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Where does the money goes. Our church was built on property purchased by the congregation and it was a non-profit 501 c3 in Fl.

Miami, FL |

The pastor had a fall out with his wife and resigned. The wife re-assigned board members of the incorporation documents and eventually sold the property for over $850,000. She has paid off her home and purchased a new car. On her divorce she omitted the proceeds of the sale. Is she entitled to all of the $850000? Or is there something the congregation or founding Deacons can legally do?

Attorney Answers 2


Possibly. A review of the related documents, deed, by-laws, ect., would be needed to answer the question specifically to the situation you described.

However, the proceeds of a 501(c)(3) transaction can never inure to a private person. Depending on whether or not the Church was an entity with members would determine who may have the right to enforce the prohibition on private benefit. Typically though it would be handle by the Attorney General of the State, and the IRS. There are some very, very serious IRS penalties for those who violate the 501(c)(3) statute in such a manner.

Someone would have to bring this matter to the attention of the powers that be.

Again, a review of the appropriate documents would be needed to see if the situation you describe is a violation of the tax-exempt statues.

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The facts presented raise several issues in several areas of law. The previous answer, for example, focuses on the tax exempt issues. This answer addresses the property issue, only. In particular, it does not address the family law issue regarding the divorce of the pastor and his wife.

Your question states that the property was purchased by the church, presumably a Florida not-for-profit corporation; and, it is assumed that the deed was actually in the name of the church. It appears from your question that the allegation is essentially this: The wife, without approval from or knowledge of the church governing body, surreptitiously changed the church's articles of incorporation in order to sell the property and, after accomplishing same, she diverted the proceeds to her own personal use. Your attorney (and, yes, the church certainly needs to consult with an attorney) will want to review the deed, the articles of incorporation and any amendments thereto, the board minute book and other corporate records, and any other documents pertaining to the property and its sale.

In all likelihood, the facts may not be so straight forward, but from the question presented and the foregoing assumptions, there would appear to be a potential claim against the wife for fraud upon the church. There may be any number of other claims, such as breach of fiduciary duty or constructive trust, that are supported by any additional facts you are able to provide your attorney. In any event, it would appear in the best interest of the church and its members for the governing body to have the matter reviewed by legal counsel in an effort to protect its assets and avoid losing its 501(c)(3) status.

The answers provided are of a general nature and are not intended to be final or complete answers of any individual's legal questions. Other facts not considered may change the analysis or outcome. Do not rely on information presented herein to address your individual legal concerns. Your receipt of information from this website does not create an attorney-client relationship and the legal privileges inherent therein. If you have a legal question, you should consult an attorney experienced in that area of the law. The hiring of an attorney is an important decision that should not be based solely upon advertisements. Before you hire an attorney, you should request information about the attorney's qualifications and experiences.

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