Simple Gifts to Charities in Your Will
A Gift from Me to You: Simple Gifts to Charities in Your Will
The most common method of leaving a part of an estate to a charity is by a simple gift under a Will to the charity. This is where the person making the Will (“the testator”) simply leaves a gift to the charity under their Will, without resorting to more complex testamentary structures. However, there are many different methods of gifting under a Will.
One way of leaving a gift to charity under a Will is that of a residual gift where, after specific gifts and debts have been paid, the remainder of the estate (or part thereof) is left to one or more charities. This is popular as it means that other intended beneficiaries receive their gifts, prior to the charity receiving the remainder of the estate.
However, this method can create disputes if there is an unexpected change in a person’s financial circumstances prior to their death. For example, if a person has left specific gifts to their family members with the residue to pass to a charity, the testator’s family may be disgruntled if the testator’s estate unexpectedly increased in size after the Will was signed, leaving a larger share to the charity than possibly intended.
Specific and Pecuniary gifts
Pecuniary legacies (gifts of a specific sum of money) or specific gifts of particular assets (for example, real property, shares or stocks) are an alternate option for supporting charities under a Will.
By their very nature, these gifts are specific, so it is important that the assets being bequeathed are clearly identifiable. There is also the risk that the gift will fail (‘adeem’) if the relevant asset has been sold or gifted away prior to the testator’s death. It is, therefore, important that a testator review their Will on a regular basis in order to ensure that the provisions are still current.
Fractional bequests are where a certain fraction or percentage of an estate is gifted to the charity of the testator’s choosing. This is popular as the relative benefit the charity is to receive under the Will compared to other beneficiaries will be proportionally the same regardless of the changing financial position of the testator.
Whole Estate gifts
Where the testator has few (if any) surviving family or friends they may choose to instead leave all their estate to charity. Notwithstanding the philanthropic intention, a whole estate gift will often lead to estate challenges if the testator leaves a surviving partner and/or children who are eligible at law to make such a claim.
A contingent gift is a gift that depends on an event occurring. Typically, these are used to provide for an alternate beneficiary (for example, a charity) should the original intended beneficiary predecease the testator.
Common issues with simple gifts
Adequate description of charities
It is important that a testator’s Will is precise when referring to a charity. Lack of an adequate description can mean the recipient is uncertain and may require an application to the Court to resolve the matter.
In Gray v Australian Cancer Foundation for Medical Research  NSWSC 492, the testator left 95 per cent of his estate to “The Cancer Research Foundation”. The gift was unclear as a charity “The Cancer Research Foundation” did not (nor had it ever) existed. More than eight years following the grant of probate, the Supreme Court of New South Wales ruled that the gift be split equally between the Australian Cancer Research Foundation (which was called the Australian Cancer Foundation for Medical Research at the time the Will was made), the New South Wales State Cancer Council and the University of Sydney group The Melanoma Foundation.
There is the possibility that, between the making of the Will and the administration of the testator’s estate, the charity mentioned in the Will ceases to exist, changes its name or varies its operating structure. This can complicate administration of the estate or result in the gift failing altogether.
Family Provision Applications
With the increasing rate of family provision applications, testators should be mindful of how family members may react to the amount of the testator’s estate that has been left to charity. If family members feel that vast swathes of the estate have been left to charity with little provision for them, there is a risk they may challenge the testator’s Will. This can lead to the estate incurring considerable expense and delay in distribution as a result of the litigation.
If you are interested in including a gift to charity in your Will; if you are concerned about how you have gifted to charity in your Will; or if you simply wish to discuss your estate planning further, the experienced team at Bell Legal Group are more than happy to ensure that your wishes can be carried out considering all of your circumstances.
For further information and assistance on any estate planning or estate administration matter, please contact a member of our experienced Wills, Trusts and Estate Planning Team at Bell Legal Group on (07) 5597 3366 or simply fill out the ‘Contact Us‘ form below.
This article was written by Josephine Vernon, solicitor with our Estates team. Its publication is for information only, it is not legal advice nor is it intended to be.