The Importance of Charitable Beneficiary Planning: Lessons from the Matter of the Estate of Heinecke

Mandelbaum Barrett PC

Mandelbaum Barrett PC

The recent Appellate Division decision, In the Matter of the Estate of Heinecke, serves as an important warning to those who have named charitable organizations as beneficiaries in their Last Will and Testament.  The case also illustrates the applicability of the legal doctrine known as Cy Pres.

Understanding Cy Pres Doctrine:

Cy Pres is an “intent-enforcing doctrine,” utilized by Courts when the purpose of the charitable disposition becomes impossible, impracticable, or illegal. In such a scenario, the Court is authorized, pursuant to N.J.S.A 3B:31-29, to “modify or terminate the [charitable disposition] by directing that [it] be applied or distributed, in whole or in part, in a manner consistent with the [Decedent’s] charitable purposes.”   The doctrine’s applicability depends upon the donor’s intent and purpose in making the gift.

Heinecke involves the Last Will and Testament of Barbara Heinecke (“Barbara”), who passed away on April 9, 2021. Barbara’s Will bequeathed twenty-five percent (25%) of her residuary estate to charitable organizations, which included the New Jersey Society for the Prevention of Cruelty to Animals (“NJSPCA”) and the International Relief Fund (“IRF”).  The Co-Executors of the Estate filed a Complaint seeking advice and direction from the Court as to the disposition of the charitable bequests, alleging NJSPCA and IRF were defunct.

In 2018, NJSPCA was reincorporated into NJSPCA, Inc.  Due to the reorganization, NJSPCA’s original responsibilities to enforce animal cruelty laws were transferred to county prosecutors and municipal law enforcement agencies.  The Estate contended that the shares intended for NJSPCA and IRF should be distributed to the other charitable organizations named in Barbara’s Will because the new organization did not maintain the same function as the original entity, which would be contrary to Barbara’s testamentary intent.  

NJSPCA, Inc. claimed that all assets from the NJSPCA were transferred to NJSPCA, Inc., and although it had no authority to enforce animal cruelty laws, the mission of NJSPCA, Inc. was consistent with that of NJSPCA. Accordingly, NJSCPA asserted that NJSCPA, Inc. should receive the bequest under Barbara’s Will.  

The Attorney General (The “AG”), appearing in its role as protector of the public’s interest in charitable gifts, objected to NJSPCA Inc.’s contentions, asserting the primary function of NJSPCA, Inc. was fundamentally different from the law enforcement role of the NJSPCA. As such, the AG argued that the original entity identified in Barbara’s will no longer existed and the redistribution of the bequest to the other designated charities was more consistent with Barbara’s intent.

The Court was persuaded by the AG’s argument and applied the Cy Pres doctrine to redirect the devises intended for IRF and the NJSPCA to the remaining charities named in Barbara’s Will.

On appeal by NJSPCA, Inc., the Appellate Division upheld the lower Court’s application of Cy Pres. However, rather than redistributing the bequest among the remaining named charities in Barbara’s Will, the Court remanded the case back to the lower court, instructing it to “make factual findings sufficient to effectuate the distribution of the devises with organizations ‘as similar as possible’” to Barbara’s purpose in making the charitable gifts to NJSPCA and IRF.

Implications and Lessons Learned:

This case is a critical reminder to review your Will if you have named a charitable organization as a beneficiary of your estate. If the charity is no longer active, maintains tax exempt status, or changes its mission, the Cy Pres doctrine may apply. Without this verification, you run the inadvertent risk of spurring lengthy and expensive litigation between the named charitable beneficiaries upon your death.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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