For high-net-worth couples navigating divorce, philanthropic assets and endeavors often represent far more than their financial value. They embody shared legacies, deeply held values, and years of charitable commitment. Yet these very assets, including private foundations, donor-advised funds, and charitable trusts, can become sources of conflict when a marriage ends. Such divorces give rise to complex, deeply personal, and emotionally charged negotiations that require careful handling.
The Division of Charity
While assets previously donated to irrevocable donor-advised funds, private foundations, or charitable organizations are not subject to division in divorce proceedings – as they no longer constitute part of the marital estate – pledged but unpaid donations, investment strategies, tax benefits, and control over private foundation governance, including board positions, remain subject to negotiation.
Although donor-advised funds are generally considered irrevocable gifts to charity and thus excluded from the divisible marital estate, a joint donor-advised fund may be split into two separate accounts, enabling each party to continue their philanthropic endeavors independently.
Private foundations are typically nonprofit entities established and funded by an individual or family to further charitable activities. In the context of divorce, such foundations may require restructuring—whether through the division of assets into two separate entities or the modification of corporate governance to permit one or both parties to continue operations. Control, income distribution, and management of the foundation may be subject to negotiation or division if the foundation was funded with marital assets.
Charitable remainder trusts present another avenue for division, wherein one party receives the tax benefits of the charitable donation while the other retains the income stream from the trust. The critical question is whether a spouse retains any property interest or beneficial rights in the transferred assets. If property is irrevocably transferred to a charitable trust without retention of a beneficial interest, it likely becomes the separate property of the charitable entity rather than marital property subject to division.
In any divorce settlement, philanthropic assets must be explicitly addressed, including the allocation of ownership, control and management responsibilities, and future charitable commitments. To the extent the parties elect to continue co-managing the entity, the settlement agreement should establish clear management parameters to prevent future conflicts and ensure effective collaboration. However, consultation with a tax advisor is recommended as donations required1 as part of a divorce judgment may not be eligible for tax benefits.
When disputes arise, courts examine the timing of when the donor-advised fund, foundation, or trust was established—whether before or during the marriage—whether it was funded with separate or marital property, and who controls it. Because charitable donations may be prefunded or subject to lifetime giving commitments, the spouse who receives the asset must comply with the terms of the donation, an issue that warrants specific attention during divorce negotiations.
To mitigate potential disputes, couples may proactively address philanthropic giving in a premarital agreement. The agreements can include provisions governing annual giving limits, the characterization of contributions as marital or separate property, circumstances requiring joint consent, and governance requirements during the marriage or upon dissolution.
Charitable Giving is Subject to Scrutiny
During divorce proceedings, charitable contributions may also be subject to heightened scrutiny. When one spouse has maintained primary control over marital finances, the other may question whether such contributions were made unilaterally or strategically – such as a mechanism for removing assets from the marital estate that would otherwise be subject to division.
Consider California, a community property state where all property acquired during marriage is presumed to be community property unless it derives from a separate property source, such as assets acquired prior to marriage, income or appreciation on separate property assets, or property received by gift, bequest, devise, or inheritance.2 Upon dissolution of marriage, the court must divide the community estate equally between the parties.3 This characterization framework is essential in determining whether charitable donations or interests in charitable vehicles are subject to division.
During marriage, spouses owe fiduciary duties to one another in all transactions concerning community property and must account for any benefit or profit derived from such transactions without the other’s consent.4 Additionally, spouses are prohibited from making unilateral gifts of community property absent the written consent of the other spouse.5 A married person is free to invest (or gift) their separate property as they choose.6 Where a spouse makes a charitable donation of community property without spousal consent, such conduct may be challenged as a breach of fiduciary duty, carrying significant financial consequences. The non-consenting spouse may seek to have 100% of the unilateral gift charged to the gifting spouse (plus payment of any attorney’s fees and court costs incurred related to this issue).7
When making a significant charitable contribution during marriage, it is considered best practices to document the mutual agreement of the spouses to the charitable contribution in order to avoid any future ambiguities.
Philanthropy is Personal
Philanthropy is inherently personal, often inextricably linked to one’s identity, priorities, values, and mission. As with any business or enterprise, disputes may arise regarding governance. Questions of attribution for charitable contributions, the ongoing involvement of both spouses, and how a foundation will honor the charitable vision of its founders present significant challenges. Divorce can disrupt the shared mission couples once pursued together. In some instances, the foundation may be divided, with one spouse championing certain philanthropic endeavors while the other advances different causes.
The Impact of Charity on the Marital Standard of Living
Charitable giving may constitute an integral component of the marital standard of living, depending on the jurisdiction. In California, for example, courts must consider the marital standard of living established during the marriage when ordering spousal support.8 Under Family Code section 4320, courts possess broad discretion to determine support based on enumerated factors, including each party’s earning capacity, ability to pay, needs, obligations, assets, and the duration of the marriage, as well as other factors the court deems just and equitable. Charitable contributions are among the expenditures courts may consider in this analysis and as evidence of the parties’ lifestyle during marriage.9 Notably, the Income and Expense Declaration (FL-150)—which parties must complete prior to any support hearing—includes a specific line item for “charitable contributions” under monthly expenses.10
Philanthropy is often deeply intertwined with a couple’s shared values, financial planning strategies, and long-term legacy aspirations. For divorcing couples with significant philanthropic commitments, thoughtful planning and skilled legal counsel are essential to preserving charitable legacies while achieving an equitable resolution. By addressing these issues proactively, whether through premarital agreements or comprehensive settlement negotiations, parties can protect both their financial interests and their philanthropic missions. With careful consideration, couples can navigate these complex issues and emerge with their charitable intentions intact.
- In determining the tax deductibility of a charitable contribution, the IRS looks at donative intent. According to the U.S. Supreme Court, a charitable gift “proceeds from a ‘detached and disinterested generosity’” (Commissioner v. Duberstein, (1960) 363 U.S. 278, 285). If a payment “proceeds primarily from ‘the constraining force of any moral or legal duty,’ or from ‘the incentive of anticipated benefit’ of an economic nature (Bogardus v. Commissioner, (1937) 302 U.S. 34, 41), it is not a gift.” (Id.)
- California Family Code sections 760, 770.
- California Family Code section 2550.
- California Family Code sections 1100, 721.
- California Family Code section 1100.
- California Family Code section 770(b); see also Somps v. Somps (1967) 250 Cal.App.2d 328
- California Family Code section 1100(g).
- California Family Code sections 4320, 4330.
- See In re Marriage of Weinstein (1991) 4 Cal.App.4th 555, 561 (On an appeal of a judgment for a dissolution of marriage that awarded $8,500 per month in spousal support, Appellant testified that her charitable activities and entertaining contributed to Respondent’s career advancement. She cited a provision in Respondent’s employment contract that they were to entertain for the goodwill of the corporation, and described major donations of $75,000 plus additional gifts ranging from $500 to $1000).
- 10.FL-150 INCOME AND EXPENSE DECLARATION (No. 13.o.).
