Can charities function as a bankruptcy shield? Take Bill Gates as a hypothetical example. He wants to avoid estate tax, bankruptcy or anything else taking his assets. He created a charity and his children can run it and collect a salary. If the Gates' estate is insolvent does the charity still function? Does it effectively provide an asset shield and allows his children to collect a salary?
Jurisdiction: england-and-wales Charity law A charity must only allocate its resources in pursuance of its charitable objects. Providing a &quot;bankrupcty shield&quot; to a donor is not capable of being a charitable purpose nor does it meet the public benefit requirement pursuant to sections 1 and 2 of the Charities Act 2011. Bill Gates as a trustee While a charity can pay a salary to its employees, it cannot usually pay its trustees a salary, and its trustees must avoid conflicts of interest. Where a trustee is related to an employee, there is a clear conflict of interest if that trustee takes part in any decision making process which sets the employee's salary. The standard procedure is that any conflicted trustees should sit out of such decisions. If the charity pays a salary far in excess of the market rate for the role, the trustees will open themselves up to being sued by the Attorney General (representing the public / beneficiary) for misallocation of charitable funds. Bill Gates cannot therefore lawfully use his position as trustee of a charity in E&amp;W to ensure that money which he donated is received by his family members via artificially inflated salaries. Bill Gates as a donor If a charity intends to claim Gift Aid on donations then the donation must be non-refundable, pursuant to sections 414(1), 416(1), and 416(3) of the Income Tax Act 2007. In any case, a donor will have no power to compel a charity to return a donation unless the parties entered into a contract to that effect. If no such contract is in effect, then any money Bill Gates has given to the charity is unrecoverable and must be used to further the charity's objects. If such a contract exists, then the adminstrators of Bill Gates' bankruptcy will be able to recover the funds under the contract and use it to pay his creditors, so such an arrangement is useless. Insolvency Act 1986 Under Sections 339 and 441 of the Insolvency Act 1986, the courts can make an order to reverse any transactions at an undervalue (including a gift) which have taken place in the 5 years prior to a bankrupcty (in the case of insolvency) or in the 2 years prior (regardless of insolvency). There is a rebuttable presumption of insolvency under the 5 year rule in cases where the transaction involved an associate of the person. See section 435 for the definition of &quot;associate&quot; which can include relatives, beneficiaries of a trust, and [charitable] companies. This serves to prevent individuals from taking deliberate steps to distribute their assets in advance of a predicted bankruptcy. If the Gates' estate is insolvent does the charity still function? Pursuant to section 34(1) of the Charities Act 2011, a charity will continue to function so long as it remains charitable and hasn't ceased to exist or operate. A charity could cease to exist if the underlying structure no longer exists. In the case of a charitable trust this could happen if all the trustees die without replacement or in the case of a charitable company if it is struck off the register (e.g. if all the directors die and are not replaced). It is unlikely that Bill Gates' estate being insolvent will cause the charity to cease to exist or operate as it will almost certainly have or acquire independent trustees / directors to keep it operating.
@Rick aptly answers your first question (and I totally agree with his answer including his conclusion that the cited provisions apply to single member LLCs). So, I'll touch on issues associated with your second one. Would there be anything legally wrong with my intentionally wasting the company's money or doing something similarly pointless and harmful to the business, considering I'm the only actual person (as in human, not legal person) who is harmed in any way? If the way you use the money wastefully is considered by a court to be a de facto distribution by the LLC to you, its sole member, and this renders it insolvent (as defined in ORS 63.229 (Limitations on distributions), you could have personal liability for the distribution to the company. See ORS 53.235. Creditors of the company could then garnish that obligation to collect their debts owed to the company from you (a garnishment is technically a right to obtain money or property from someone who owes a debt to a judgment debtor, usually a bank or employer, but not always as in this case). Intentionally wasting the company's money would probably constitute a &quot;fraudulent transfer&quot; on the part of the LLC which could expose you to liability to third-party creditors if those actions left the company unable to pay its debts as they came due, or with assets with a fair market value that was lower than the fair market value of its current and currently anticipated liabilities. This parallel liability would arise under the Oregon Fraudulent Transfers Act and related provisions of Oregon law found at ORS 95.200 to 95.310. If you were anticipating or in the process of divorcing, it could constitute economic waste that could be held against you (treating the wasted assets as if they still existed and were allocated to your in a property division). Likewise, if the waste reduced your income for child support purposes, a court would seriously consider imputing the income you could have had if you had not acting in that matter to the income you actually had, in order to calculate your child support obligation. And, you might be disallowed a deduction for the waste of the company's money, rather than having it treated as an expense, which could increase your income tax and self-employment tax liability. But, to the extent that you are the sole owner of the company, no creditor, spouse or child has rights impaired by your actions, and you don't claim the wasted assets as income tax deductions, there would be no one with standing to complain about your conduct in court.
In general, no, if you make a will then you can revoke that will while ever you are still legally competent. Also, in general, this is a good thing. For your first example, you are ruling out all possibility of redemption - people change: a person who is a selfish a*$%^#@e in their 20s may be a kind, caring, dutiful and loving person in their 40s. For your second example, what if XXX gets demolished? Or you move cities? If you are truly serious, you can transfer all your assets to a trust, put your instructions in the trust deed and then nominate someone you really, really, really trust to be the trustee. This would prevent you modifying the instructions but you are then relying on the trustee interpreting them.
They fail as a business and the debt passes to another bank. There is a massive banking catastrophe and most banks fail. Companies do not cease to exist because they are in bankruptcy. Typically a caretaker management is set in place (elected either by the borrowers or the judge overseeing the bankruptcy) to avoid the loss of value during those proceedings. Usually a company in bankruptcy has to reduce its operations because it will find it difficult to get resources to continue its usual operations. But it could continue those operations that are still expected to provide a profit. It would not be unusual for the caretaker manager to ask more funds from the borrowers in order to ensure that they do not lose even more of the value of the company. I would say that debt collection is profitable enough to keep it running, at very least to cover the minimal legal requirements so that the debt does not expire. And at the very least, the debt can be sold to a debt collection agency or another bank, outside of the bankruptcy proceedings (then the net value of this sell is what will be passed on to the borrowers). It will give a small profit for the original company, but at almost no cost or risk for them. Also, the debt holder would have no incentive to collect if it was in bankruptcy proceedings and didnt own anything. You are confusing managers with owners. The people deciding what to do are the managers, and even in bankruptcy managers still owe fiduciary duty to their business. In fact, in general there is no need for the manager of the company to &quot;own anything&quot; of the company they manage, yet they have to work to improve its situation. If a manager negligently caused the company to cause value, he could be sued for it. Even if he is not sued, it would look very bad for him when looking for a new job. In any case, this is not different than the shop across the street going out of business. Have you seen any of them putting a sign telling &quot;We no longer own anything, so come here and help yourself whatever you want for free&quot;? No? A credit card company would not do that, either.
Good news: it behaves like a legal entity. An estate is a collection of assets and liabilities that belonged to the deceased. The collection behaves a great deal like an LLC or other legal entity, although states don't call it that. The collection is isolated from anyone else's collection of assets and liabilities. For instance, it's not part of the executor's personal assets, nor liabilities. That's very important because... If the collection is sued e.g. by a creditor, the suit can only make claims against assets in the &quot;collection&quot;. That is to say, the executor's own assets are not at risk. That's very important if you're thinking about volunteering to become an executor or manager of a trust. You can do so without fear of personal liability. Asterisk here *, but don't panic, it's a harmless asterisk. The collection can buy and sell goods and services (more the latter generally). A typical service purchased by an estate is storage unit rental. The collection can hire, fire and generally do business. Consider an estate which owns an apartment building. Life goes on: rent must be collected, utilities paid, leaky toilets fixed, contractors and managers hired and fired. In this case, the estate is a going-concern business behaving a lot like an LLC. The collection/estate could potentially do business indefinitely, if the will of the heirs is to continue doing so. This might happen if splitting the assets equitably amongst the heirs wasn't possible (e.g. the estate of Leonard Cohen collects a lot of royalties)... or too complex to easily back out of (say: the deceased owned 5 McDonalds franchises and had bet the farm on opening two more; backing out now would bankrupt the estate, so the estate might oddly open two McDonalds.) The collection can also sue, and proceeds from the suit or settlement go into the collection. Asterisk again. * The collection has its own Taxpayer Identification Number (aka SSN or EIN). The collection files its own 1040 tax form, and may do so for years or even decades. The point of all these practical examples is that an estate looks, walks and quacks like a &quot;legal entity&quot;. To the point where the IRS even calls it one. And to a boots-on-ground executor, manager or trustee, the reality is it handles like a legal entity, and the experience you have managing legal entities will largely apply, almost in full. Almost. * Now, that asterisk. Due to state court rules in many states, if you attempt to sue an estate, you have to use the right name. And that's what this question is all about. It's a naming convention, and that is all. And courts treat it as such. Take Roe v. Wade. &quot;Roe&quot; is an adaption of &quot;Doe&quot; as in &quot;John Doe&quot;. Wade, however, was the district attorney of Dallas County at the time of filing. Wade wasn't being sued personally. It's just the quirky naming convention the court uses. What you have identified is a similar quirk in court rules, where instead of suing Estate of John Q. Example, the syntactically correct thing is to sue Jane Doe, in the capacity of, Executor of John Q Example's estate. And the italic parts are optional, because the court knows that. Why is this important? It's not important, and that's what the Florida Court of Appeals said in florida Spradley v Spradley 213 So. 3d 1042 (Fla. Dist. Ct. App. 2017. The plaintiff had made exactly the above error: suing &quot;the estate of&quot; instead of suing &quot;Derreck Spradley et.al. (implied: in their capacity as executor)&quot;. The judge threw out the case, saying in essence &quot;You forgot to &quot;dot an i&quot;. The appeals court said no, the distinction is trivial and the court should have simply let the brother &quot;dot their i&quot; and continue with an entirely valid case. In other words, it was a distinction without a difference. So if sued, the executor should not panic about being &quot;named personally&quot; in the suit - you're not personally liable. And it is a waste of time to pick nits over how the name of the defendant is spelled, so says the Florida court at least... and in my humble opinion that precedent would be well received in other state courts, as it avoids wasting docket time and citizen filing fees on an action that will simply be re-filed correctly the next day. Not a license to cheat, however. One way an executor can manage to create personal liability is to abuse or mishandle the role with extreme negligence. In that case, yes, the executor's personal assets could come under fire, basically as punishment for misdeeds. An executor who is careful, honest and gets help when needed won't have any trouble at all.
Whether or not the estate has an obligation to pay the mortgage is really dependent on the terms of the estate plan and the solvency of the estate. The fact that someone is on the deed to a property (whether a deed of gift or a transfer on death instrument) that automatically passes upon death of the original owner to a relative has little or nothing, really, to do with the estate plan. While it may have been part of the person's ultimate plan for the disposal of their assets in life and at death, that is different than being part of the actual estate plan, which deals with the disposition of assets upon death, setting out the wishes of the deceased as it pertains to all property. There are lots of people who end up in this position, even though the original person on the deed did not intend to purchase or leave the other any property. It happens a lot when say a child does not have adequate credit to secure a mortgage to buy a home, but has the money to pay a mortgage. So, in that scenario usually a parent or grandparent will put the mortgage in their name (the other will live there and pay the mortgage) and then in the event the "helper" dies, they have it pass to the other at death, either thru a "TOD" or a "joint tenancy", so that in the event they die intestate, or if the will is challenged, there will be no question who owns the house...the equity in it, anyway. It (the instrument) is its own separate entity, not subject to the will except to the extent the deceased makes it subject (I'm getting to that part). Like a life insurance policy, that pays on death but is not subject to any terms of the will, it can stand alone since deed is its own instrument, separate from any wills or trusts. Under federal law, the mortgage must be allowed to remain in effect without changes when it passes from one person to another because of a death. This negates any due-on-sale clause in the mortgage. Who pays for the remainder of what is owed, however, generally depends on the deceased's will. The will might stipulate, for example, that the heir receive the home, free and clear, with the estate to pay all monies due. In this case, the executor will either use liquid assets, or sell other non-liquid assets in the estate to pay off the mortgage. Other times, it will say that the heir get the equity, plus X amount of dollars, which the heir can put toward the home's mortgage or not. If the will is silent on the issue, it is the responsibility of the heir/person to whom the property transfers (they needn't even be an heir) to pay the mortgage upon its normal term due, or sell the property to satisfy the debt. In the event the property is worth less than the remaining mortgage, the bank will usually take the house in "deed in lieu of foreclosure" rather than seek overage from the estate.
The actions that constitute patent infringement do not depend upon whether or not the infringer is a nonprofit or not. Disgorgement of profits is one possible remedy for patent infringement, and if the entity made less profits than a for profit company might have under similar circumstances, from the infringement, that particular remedy would be likely to be smaller. But, this would not preclude other remedies such as a reasonable royalty or profits lost by the patent holder due to reduced sales, or injunctive relief.
Expanding on @Rick's answer, the UK government does not hold all of its money in an undifferentiated general fund (although much of it is held that way). In non-profits and government, one generally uses &quot;fund accounting&quot;, in which particular pots of money can only be used for particular purposes and the government keeps track of how much money is held in each fund. In this case, credit in a fund for cabinet operations would be transferred to a fund for privacy violation fines whose disposition would be set forth either in the Data Protection Act (2018) itself, or in some other piece of legislation (perhaps statutes on court administration) setting forth how funds collected as fines are used. This said, the intuition of the question isn't wrong. When one part of the government fines another part of the government, especially if the fine has the impact of preventing the fined part of the government from carrying on necessary governmental operations, the economic effort of the fine can be swiftly wiped out in the next annual appropriations bill, or in an interim emergency appropriations bill, if necessary. And, if the individual offenders who committed the violations aren't penalized, this may not be a very effective incentive to bring about compliance with the law. Of course, even if the economic incentive that the fine creates to comply is negligible, this doesn't mean that the symbolic and political cost of holding a government agency accountable in the same way that a private firm would be held accountable, that indicates the magnitude of the wrong done, is meaningless for the politicians running that agency.