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to the Foundation. Lurking behind the Commissioner’s argument is
the intimation that this will increase the probability that
people in Hamilton’s situation will lowball the value of an
estate to cheat charities. There’s no doubt that this is
possible. But IRS estate-tax audits are far from the only
policing mechanism in place. Executors and administrators of
estates are fiduciaries, and owe a duty to settle and distribute
an estate according to the terms of the will or law of intestacy.
See, e.g., S.D. Codified Laws sec. 29A-3-703(a) (2004).
Directors of foundations--remember that Hamilton is one of the
directors of the Foundation that her mother created--are also
fiduciaries. See S.D. Codified Laws sec. 55-9-8 (2004). In
South Dakota, as in most states, the state attorney general has
authority to enforce these fiduciary duties using the common law
doctrine of parens patriae.15 Her fellow directors or
beneficiaries of the Foundation or Trust can presumably enforce
their observance through tort law as well.16 And even the
Commissioner himself has the power to go after fiduciaries who
misappropriate charitable assets. The IRS, as the agency charged
with ruling on requests for charitable exemptions, can discipline
15 George Gleason Bogert & George Taylor Bogert, The Law of
Trusts and Trustees, sec. 411 (rev. 2d ed. 1991).
16 See for example Zastrow v. Journal Communications, Inc.,
718 N.W.2d 51, 63 (Wis. 2006), where the Supreme Court of
Wisconsin held that a breach of the fiduciary duty of loyalty is
always an intentional tort.
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