• Presbyterian Church ( U.S.A.) Foundation
• Foundation Publications
• Law of Trusts, Wills, Estates, and Gifts
• Trusts
• Trustee Duties
• Charitable Trusts
• Wills
• Revoking, Renouncing and Amending Wills
• Abatement and Ademption
• Nontraditional Wills
• Probate
• Personal and Real Property — Gifts
• Charitable Deductions
• Gift Restrictions and Encumbrance

1. the competence of the donor,
2. the intention of the donor to make a gift,
3. the completed delivery of the gift, and
4. the acceptance of the gift by the donee.

An important difference between a gift and a trust is in the location of legal title. In the case of a gift, legal title and beneficial ownership of property are both vested in the donee. In the case of a trust, beneficial or equitable ownership passes to the beneficiary and the legal title is transferred to a third party or retained by the donor to be administered for the benefit of the beneficiary. Prior to agreeing to accept a gift, the board of trustees should ascertain the terms upon which the gift is being transferred and received. Such a determination would include the stated intent of the donor, any conditions about conveyance, and any conditions or restrictions on the use of said property.

The church's insurance agent should be notified immediately when a gift of real estate or fine art is received so that the property can be added to the church's insurance policy. Each insurance policy has restrictions on the number of days new property can be covered before it has to be reported to the insurance company. The number of days can range from 30 to 120 days. The normal limit is 30 days; additional days will need to be endorsed onto your policy. Remember, once this time is up the property will be uninsured. If your church receives numerous real estate or fine art gifts, you may consider increasing the new property reporting period.

Where the gift is not given to the church outright, but instead is conditioned upon the church transferring it to a designated noncharitable beneficiary, no deduction is available to the donor, because her donative intent will not have been sufficiently established and the donation is not actually made to a charity. For example, Donor A gives the church $5,000 to be used to send two specific children within the congregation to college. Initially, a church should not accept such a gift and certainly should not issue any receipt for tax purposes. Donor A would not get a deduction in this case because the gift is really to the two students, not to the church. Where such a gift is given to the church for scholarships with no conditions set about whom the church designated as a recipient, then the deduction would be available, the donor having relinquished control of the gift to the church. Absent the donor relinquishing all control over the gift, sufficient donative intent to a charitable recipient will not have been established and any charitable deduction taken by the donor would be subject to being disallowed.

There are certain tax requirements when accepting noncash gifts worth more than $500. The donor must file Internal Revenue Service Form 8283 — "Non-Cash Charitable Contributions." Under that form, the church must acknowledge receipt of the gift, entering its name, employer identification number, and the signature of an appropriate board representative. Should the church decide to sell securities within two years of the date of receipt, it is necessary to file Internal Revenue Service Form 8282 — "Donee Information Return," and to send a copy to the donor. An exception exists for publicly traded securities. See the Taxation chapter and Hammar's 2000 Tax Guide for information on IRS requirements for receipt of charitable donations, including information on the IRS requirements for substantiating donations and gifts of $250 or more.

One of the most significant problems involved in the acceptance of real estate is possible environmental hazards and liabilities on the gift property. Owners of property, even a church that has received a gift of real property, could become liable for cleanup costs and removal of any hazardous wastes on the site. It is important to consider all of these factors when evaluating the acceptance of a gift of real estate. An environmental audit or title insurance rider insuring against liability should always be obtained. Should the audit indicate that there might be hazardous waste contamination on the property, the best way to prevent potential liability is to exercise the right to disclaim the gift or bequest. Similarly, a church may wish to reject an offer to donate a heavily mortgaged property or property in serious disrepair.