Estate Planning for a Single Person

Many people believe that estate planning for a single person is not a priority, but this approach fails to understand how comprehensive estate planning can actually be for an individual. In fact, if you are a single person, your estate plan may be even more important in terms of guaranteeing that your legacy is dealt with in accordance with your wishes and that your healthcare decisions are honored in the event you are not able to address them yourself. If you are single, your estate plan matters, and the experienced estate planning attorney at the Jennifer V. Abelaj Law Firm (212-328-9568; abelajlaw.com) in New York has the experience and legal insight to help.

Recognizing Decision-Making Authority

If you are single (unmarried and without children), you are unlikely to have anyone whom the State of New York will readily recognize – absent an advance directive – as having the authority to make healthcare decisions on your behalf (in the event you are incapacitated). The same is also true of any financial decisions that need to be made in the course of your incapacitation. While a spouse or child can fill this role for married individuals, you face unique challenges in terms of estate planning for a single person. This makes establishing both a financial power of attorney (as defined by the New York State Bar Association) and a healthcare proxy paramount for those who are single. If you cannot make primary decisions regarding your health and/or finances on your own (due to incapacitation), you want someone whom you trust to do so on your behalf – in accordance with your wishes and with your best interests in mind – and this can be addressed in your estate planning efforts.

Dying Intestate (Without a Will)

If you were to pass away without a will in place, your assets, which amount to your financial legacy, will be distributed by the court in accordance with state law. If you are married with children, this distribution is likely to align with your basic wishes, but if you are single, this is not necessarily the case. New York intestacy laws, which guide how assets are distributed when there is no will or estate planning document, dictate that the assets of single people who have no children are distributed as follows:

• Your assets (in their entirety) will pass to your parents.
• If you do not have a living parent, your assets (in their entirety) will pass to your siblings.

If neither of these applies in your situation, your estate will likely be divided between your mother and father’s relatives, including distant cousins. In other words, estate planning for a single person is exceptionally important, and the practiced estate planning attorney at Jennifer V. Abelaj Law Firm in New York is well positioned to help you address your unique estate planning needs.

Taking Important Steps Forward

It is easier for single people to ignore the matter of estate planning, however taking the time to solidify your wishes now can provide you with considerable peace of mind moving forward. Further, if you are inching toward retirement age, the time for estate planning for a single person is now. In addition to setting up a financial power of attorney (POA) and a healthcare proxy, there are a variety of important steps you should take.

Make Your Will

One of the most important aspects of your estate plan involves making your will, which names your estate’s executor – who will be imbued with the authority to engage in all the following:

• Attending to your affairs (in accordance with your wishes) after your death
• Probating your Will (if the need arises)
• Paying both your income and estate taxes
• Allowing for estate tax planning

In order to streamline the process of passing your assets on, the best course of action is generally making a revocable trust (created during your lifetime) the beneficiary of your will.

Create a Revocable Trust

Over the course of your lifetime, you may have built a financial legacy that continues to grow, and upon your death, you want your assets to flow to your loved ones – and/or to charities that are meaningful to you – in accordance with your wishes. A revocable trust provides you with the tools necessary to do so. For example, if you have a significant other to whom you are not married, including his or her name as a specific beneficiary of your trust will ensure that he or she receives those assets that you want him or her to have. Further, you may want him or her to remain in your home until his or her passing – when the property may move on to a relative (or someone else of your choosing) – as identified in your revocable trust. Setting up a revocable trust is an excellent way to specifically address the unique challenges that are often part of estate planning for a single person.

Fund a Trust Today

The importance of funding a trust throughout your lifetime cannot be overstated. If you are incapacitated at a later date, your trust’s successor trustee can use the funds therein to pay for your healthcare needs (in accordance with your specific wishes). If you have not successfully completed the steps of setting up a trust and funding it, those who are closest to you may be required to have a guardian or conservator appointed on your behalf, which can be a lengthy and complicated process. By funding your trust now, you accomplish both the following:

• You control who will be managing the assets you have included in the trust.
• You ensure that the assets you have included in the trust avoid the probate process.

Estate Tax Planning

For a single person who has assets that have a total value that is greater than the New York State or Federal Estate Tax Exemption, they must take deliberate steps to address minimizing estate taxes.  A married person may take advantage of the unlimited marital deduction for assets that pass to a surviving spouse.  However, a single person does not have this deduction available.  This is most pressing for single persons who have a partner (or children), and who will bear the estate tax burden.  Options might include charitable bequests, gifting during life, or creating irrevocable trusts that remove assets from your estate.  This can only be done with advanced estate planning.

Reach Out to an Experienced New York Estate Planning Attorney Today

Estate planning for a single person is extremely important. In fact, you could be facing challenges that married individuals with children do not. Whatever your unique estate planning needs are, the experienced New York estate planning attorneys at the Jennifer V. Abelaj Law Firm can help. To learn more, please do not wait to contact or call us at 212-328-9568 today.

In the News: Jennifer V. Abelaj, Interviewed by US News, published online August 26, 2021

Jennifer was interviewed by US News about the (cumbersome) process and status of remote notarization in New York State.

During the Covid-19 pandemics, many states (including New York and New Jersey) enacted temporary measures allowing remote notarization and signing of estate documents. Unlike other states, New York no longer allows remote notarization or signing of estate documents.

Check out the full article and Jennifer’s comments: What Is a Notarized Document – and Where Can I Get Something Notarized? | Family Finance | US News

Basics of Estate Planning

Estate planning is a broad term for preparing your assets and your family’s needs in the event of your disability of death.  The type of planning appropriate for you will depend on the composition of your assets, your family structure and dynamic, the value of your estate, or your country of residence.

Estates Come in all Shapes and Sizes

What do you think about when you hear the term “estate” planning?  It’s possible you may be thinking that an estate exists only if there is significant wealth, multiple assets, or many family members.  But an estate exists as soon as you have any asset in your name, regardless of the value.

Smaller estates may only require very basic planning, such as a Will, Health Care Proxy and Living Will, and Power of Attorney.  A larger estate may benefit from additional estate and income tax planning, creation of trusts, or structuring the sale or distribution of a family business.

The estate planning is tailored for your needs.  Although it may seem simple enough, the process to consider who receives your assets is as unique as you are.

Take Action During Family of Financial Milestones

A good time to prepare an initial estate plan or review your existing plan is when there is a family or financial milestone in your life.  Common milestones include marriage, birth of a child, divorce, purchase of a home, retirement or increase in wealth.

Prepare a Will

Individuals sometimes ask me if they REALLY need a Will.  As a trust and estates lawyer for over 10 years, I can unequivocally say the answer is YES!

If you die without a Will, the State (or country) of your primary residence will determine who receives your estate and in what portions.  This does not mean that the State gets your assets – only that your estate will be distributed according to their rules.  You may not like the default distribution.  A Will or Trust allows you to override the default distribution in accordance with your wishes.

Distribution without a Will (Intestacy)

Generally, spouses cannot be disinherited (unless there is a pre- or post-nuptial agreement).  Statutory intestacy rules may provide that the remainder of your Estate must be distributed to equally to your children, grandchildren, or your parents.  This may not be the best distribution for your family.

In particular, if you have minor children, it is preferable to have their share held in a trust until they reach a certain age.  Without a Will or Trust, you would be unable to do this and the child would receive the entire distribution at age 21. The risk of a full distribution at age 21 is that the child may splurge it all at one. Most parents prefer that the child’s assets be held for their benefit until a later age – 35, 40 or even longer – so that the child has access to funds at various milestones.

Additional Benefits of a Will or Trust: You call the shots!

A testamentary document, such as a Will or Trust, allows you to decide who will manage the administration of your Estate by appointing an Executor or Trustee.  By clearly identifying an individual, your family members will not have to decide who should (or shouldn’t) be in charge.

You can also provide that the Executor or Trustee may serve without filing a bond.  The default in many States requires that the Administrator file a bond, which can be costly for the estate and create delays in collecting the assets.  By avoiding a bond, your assets can be collected sooner and distributed to your beneficiaries without the expense of a bond.

If you have minor children, you can designate a preferred guardian if both parents are deceased.  During such a difficult time, your children would benefit from having the security of a designated guardian without having relatives argue over who is best suited to care for the child.

Estate Taxes

Federal law allows an individual a lifetime estate and gift tax exemption of $13,610,000 (for 2024).  New York law provides an exemption of $6,940,000.  These are historically high exemption amounts.  Although the values usually increase annually, there have been instances where these values went down.

If your estate is near either of these values, you should consider various estate planning strategies now to reduce your estate tax exposure.  This may include creating lifetime trusts, making gifts to your heirs during life, or giving a portion to charity.

Next Steps

A skilled estate planning attorney can provide tailored options for your assets and family structure.

Do not hesitate to contact me if you need assistance with your estate planning.

Cryptocurrency, Digital Assets and Estate Planning

Did you hear about the cryptocurrency-exchange founder who was the only person with the password to a digital wallet worth $190m of client funds, and suddenly died without having shared the password with anyone?  Well – if you didn’t, here is an article (one of many): Crypto exchange customers can’t access $190 million after CEO dies with sole password – MarketWatch  He essentially has locked out all these customers from ever accessing their money – possibly until someone can identify and crack his password with future technology.

Cryptocurrency.  Non-fungible tokens (NFTs). Blockchain.  Digital Wallet. 

Until the recent past, these terms did not exist in mainstream conversations.  Although they have been around for quite a long time — and this is old news to many individuals who are trailblazers in the tech sphere or who are early adopters — most individuals did not have to think about digital assets when planning their estates.

Today, you may own digital assets or know someone who does.  In fact, if you have a Facebook account, PayPal account or a website, you have a digital account and possibly digital assets.

If you own any of these assets, they are part of your estate and all the same rules of descent and distribution apply to them.  This means that you must plan for their collection and distribution accordingly.

Definitions Guided by RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act)

The RUFADAA was enacted to provide a mechanism for fiduciaries to access your digital information, whether the assets are in a Will, a Trust instrument, or pass via intestacy.  Prior to its passage, neither common law nor statutory law (in most states) clearly authorized a fiduciary to collect digital assets, close digital accounts or make an inventory of either. 

Digital assets include cryptocurrency and non-fungible tokens (NFTs).  They may be held in digital accounts, such as a digital wallet, or the password may be held on a digital device, such as a USB drive or a laptop’s hard drive. 

It is essential to understand the three distinct categories (i.e, digital asset, digital account, and digital device) in order to properly plan for collection and distribution of your digital assets.

Estate Taxes

Estate and gift taxes are based on the value of the property transferred at the set point in time, whether at death or upon the date of the gift.  Digital assets and accounts –- whether cryptocurrency, NFTs or otherwise –- would be valued in the same way to determine whether the estate is subject to State or Federal estate taxes. 

Established cryptocurrency or other digital assets that are tied to a price index may be easier to value in real time.  However, assets that are not tied to a price index – whether emerging cryptocurrency or NFTs – may be more difficult to accurately value for tax purposes.  For such assets, any estate or gift tax valuation may require an appraiser who has expertise in digital assets to provide an accurate valuation.

Planning for Distribution of Digital Assets

You should clearly identify the type of digital assets that you own, how they are accessed and the approximate value.  The RUFADAA does not direct distribution of your digital assets, digital accounts or digital devices; it is up to you to decide who receives your digital assets and provide for each as part of your estate planning.

It is important to discuss this information with your attorney to include the proper language in your estate documents, whether your Will or a Trust, to make proper distribution of such assets. 

Changing the Trustee of a Testamentary Trust in New York State

A trust is a document created by an individual (i.e., the Grantor) directing a Trustee to hold property or assets for the benefit of another person or entity (the Beneficiary”) based on certain terms and conditions.

Inter Vivos Trust vs Testamentary Trust

An inter vivos trust is created by a Grantor to be administered during the person’s life, and it may be revocable or irrevocable.  These come in many forms, but frequently include Irrevocable Life Insurance Trusts (ILIT), Qualified Personal Residence Trust (QPRT), Supplemental Needs Trust (SNT), or Grantor Retained Annuity Trust (GRAT).  Inter vivos trusts generally have terms for the appointment of a successor Trustee, usually with a simple document or consent signed by the parties.

A testamentary trust is created under a person’s Will to take effect upon their death.  This trust is irrevocable because the individual who created it is no longer alive to make any amendments or revocations.  The Trust frequently includes a list of individuals who are to serve as successor trustee.  However, unlike an inter vivos trust, appointment of a new Trustee may only be done by an application to the Surrogate’s Court.

Successor Trustee Nominated in Will

If the successor Trustees are identified in the Will or testamentary trust, the petitioner, which may be the existing trustee or the successor trustee or the beneficiaries, must petition the Court requesting that the identified successor Trustee be appointed.  In these cases, the process is generally predictable, but can take several weeks for the Court to process the application and appoint a successor Trustee.

Successor Trustee Not Named in Will

If, however, the successor Trustee is not identified, the petitioner must demonstrate that the interests of the current and future beneficiaries are best served by appointing the successor trustee.  If any beneficiary is a minor child or a person under a disability, the parent or guardian may have standing to consent on behalf of such beneficiary.  In certain cases, the Court may appoint a Guardian ad Litem (GAL) to represent the interests of the minor or disabled person.  This process may take several months.

Decree or Order Appointing Successor Trustee

If the Surrogate agrees that the nominated successor Trustee is fit to be appointed and in the best interest of the beneficiaries, he or she will sign a Decree or Order appointing the Successor Trustee.  At that time, Letters of Successor Trusteeship will be issued and the appointed successor trustee may begin serving in a fiduciary capacity to carry out the terms of the Testamentary Trust instrument.

How Individuals and Charities Can Benefit from Changes to Charitable Deductions Before and After OBBA

The One Big Beautiful Bill Act (“OBBA”) was signed into law on July 4, 2025, which includes many striking changes to charitable deductions that start on January 1, 2026. Donors and donees of charitable gifts must be aware of the new rules to maximize their philanthropic goals. Find out the impact the changes will have on donations and how donors and nonprofits can prepare and respond before and after the changes. If you have questions about charitable giving in New York, please consider scheduling a consultation with the experienced New York philanthropy attorneys at Abelaj Law, P.C. by calling 212-328-9568.

Good: Boost in Charitable Deductions

1) Individual taxpayers who take the standard deduction are allowed an additional charitable deduction of up to $1000 for single filers or up to $2000 for joint filers. 

Recipient limitations: Donations to Donor Advised Funds (“DAF”), supporting organizations, or non-operating private foundations are not eligible for the standard charitable deduction.

2) Donations to charities that provide scholarships to K-12 students. 

Deduction: Starting in 2027, nonrefundable credit of up to $1700 for gift of cash or marketable securities. Available to both standard and itemized filers, the credit will reduce the other charitable deductions allowed to the taxpayer.

Bad: Reduction in Charitable Deductions

1 – Taxpayers who itemize deductions will only be allowed to deduct charitable contributions exceeding of 0.5% of taxpayer’s AGI. 

• For example, if a donor’s AGI is $500,000, they will be allowed to take a charitable deduction on the excess over $2,500. Donations must be to a 501(c)(3) organizations and deductions for gifts to DAFs, private foundations or supporting organizations are allowed.

2 – Corporations will only be allowed to deduct charitable gifts exceeding of 1% of taxable income up to a maximum of 10%.

• Impact to Matching Gifts Programs. Corporations either reduce or increase the number of available charities that may receive a matching gift. It will be a year or two until we see the outcome.

Take Action: Maximizing the Rules for Your Benefit

1) Standard Filers. Consider whether waiting until 2026 to make a charitable contribution will significantly improve your taxable income or if the result would be nominal as compared to the charity’s loss. Keep in mind that your favorite charities rely on your donations, and they may be more negatively impacted than you can imagine. If you skip the 2025 contribution, increase it in 2026.

2) Itemized Filers. Make your charitable contributions NOW before 12-31-2025 in order to receive the maximum charitable deduction. For 2026, make a larger contribution in one year to front-load the gifts that would have been made over several years (sometimes called “bunching gifts”).  Bunching will allow you to receive a charitable deduction while providing the cumulative gift to the charity “in advance.”

3) Charities. Contact donors now to make contributions before 12-31-2025, expressing the benefits of receiving a full charitable deduction this year without being subject to the floor. Coordinate with your fundraising team to identify and segment donors who might fit into the standard deduction filing or the itemized filing. 

• Identify donors who make smaller, annual gifts and tailor a fundraising message to highlight the benefit of charitable contributions starting in 2026 that were not previously available.
• For large recurring donors or those at the borderline of the 0.5% floor, communicate with them NOW Before 12-31-2025 and share the benefits of making a charitable contribution before December 31, 2025.  For 2026, tailor fundraising messaging to the benefits of “bunching gifts” in one year.

4) Supporting Organizations and Private Foundations. Focus your fundraising efforts on itemized filers who can receive a charitable deduction when making large donations or bunching gifts.  If you have a website, consider updating the donation page to provide information and direct the donor to discuss with their tax adviser.

Additional Limitations

• Deduction for cash donations to public charities is capped at 60% of AGI (30% of AGI for appreciated assets). OBBA made the 60% cap permanent.
• Carry-forward for 5 years is still allowed, subject to the same limitations.

Consult with a Philanthropy and Charity Attorney Today

Being aware of the tax changes is critical when making charitable gifts. Whether you are a donor or a donee; an individual giver or a charitable recipient, the new laws will impact your strategy to maximize tax benefits. Discussing the tax changes with a philanthropy attorney may ensure that you take steps to fit your philanthropic goals. If you want to learn more about philanthropy planning in New York, please consider scheduling a consultation with the Abelaj Law, P.C. by calling 212-328-9568 to discuss how we can assist you in this process, including developing policies and procedures to receive large donations in order to avoid jeopardizing tax-exempt status.

How Individuals and Charities Can Benefit from Changes to Charitable Deductions Before and After OBBA

The One Big Beautiful Bill Act (“OBBA”) was signed into law on July 4, 2025, which includes many striking changes to charitable deductions that start on January 1, 2026. Donors and donees of charitable gifts must be aware of the new rules to maximize their philanthropic goals. Find out the impact the changes will have on donations and how donors and nonprofits can prepare and respond before and after the changes. If you have questions about charitable giving in New York, please consider scheduling a consultation with the experienced New York philanthropy attorneys at Abelaj Law, P.C. by calling 212-328-9568.

Good: Boost in Charitable Deductions

1) Individual taxpayers who take the standard deduction are allowed an additional charitable deduction of up to $1000 for single filers or up to $2000 for joint filers.

Recipient limitations: Donations to Donor Advised Funds (“DAF”), supporting organizations, or non-operating private foundations are not eligible for the standard charitable deduction.

2) Donations to charities that provide scholarships to K-12 students.

Deduction: Starting in 2027, nonrefundable credit of up to $1700 for gift of cash or marketable securities. Available to both standard and itemized filers, the credit will reduce the other charitable deductions allowed to the taxpayer.

Bad: Reduction in Charitable Deductions

1 – Taxpayers who itemize deductions will only be allowed to deduct charitable contributions exceeding of 0.5% of taxpayer’s AGI.

• For example, if a donor’s AGI is $500,000, they will be allowed to take a charitable deduction on the excess over $2,500. Donations must be to a 501(c)(3) organizations and deductions for gifts to DAFs, private foundations or supporting organizations are allowed.

2 – Corporations will only be allowed to deduct charitable gifts exceeding of 1% of taxable income up to a maximum of 10%.

• Impact to Matching Gifts Programs. Corporations either reduce or increase the number of available charities that may receive a matching gift. It will be a year or two until we see the outcome.

Take Action: Maximizing the Rules for Your Benefit

1) Standard Filers. Consider whether waiting until 2026 to make a charitable contribution will significantly improve your taxable income or if the result would be nominal as compared to the charity’s loss. Keep in mind that your favorite charities rely on your donations, and they may be more negatively impacted than you can imagine. If you skip the 2025 contribution, increase it in 2026.

2) Itemized Filers. Make your charitable contributions NOW before 12-31-2025 in order to receive the maximum charitable deduction. For 2026, make a larger contribution in one year to front-load the gifts that would have been made over several years (sometimes called “bunching gifts”).  Bunching will allow you to receive a charitable deduction while providing the cumulative gift to the charity “in advance.”

3) Charities. Contact donors now to make contributions before 12-31-2025, expressing the benefits of receiving a full charitable deduction this year without being subject to the floor. Coordinate with your fundraising team to identify and segment donors who might fit into the standard deduction filing or the itemized filing.

• Identify donors who make smaller, annual gifts and tailor a fundraising message to highlight the benefit of charitable contributions starting in 2026 that were not previously available.
• For large recurring donors or those at the borderline of the 0.5% floor, communicate with them NOW Before 12-31-2025 and share the benefits of making a charitable contribution before December 31, 2025.  For 2026, tailor fundraising messaging to the benefits of “bunching gifts” in one year.

4) Supporting Organizations and Private Foundations. Focus your fundraising efforts on itemized filers who can receive a charitable deduction when making large donations or bunching gifts.  If you have a website, consider updating the donation page to provide information and direct the donor to discuss with their tax adviser.

Additional Limitations

• Deduction for cash donations to public charities is capped at 60% of AGI (30% of AGI for appreciated assets). OBBA made the 60% cap permanent.
• Carry-forward for 5 years is still allowed, subject to the same limitations.

Consult with a Philanthropy and Charity Attorney Today

Being aware of the tax changes is critical when making charitable gifts. Whether you are a donor or a donee; an individual giver or a charitable recipient, the new laws will impact your strategy to maximize tax benefits. Discussing the tax changes with a philanthropy attorney may ensure that you take steps to fit your philanthropic goals. If you want to learn more about philanthropy planning in New York, please consider scheduling a consultation with the Abelaj Law, P.C. by calling 212-328-9568 to discuss how we can assist you in this process, including developing policies and procedures to receive large donations in order to avoid jeopardizing tax-exempt status.

Common Risks for Nonprofit Organizations and How to Prevent Them

Nonprofit organizations are essential to the well-being of our communities, delivering critical services to support those in need. While their charitable missions empower them to engage in unique, mission-driven activities, they are not immune to risk. In fact, as tax-exempt entities, nonprofits must navigate an added layer of regulations that for-profit businesses often don’t face. Proactively identifying and managing these risks is crucial for long-term sustainability and mission impact. In this post, we’ll examine some of the most common risks nonprofit organizations encounter and how to prepare for them effectively.

1. Conflicts of Interest Must be Disclosed and Addressed

Unlike for-profit entities, board members, officers, or other key persons involved at a nonprofit organization must disclose when they have conflict of interest or potential conflict of interests when making decisions that can impact the organization. When a conflict of interest or potential conflict of interest is identified, it is best practice for that person to remove themselves from the decision-making process.

If an organization engages in a related-party transaction where a conflict of interest exists, it can be at-risk of violating IRS rules that impose a significant tax and possibly jeopardize its tax-exempt status.  This is particularly the case for private foundation, where self-dealing, when a key person benefits from a transaction to the organization’s detriment, can result in a hefty excise tax. 

Although the IRS does not require a Conflict of Interest Policy, many States, such as New York, require that the organization have one in place to guide them through the decision-making process. 

2. Governance and Compliance Risks from Internal and External Sources

Governance and Compliance risks cover a host of issues that nonprofit organizations may face. It is critical that board members, officers, and other key persons at an organization be familiar with the organization’s internal policies and aware of external laws. This includes complying with state, local, and federal tax rules to ensure the organization is only engaging in activities that carry out its charitable purpose in order to maintain its tax-exempt status.

A nonprofit organization must ensure that it is complying with its internal policies (Bylaws, Conflict of Interest Policy, Grant Policy, OFAC Policy, etc.) in order to maintain seamless and reliable operations.  It is recommended to review internal policies every 3-5 years and ensure new board members get familiar with the organization’s governing documents before joining the organization.

Organizations must ensure compliance with external laws and requirements. This includes changes to nonprofit corporation laws, tax laws that impact the organization and applicable agency laws.  By having ongoing communications with its general counsel, an organization can be nimble in responding to sudden changes in the law in order to avoid jeopardizing its legal standing.

3. Communication Risks to External Parties May Harm Organization’s Reputation

A nonprofit organization must be mindful of its communications. This includes social media posts, emails, and when members of the organization speak in public settings.

A nonprofit should have a procedure in place to review its communications prior to publication to confirm they accurately describe its charitable mission in a transparent manner. If a nonprofit organization does not, it may be at risk misrepresenting itself in contract negotiations, grant applications, or donor engagements. The result may be catastrophic if funding is lost or the resulting reputational harm is irreversible.

When advocating for or informing the public about its charitable goals, nonprofits must avoid engaging in partisan political activity and must not have a substantial part of their activities be lobbying. Organizations are allowed to advocate for supporting their charitable causes, but they cannot engage in prohibited political activity as there is a high risk of potentially losing 501(c)(3) tax-exempt status.

Adopting a policy and process for external communications will help create parameters on the type of language that can be used, the authorized platforms, and the individual responsible for reviewing the final products. 

4. Financial Responsibility Cannot Be Abdicated

Nonprofit organizations rely on donations, grants, and fundraising events to support its operations and activities. It is the Board’s responsibility, both collectively and individually, to oversee the financial health of the organization.

The organization’s financials must be handled in a transparent manner and ensure the majority of funds are used to carry out the organization’s charitable mission.

The organization should reiterate to its Board that financial compliance and responsibility remains with the Board at all times and is not a responsibility that can be transferred to someone else, whether a committee, CPA, attorney, or outside consultant. There should be checks and balances in place to ensure that filings are submitted to the IRS on a timely basis and that the finances are properly invested to meet the organization’s overall goals.  Failure to do so may result in loss of tax-exempt status, which requires significant cost and time to regain from the IRS.

5. Reputational Risks May Result from Internal or External Events

Reputational risks usually refer to the potential loss of public trust and credibility due to actions, behaviors, or external perceptions of an organization. A “bad reputation” can cause a ripple effect through the organization and impact its internal structure and external partners.  This is because nonprofits rely on their reputation in order to receive donations, grants, and enter into contracts. Reputational risks can cause internal disruption and cause a stagnant Board not be able to make important decisions for the organization. It can also cause community backlash, loss of funding and opportunities, and may even prompt an investigation from the Attorney General.

Contact Our Experienced Nonprofit Lawyer Today

Risk is an inevitable part of running an organization, but it doesn’t have to hinder a nonprofit organization’s activities. Recognizing risk is the first step to resolving it. By taking proactive approach to risk management, board members, officers, and other key persons can help set up the organization for long-term success to make a lasting difference in their communities.

At Abelaj Law, P.C., we understand the various risks nonprofit organizations face and work with them to mitigate and resolve current or potential issues. Our work is about giving the tools and resources an organization needs in order to succeed. To hear more about our services, call a seasoned lawyer at Abelaj Law, P.C. You can reach them at 212-328-9568.

Also, check out or Board Member Training: How to prevent Disruptions Before They Occur https://www.abelajlaw.com/elevate-your-nonprofit-governance/