Throughout your career, you will likely help dozens of clients navigate the intersection of philanthropy and estate planning. While the focus is often on the creation of donor-advised funds or charitable remainder trusts, an increasingly relevant question for many advisors is: What happens to these assets in the event of a divorce?
Given the rising importance of specialized roles in couple’s philanthropy, being prepared for these scenarios is essential for protecting a client’s intent and their financial standing.
The Legal and Fiduciary Framework
From a legal standpoint, charitable giving during a marriage is often subject to the same rules governing other marital assets. In community property states, for instance, assets acquired during marriage are generally considered jointly owned, and spouses owe fiduciary duties to one another regarding their use.
This framework can lead to significant complications:
- Unilateral Gifts: Gifts made without a spouse’s knowledge or consent may be challenged. In some jurisdictions, the full value of the gift could be attributed back to the donating spouse during divorce proceedings.
- Control and Governance: Even after a philanthropic vehicle like a DAF or private foundation is funded and technically removed from the marital estate, ongoing advisory privileges and governance rights often become points of intense negotiation.
Strategic Coordination
For the professional advisor, these risks highlight the need for proactive coordination. Ensuring that significant gifts—especially those made during the marriage—are backed by documented mutual intent can help avoid future disputes and preserve the client’s long-term philanthropic goals.
How We Can Help
The community foundation is here to serve as a neutral, expert resource for you and your clients during these transitions. Whether you are helping a client establish a new fund, restructuring an existing one during a life change, or simply looking for technical guidance on how our fund agreements handle successor advisors, we are here to support your practice.
The team at the community foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.
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