Understanding the Two Types of Contingent Gifts

by Clint Travis

As a general rule, we don’t count contingent gifts. The idea that we will only see a particular gift if something else happens, allows for too much uncertainty and so we won’t add those gifts to our campaign numbers. (Though you can still be a Heritage Society member even with a contingent gift!) But when meeting with donors and discussing possible gifts, it’s important to figure out what type of contingency we’re dealing with because in reality there are two types.

The first type of contingency gift is the “if there’s no one else then it’s coming to you” type. These people like UGA. When they die, they want their money to go to their spouse, but if the spouse is deceased then to their children, and if the children are deceased then to the grandchildren, and if the grandchildren are deceased then to their next-door neighbors, and if they’re deceased, then to UGAF. We’re not getting this gift. It’s still an honor that someone cares about us enough to list us among close friends and family. And there may be continued relationship and stewardship opportunities that lead to a gift in the future. But there is no current intention to make a gift.

The second type of contingency is the “really want to make a gift as long as my spouse/special needs child is comfortably taken care of” type. This is where a more in-depth conversation can really be useful. For example, someone might make us the contingent beneficiary of their IRA. Primary beneficiary is the spouse, and secondary is UGAF. They have true intentions of a gift coming here. But if they die first, the IRA passes to the spouse and becomes the property of the spouse so that the previous contingent beneficiaries no longer exist with the IRA. Some donors may say that their spouse is aware of their plan and will ensure it comes to fruition. But what if the living spouse is incapacitated? Even if both spouses list us as 50% contingent beneficiaries of their respective IRAs, if they don’t pass away at the same time, one gift will come to us and one will not.

With this second type of contingency, the Gift and Estate Planning team can offer solutions that may include trusts that pay someone for life, trusteed IRAs, or a codicil to a will that guarantees a gift will be completed as intended, and thus remove the contingency. And that type of plan will ensure that the wishes of the donors are met AND that there is a gift that can be counted!