ESTATE & FINANCIAL PLANNING
Integrating Religious Considerations into Estate and Real Estate Planning
Diversity encompasses not only gender, race, and ethnicity, but religion as well. Diversity efforts can and should extend to actual practice, not merely to law firm hiring. This can be done by integrating religious concerns into drafting and planning documents when a particular client’s sensitivities indicate that those concerns be addressed.
Real estate planning and drafting issues. A host of issues arise in common real estate transactions and documents that can be addressed by tailoring the documents to encompass religious sensitivities. The following is a summary of a few of these.
In preparing bylaws, shareholder agreements, and similar corporate or business documentation, consideration should be given to scheduling annual meetings and transaction closings on dates that do not conflict with members’ religious observances.
If the client is involved in a particular business and wishes to conform the operations of that business to certain religious precepts, then the governing documents for that entity should include a general directive that operations should conform in all respects to those precepts. One step that can be taken in many transactions, and which often will suffice to satisfy the client’s religious concerns, is to add a recital clause to a document indicating the client’s desire that the transaction, entity, or other matter be conducted with consideration to religious sensitivity. A more specific approach would be to modify specific provisions in an agreement to incorporate religious requirements.
A number of faiths raise issues with dispute resolution. In lieu of an arbitration clause, a religious dispute resolution mechanism could be tailored to the situation. This issue may be of particular concern for clients who are Buddhist or of the Baha’i faith. Also, clients from particular faiths may have a preference for a clause that calls for arbitration before a private religious body, for example a beth din (Jewish court) for an Orthodox Jewish client, rather than leaving the parties to resort to suit in a secular court. The provision may be in the form of a mandatory arbitration clause in accordance with religious standards or before a religious body, or for some clients, a mandatory, nonappealable religious arbitration.
Jewish and Muslim traditions raise prohibitions and restrictions on the charging of interest. Although these have generally been ignored in modern commerce, they have not been entirely ignored, and for a meaningful number of clients these issues are of importance. Thus, in structuring a real estate transaction for a Muslim or Jewish client, issues of how the transaction can be structured to recharacterize or avoid interest charges should be addressed when the client desires.
When drafting a tenants-in-common or similar agreement governing the use or ownership of a jointly used vacation property, religious sensitivities may be important to address. For example, three families purchase a beach house for shared use. An agreement governing the use of the vacation home is prepared. In addition to the usual issues concerning repair and maintenance and financing, provisions addressing religious sensibilities can be incorporated into such an agreement. Dates can be rotated to consider religious holidays. Religious dietary restrictions can be mandated for observance in the kitchen. Property financing can be required to be structured to comport with religious restrictions against charging interest.
Estate planning and drafting issues. A myriad of provisions, documents, and planning steps encountered in common estate plans may warrant modification to address a client’s religious concerns. Many advanced estate planning techniques require consideration of the prohibition on interest charges already discussed. Other common modifications are highlighted below.
One of the most important decisions for a client is the selection of fiduciaries that have one or all of the following: knowledge of the particular faith, affiliation or observance of that faith themselves, and sensitivity to the specific needs of the heirs in light of the client’s religious goals and objectives. In many instances, the person who best fits these criteria will not be the person best suited to handle investment and other fiduciary responsibilities, so that a combination of an individual fiduciary sensitive to religious concerns and an institutional co-fiduciary may be called for. The client’s selection of fiduciaries has a profound effect on the client’s ability to transmit values. The fiduciaries’ context should not include only trustees but also agents under a power of attorney and health care directive in the event that a chronic illness or other incapacity results in these powers being the operative document for many years.
Agents and fiduciaries should be given guidance, and granted legal authority, to disburse funds for religious education, charitable giving, and other purposes consistent with the client’s religious goals. Boilerplate distribution provisions will not suffice.
Every religion advocates the virtues of charity, but charitable giving can be tailored to reflect the unique nuances of a particular faith. Although many religions mandate tithing a certain percentage of income or assets to charity, others provide more specific standards.
Perhaps the single phrase in all of estate planning that has more potential religious repercussions than any other is the mandate in a living will or health care proxy that “no heroic measures” be taken. Apart from the definitional issues of the phrase, clients with religious sensitivities should be queried for appropriate modifications. Although some religious clients may assume that they cannot ever withdraw life support without violating their religious standards, this often is not correct. The answer is often more complex and so fraught with religious nuance that practitioners should adopt the standard language provided by the client’s faith.
A woman of childbearing age should carefully address the issue of pregnancy in her living will and/or health proxy because medical decision making concerning a mother and her fetus varies greatly among different religions. Generally, Catholicism proscribes taking direct action that would cause the death of the unborn child or the mother because all life is sacred and the right to chose is in God’s hands alone. Unless this matter is expressly addressed in a living will, no one may know the degree of the client’s devotion. In contrast, under Jewish and Islamic law, saving the mother’s life is generally given preference to that of the fetus.
Most religions provide for post-death rituals and law. Some religious traditions may be impossible to carry out in a medical or health care facility, so it could be quite important to make advance arrangements to spend one’s last days at home or in a hospice sensitive to these religious beliefs. Likewise, many patients and health care providers view the alleviation of all pain to be an essential and ideal objective. However, the customs of the Orthodox Christian Church encourage adherents to be lucid during their last days so that they may be free to confess their sins and receive Holy Communion. Excess pain relief could undermine this. A sensitive balancing of important goals is thus required.
A secular will may have to be modified to reflect the Baha’i, Jewish, Islamic, or other religious laws of inheritance. Both Islamic and Jewish legal traditions include detailed provisions on how inheritance must be handled. Although similar, they are typically applied in quite different manners in drafting wills. These provisions need to be coordinated with tax, estate, financial, and succession planning, as well as ethical concerns.
Finally, the Prudent Investor Act and the investment provisions of the governing document should be tailored to permit a religious or socially oriented investment strategy, if that is appropriate for the client.
For More Information About the Real Property, Trust And Estate Law Section
- This article is an abridged and edited version of one that originally appeared on page 34 of Probate & Property, March/April 2008 (22:2).
- For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.
- Website: www.abanet.org/rpte.
- Periodicals: Probate & Property, bimonthly magazine; Real Property, Trust & Estate Law Journal, quarterly journal; and the new, bimonthly RPTE e-Report.
- CLE and Other Educational Programs: Watch out for RPTE’s monthly CLE teleconferences; for more information, please visit our website.
- Books and Other Recent Publications: From Handshake to Closing: The Role of the Commercial Real Estate Lawyer; Title Insurance: A Comprehensive Overview, 3d ed.; The Insured Stock Purchase Agreement, with sample forms, 2d ed.; An Estate Planner’s Guide to Qualified Retirement Plan Benefits, 4th ed.
Martin M. Shenkman is a member of the New Jersey firm of Martin M. Shenkman, P.C. He may be reached at email@example.com.