Previous articles about the updated Planned Giving & Trust Services (PGTS) standards have given a broad overview of the recent changes. There are six new standards that organizations should pay close attention to, as most of them will require some effort to comply with before their effective date of January 1, 2023. This article will take a deeper dive into each of the new standards and will attempt to explain what the standard is, why it is important to follow, and how it can be applied in your office.
Standard #7.
An opinion has been obtained from an attorney licensed to practice in the applicable jurisdiction regarding the implications of the Health Insurance Portability and Accountability Act (HIPAA) and appropriate actions for the organization when serving as a fiduciary, successor fiduciary, attorney-in-fact, and any other related activity.
Most Planned Giving & Trust Services organizations in the United States know what HIPAA is, enacted on August 21, 1996, since it has been showing up on trust reviews for many years now. But, standard #7 is a new standard and it requires immediate attention to ensure all necessary HIPPA attorney opinions and releases are obtained by January 1, 2023.
What entities are covered? HIPPA applies to health plans, health care clearinghouses, and health care providers. Essentially any organization a fiduciary must communicate with to pay medical bills on behalf of a donor is covered by HIPAA. Getting the information necessary to pay bills will be almost impossible if you do not have a HIPAA release as a fiduciary.
What is covered? “The Privacy Rule protects all ‘individually identifiable health information’ held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper, or oral.” The Privacy Rule calls this information “protected health information (PHI).” (U.S. Department of Health & Human Services, hhs.gov/hipaa, accessed October 20, 2020)
What does standard #7 require? Your organization must have an attorney opinion letter that states how your organization relates to HIPAA in your area in the context of the fiduciary services you provide your donors. If you do not yet have this legal opinion, contact your attorney now to start the process of creating one. With the necessary legal opinion in hand follow the attorney’s counsel by reviewing all your fiduciary files and ensuring you have the proper documentation or HIPAA releases when necessary.
Standard #11.
All disclosures required under the Philanthropy Protection Act of 1995 are provided to each applicable donor at the time of donation.
For a full explanation of the history and reasons for the Philanthropy Protection Act of 1995 (PPA), see the link below from the American Council on Gift Annuities (ACGA).
Standard #11 deals with disclosures required by the PPA for life income gifts. Those gifts include, but are not limited to, charitable gift annuities (CGA), charitable remainder trusts (CRT), and any other life-income gifts. Even though there is currently very little enforcement of the requirements of the PPA, at some point in the future that could change. Seventh-day Adventist organizations must comply now to avoid problems later. You will need to follow your attorney’s directions if the disclosure is necessary for gifts written after 1995 to the present.
Sample language for a disclosure letter may be found on the ACGA link below. Your attorney will need to review this language annually to assure compliance with local laws.
Sample Gift Annuity Disclosure Statement
Note that if you do not offer planned gifts to your donors, or the state that has jurisdiction over the CGA (usually the state where the donor lives) has opted out of the PPA, standard #11 may not apply to your organization. This could change as it did in Maryland, opting out initially then reinstating the PPA.
The required donor disclosure could be added to the life income gift application that the donor signs to acknowledge that the donor received the disclosure letter. All this documentation would then be added to the donor file.
Standard #16.
The organization has a PGTS gift acceptance policy approved by governing Board or committee.
To comply with Standard #16, your organization is required to have a written gift acceptance policy that your governing board has approved. The vote should appear in the minutes of the appropriate committees and boards.
Many organizations already have gift acceptance policies. For those who do, we suggest you review these policies to be sure they comply with local law, scripture, Ellen White’s counsel (see “Counsel on Stewardship” section 7), and your organization’s values.
The General Conference is preparing guidelines for gift acceptance policies. These guidelines should be available as an example before January 1, 2023, when this standard becomes effective and organizations are expected to comply with it. When available, these gift acceptance guidelines will be made available on the staff.willplan.org website, in the NAD PGTS Quarterly Newsletter, and eventually in the PGTS Manual.
Standard #17.
Written requests are obtained and appropriately verified by a method approved in writing by legal counsel who is authorized to practice in the applicable jurisdiction for the transfer or return of any original legal documents.
The question is asked, “Does an email count as a ‘written request’ for return, cancellation, or revocation of original legal documents that SDA organizations have stored in their vaults?” As with most legal questions, the correct answer is “it depends.” Standard #17 directs each NAD organization to have a written attorney opinion for handling and verifying these requests.
If your organization follows your attorney’s instructions on verifying that the person is who they say they are and is authorized to make the request, the organization will have complied with Standard #17. These instructions may allow for requests to be made by email, but will typically require some verification process where the donor is called at a known number, or some other method prescribed by the attorney. Most organizations have not had such instructions from their attorney about verifying written requests in the past. Start now to review and have your attorney give guidance on how to comply with this new standard.
Standard #18.
To consider a will no longer valid documentation must be in the file approved by legal counsel who is authorized to practice in the applicable jurisdiction.
Standard #18 is added by popular demand. Many organizations have thousands of wills in their files, but upon closer inspection, some have found that only a small minority of wills are signed, valid, and active, with contact still possible with the testator. Standard #18 gives direction on how to handle wills that may no longer be active. Start by seeking direction from your attorney for the process that should be used when a will appears to be no longer valid. Then follow the process to invalidate the will and provide the necessary documentation to substantiate the work you have done.
Your attorney’s opinion may be incorporated into a checklist used in your organization to cancel or inactivate a will. In some instances, your attorney will need to give specific counsel for the time frame that should be used to invalidate documents. For example, if the will was executed more than a specified number of years ago. The time frame may be different for the various situations that present themselves in your files.
Here are some examples of situations that might make a will invalid.
- Will documents not signed by the testator(s)
- Testators who cannot be located
- Wills over a certain age (could be 100 years) with no recent contact from the testator.
- The testator has created a new will
- The testator is deceased and their estate has been probated
Standard #23b.
Electronic files held in a fiduciary capacity and other legal documents are properly backed up and secured per organizational policy approved by the governing Board or committee and legal counsel.
NAD Working Policy BA 70 10.6 Record Retention (Voted in 2019)
6. Planned Giving & Trust Services programs, trusts, wills, charitable gift annuities, and other estate planning documents shall be retained permanently in their original form. Other documents including information worksheets, accounting reports, tax returns, correspondence, email messages, and other routine materials may be retained in a secure and accessible electronic form. This policy shall be reviewed periodically, e.g., every three to five years.
Standard #23b was added to the standards in response to organizations’ requests to electronically archive informational documents. The common complaint from organizations was that the amount of paper being stored required the building of additional storage buildings. Now there is a solution for the paper monster, but your organization must have a policy regarding the electronic storage of your documents and it must be approved by your governing board to implement Working Policy BA 70 10.6.
Once you have the approved policy that allows for electronic storage of informational and other types of documents, then the confidentiality, privacy, security of these sensitive documents must be constantly defended.
As has been noted in the news lately, not paying attention to cybersecurity can result in significant financial losses to secure data that has been hacked. Keeping your donor’s personal information safely away from hackers must be a priority if your organization chooses to use electronic means to store documents. Many organizations found that storing documents electronically was a great advantage when offices were closed during the pandemic. Some offices found that hackers also saw a benefit to accessing these files remotely.
Millions of dollars and much time and negative publicity resulted from the loss of data. In the Washington DC area, fuel prices spiked for several weeks because of one of the breaches in electronic data security. Standard #23b states that all organizations storing PGTS documents electronically are required to have a plan for the security of these documents. The governing boards must vote on this plan, and the vote must be documented in the organization’s minutes.