information that reflects this support, including a history of all giving, communications with the donor, records of the donor’s attendance at events, galas, and other functions, records of the donor’s volunteer service on behalf of the organization, and any other materials that demonstrate their ties to the organization.

This type of evidence can be persuasive in demonstrating that your donor knew exactly what she was doing when she chose your organization to receive a legacy gift.

4. Even If A Will Is Not Perfect, A Court May Still Conclude It Is Enforceable. In certain instances, an estate planning document might not conform entirely to the statutory requirements despite the testator’s clear intentions. However, there are exceptions and curative doctrines that may nonetheless render its terms enforceable. Similarly, if there is a drafting error in a will, various jurisdictions now permit the will to be reformed to comply with the intentions of the testator.

5. Protect Your Interests Without Breaking The Bank: For many nonprofit leaders, the idea of retaining outside counsel — and in turn, spending money out-of-pocket that you might not have or wish to spend — sounds daunting and can quickly feel like the bequest is more of a burden than a benefit. However, ensuring that you have an attorney that is representing your organization’s interests throughout the process is an important factor in attempting to ensure your interests are protected.

In most cases involving charitable bequests, the personal representative will retain counsel and defend against the claim — consistent with its obligations to act in the best interests of the beneficiaries of the will and the intentions of the testator. Therefore, most of the day-to-day operations of the litigation — taking depositions, issuing discovery, filing motions — can be handled by the attorney for the personal representative, which in turn, allows your organization to minimize legal fees to the extent possible. But this does not mean that your organization does not still need an attorney to represent its interests.

First, your counsel — while minimizing costs by avoiding taking the lead role in discovery — can play a vital role in ensuring that the personal representative’s counsel is asking the right questions, filing the right motions, and focusing on unique issues relating to the bequest to your organization.

Second, there will inevitably be discussions during the course of the lawsuit about a potential settlement or resolution. You will want to have a prominent seat in the room with a legal professional that is advocating exclusively for your interests and negotiating on your behalf.

Third, and perhaps most important, even if the thought of incurring costs for an attorney is daunting, your relationship as an “interested party,”as opposed to a defendant accused of wrongdoing, gives your organization greater control over the use of its legal resources. After considering your organization’s finances and the amount at issue in the bequest, you might conclude that you would like the attorney to play a more limited role and limit costs by only appearing at court and depositions when absolutely necessary. This flexibility allows you to ensure that your interests are protected on key decisions while also limiting costs.

These five steps can help your organization to fully evaluate the dispute, enhance your opportunity for success while minimizing costs, and increase the likelihood that the monumental gift that your organization was expecting will be realized and preserved.
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Kevin W. Weigand is of counsel at Venable LLP. His email is kwweigand@Venable.com

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