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A few years ago, Valley Humane Society learned that one of our special supporters had passed away. Her sister called to tell us that we were one of nine nonprofit beneficiaries of her IRA.
Our donor had a trust, but her IRA was a nonprobate asset. The idea is simple: you name the people or organizations you want to receive the asset, and when you die, it passes directly to them without going through probate. Like many people, I assumed the financial institution would notify the beneficiaries. I was wrong.
Our donor’s sister found a piece of paper identifying the IRA and listing all nine beneficiaries. As trustee, she contacted the financial institution expecting to help distribute the assets according to her sister’s wishes. But because she was not a named beneficiary, the institution would not provide her with any information. Fortunately for us, she had found that piece of paper.
She contacted all of us and provided the information we needed to begin making our claims. What followed took two and a half years. We submitted paperwork multiple times just to have it denied repeatedly. Eventually, I learned that all nine nonprofits needed to submit completed paperwork within the same 90-day window, but we didn’t know each other.
Our donor’s sister stepped in again and helped us connect. I organized a Zoom call, and the nine nonprofits submitted on the same day, and the funds were distributed.
But what happens when there is no piece of paper? What happens when a daughter doesn’t know her father named her as a beneficiary? Or when a nonprofit has no idea that a longtime supporter left it a final gift?
If beneficiaries are listed, the financial institution may be the only one to know. Meanwhile, the trustee, attorney or family member settling the estate may be unable to obtain that information. We soon learned our experience wasn’t unique. Other nonprofits had struggled with similar requirements. Some walked away from gifts. Others hired attorneys. We heard from family members encountering roadblocks while trying to carry out the wishes of someone they loved.
So we decided to try to fix it.
Valley Humane joined San Diego Humane Society and CalNonprofits to pursue a solution. We were fortunate to have Sen. John Laird agree to author Senate Bill 1288. Senator Laird also has a special connection to Pleasanton. His father, Ralph Laird Jr., served as principal of Amador Valley High School beginning in 1972 before becoming assistant superintendent of Pleasanton schools.
Together, we worked with legislators and the financial industry to develop a solution that works for beneficiaries and financial institutions.
SB 1288 now requires financial institutions and other registering entities to make a reasonable, good-faith effort to notify named beneficiaries after learning that an account owner has died. California is the first state to extend these types of protections beyond charitable beneficiaries to individual beneficiaries.
Gov. Gavin Newsom signed the bill into law on Sept. 27.
That means a solution that started with Valley Humane can ultimately help a parent who names a child as a beneficiary, someone who leaves an asset to a friend, or a donor who wants a final gift to reach an organization they care about.
There is also something everyone can do now: Make sure you have named beneficiaries on nonprobate assets and ensure someone knows about the account and who is named.
Valley Humane is known for animal welfare, and that will always be at the heart of what we do. But being a community nonprofit also means paying attention when we encounter a problem that affects the people around us.
We could have accepted our experience as frustrating and moved on. Instead, we asked whether the system could be better.
Now it will be.
Editor’s note: Melanie Sadek is president and CEO of Valley Humane Society and helped lead the effort to pass Senate Bill 1288.
