Attorney Thomas Vercauteren
Phone: 608-257-0945

Recently, Dane
County decided to end its partnership with the Henry Vilas Zoological Society, the
nonprofit entity that supported the Vilas Zoo. 
The county cited concerns regarding the large cash reserves that the
nonprofit held and the accessibility of funds raised with the intention to
support the zoo.

overlooked in the consequences of the termination of this partnership is the
number of individuals that have named the Zoological Society as a beneficiary
under their estate plan.

So what
happens if a nonprofit has undergone a transformation in its charitable purpose,
is in the midst of reorganizing under bankruptcy, or dissolves?

The answer,
of course, is the lawyerly: “it depends.”

Statute 701.0413 codifies what’s known as the “cy pres doctrine” for trusts. Cy
in this context represents a French legal term that roughly translates
to “as near as possible”.  The intention
of the cy pres doctrine is to give
power to the courts to make charitable gifts more effective.  The statute specifically provides that the
“court shall liberally apply the doctrine.” 
While this particular statute only applies to trusts, Wisconsin has long
recognized in common law the applicability of the cy pres doctrine to wills.

The statute
permits the court to look into the settlor’s charitable purposes for making
such a bequest. If the court finds that such purposes are unlawful,
impracticable, impossible to achieve, or wasteful, the court can modify a
settlor’s trust in a manner consistent the settlor’s charitable purposes.

this means that a court can decide whether there is a suitable replacement for
the charity you named in your estate plan. 
The statute directs the court to look at a number of factors, including:

  1. The current and future community needs in the
    general field of charity in which the original charitable purpose falls;
  2. Other charitable interest of the settlor;
  3. The amount made available to charity; and
  4. Any other relevant factors.

if a decedent did not update their estate plan and named the Henry Vilas
Zoological Society as a beneficiary, the court may find that the charitable
purpose behind such a bequest was now impossible to achieve.  The court could then substitute its own
judgment for that of the decedent and attempt to find a nonprofit that is close
to the purposes of the society.  The
court could even find that the community needs for supporting the zoo are being
met and instead add to other recipients of bequests under your estate plan.

The amount
of uncertainty in relying on the cy pres
doctrine is typically something we advise our clients to avoid.  A big part of having a complete estate plan is
the assurance that your estate will be distributed to the organizations and
individuals you have chosen after giving careful thought.

This is one
reason why it is important to review your estate planning documents every few
years.  If circumstances have changed, an
amendment to your plan may be necessary to achieve your estate planning goals.  Otherwise, you may risk a court substituting
its judgment for your own.  We are happy
and available to discuss your options and tailor an estate plan that is
airtight and right for you.