Philanthropy is often based on a couple’s shared beliefs and values. These altruistic pursuits range from donating money to local charities to starting a foundation to help with global issues. This charity work is a joint venture for many couples, reflecting their commitment to positively impacting the world. What will happen then if such a couple decides to get a divorce?
How can divorce affect philanthropy?
The dissolution of a marriage can cast a shadow over a couple’s noble pursuits. Here are some scenarios:
- Jointly owned charitable assets: If the couple has jointly owned assets they have acquired during their marriage, these assets may be subject to division in the divorce settlement if they use them for philanthropic purposes. This could include property, investments or other resources they donated or granted to charitable causes. In such cases, the couple may need to negotiate if they will divide these assets or if one partner will retain ownership or control over them.
- Charitable trusts: A charitable trust is a legal arrangement where assets are transferred to a trustee who manages the assets for charitable purposes. If the couple has established a charitable trust, they may need to address how they should manage it during the divorce process.
- Charitable foundations: If the couple has established a charitable foundation, they may need to negotiate the terms of the foundation’s governance structure. This includes the composition of the board of directors, the distribution of assets and the decision-making process for grant making.
- Donor intent: If the couple has given significantly to charity during their marriage, they may need to talk about how they want to recognize their donations. How would they run their charities after the divorce?
- Tax implications: Charitable giving can have tax implications, and divorcing couples may need to consider how tax laws will affect their endeavors. For example, if one partner retains ownership of charitable assets, they may be subject to taxes on any appreciation in value.
These are just some examples of how divorce may affect a couple’s charitable deeds.
Safeguarding the mission amidst separation
To protect their philanthropic missions during divorce, couples can consider legal mechanisms. Couples may negotiate agreements regarding:
- How they will divide their charitable assets
- How their charitable trusts or foundations will be run
- How their donations will be recognized
They can incorporate these agreements into a divorce settlement or a separate agreement.
They can also consider mediation. This can be a useful tool for couples to resolve disputes related to their philanthropic endeavors. A neutral third party can facilitate discussions and help the couple reach a mutually acceptable agreement.
If negotiations and mediation fail to resolve disputes, couples may need to pursue court proceedings to resolve issues. Couples may consult with legal professionals to understand their rights and obligations.