Nonprofit Offers: Caution! If It Is Free, You May Be The Product
By Melinda Gustafson Gervasi
December 10, 2024
Too Good To Be True? As the calendar year comes to a close your inbox and USPS mailbox are likely filling up with solicitations from nonprofit organizations you value and support. In recent years I have noticed a trend in the nonprofit world, one that gives me pause and raises my eyebrows. Nonprofits are giving out free, online will programs. The “free will” offers may be tempting, but proceed with caution. One nonprofit sent me a message that said “in under 20 minutes and just a few keystrokes, you could have a will”. Sometimes the easy route is not the best route. To quote President John F. Kennedy:
We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.
The easy route may not be the most wise route. Here are 5 things to keep in mind if you opt to create an estate plan through a free offer from a nonprofit:
- If you are not paying for something then you are not the customer; you are likely the product being sold. Before entering your information and wishes into an online platform, you may want to investigate how that data will be stored, managed, and possibly sold to other entities;
- Assumptions can be your downfall. When working with clients, I have them complete a client questionnaire to gather information needed to create a plan. More often than not, married clients will not list the name of their spouse as the primary actor for the various roles one assigns in an estate plan (agent for healthcare is an example). It is not because they don’t want their spouse to act, it is because they assume the spouse is automatically granted this authority. In my home state of Wisconsin that assumption is wrong. A spouse is not automatically given authority to make decisions. Skipping over the spouse when completing documents essentially cuts the spouse out of decisions;
- Procedures in courts can be jurisdictionally quirky. A Wisconsin will may state “I waive bond for my Personal Representative”, however, the court may ignore that wish and require bond for any out-of-state Personal Representative (called an Executor in other states). This routinely happens in the county where I practice, yet this is not obvious to the lay person creating an estate plan on their own. When learning of this practice, I have clients who opt for an instate Personal Representative rather than one residing outside of Wisconsin because the cost and time of getting bonded is an added obstacle in administering a probate;
- Build in enough contingencies. When asked where you want your estate to go upon death you may answer “to my spouse, and if they are dead to my children”. However, life can unfold in unexpected twists and turns. It is good to ask what would happen to a child’s share if they predeceased you. Would it go to their children if they had any? Would you rather the share be split between your surviving children? What if your child was married and you wanted the share distributed to your in-law? It can get complicated quickly. The more layers you address, the more longevity your will is going to offer. Free products may not give you this deep level of planning; and
- Coordinate with your Non-probate assets. A will distributes your probate assets; those are assets with no co-owner or named beneficiary. A car or a home are typical examples, but it depends on how the asset is titled. When you write a will it is vitally important that your beneficiary designations are understood as well. If your will says “everything to my children in equal shares” but the beneficiary form on your life insurance lists your sister, the life insurance goes to your sister. If she were kind and gave those proceeds to your children to honor the intention in your will, she may be responsible for paying the federal gift tax. The insurance money went to her, and then she was making a gift of it to your children. The streams by which assets pass and flow can be complicated. The 20 minute will you got for free for making an annual donation to a nonprofit may not only be insufficient, it may create an enormous headache for your loved ones.
Nonprofits are a wonderful aspect of our society. I admire them; so much that I wrote a book with the title Middle Class Philanthropist: How anyone can leave a legacy to encourage people to include charitable causes in their estate plan. At the same time, I read email solicitations with a skeptical eye when they are offering free will kits. Hopefully you will be able to make more informed decisions about these tools if and when you find an offer waiting in your inbox.
Keep in mind that a blog post is not legal advice. It is meant to spark thought and discussion. Always seek legal counsel from an attorney licensed in your state of residence. Be well, and thank you for reading.
