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Charitable Gifts in Wills

Family group

By Mitchell Evelyn

Leaving a gift to a charity in your Will can be a great way to provide generous support which might ordinarily be outside your financial means. As with any other gift in your Will, it is important to make sure that any charitable gift is clear, well considered and carefully drafted to ensure that your wishes are carried out after you have died.

Here are some of the key issues that you may wish to consider:

[accordion clicktoclose=true tag=p][accordion-item title=”Why give to a charity in your Will?“]

The main reason people tend to give to charities in their Will is to support a cause which they care about.

However, we often see people include charities in their Will for other reasons. For example, a gift can be left to a charity contingently on certain other gifts failing in the Will. This process uses the charity as a safeguard to prevent the gift going somewhere the Will maker did not intend.

For example:

Mary is a single person with one son named Jack. Mary wants to leave her whole estate to Jack, and puts this in her Will. However, Mary and Jack both die at the same time in an accident and Mary’s gift to Jack fails. The statutory intestacy formula applies and Mary’s whole estate goes to her brother, who Mary does not get along with and would not wish to benefit under her Will.

Mary could instead provide in her Will that she leaves her estate to Jack, or if that gift fails, her estate will instead go to a charity of her choice.

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People choose charities carefully – often because they have either given to that charity regularly during their life or because they feel a close connection to the work done by that charity.

Before leaving a significant gift to a charity, you should investigate that organisation and make sure that you are comfortable with them. You should certainly ensure that they are a legitimate charity, and also be comfortable with how they will use your gift. Many charities will be very happy to speak with you over the phone and explain how your bequest might be applied if you do leave them a gift in your Will.

You should also be precise in identifying the charity – for instance, by including its Australian Company Number  (ACN) or Australian Business Number (ABN). You should also keep in mind that some charities are administered as a group of state or territory organisations, so ensure that you nominate the correct one in your Will.

You may also wish to include substitution provisions, to allow for your gift to be made to a similar charity to the one you have nominated in the event that the charity no longer exists at the date of your death.

For example:

Mary leaves a gift to a local charity which helps to take care of people’s pets if they become seriously ill and can no longer do so themselves. This is a small charity, and after its founder passed away, the charity was wound up.

Mary’s Will includes a substitution clause, which provides that if a charity she has nominated no longer exists when she dies, then her Executor may give the gift to another charity of a similar purpose. Mary’s Executor instead makes the gift to the NSW RSPCA.

[/accordion-item][accordion-item title=”Purpose of donation“]

The conventional wisdom is usually that charities prefer to be given gifts which are specified as being “for their general purposes”. This permits the charity to decide how and where that donation is applied – some may go to the general overheads of the charity, and the rest may go into various projects or services being offered by the charity.

If you intend to make a bequest which is intended to serve a particular purpose – for instance, a gift which is expressed to specifically be for the purposes of assisting research into pancreatic cancer – it would be best to contact the charity directly and confirm that they are able to direct your donation to that specific purpose.

[/accordion-item][accordion-item title=”Recommended clauses“]Many charities provide a recommended or preferred clause which they suggest using in your Will when making a gift to that charity. Some of these recommended clauses are better than others, however they may not be right for you without some small alterations. These recommended clauses should be treated with care and should only be included in your Will with proper legal advice.[/accordion-item][accordion-item title=”Family Provision Claims“]

The Family Provision Act 1969 (ACT) and Part 3 of the Succession Act 2006 (NSW), as well as equivalent statutes in each State and Territory, provide mechanisms for certain people (including close family) to challenge a Will in cases where they have not been afforded adequate provision under the Will.

You should be cautious if leaving a significant portion of your estate to a charity if that gift is at the expense of your children, spouse, or another person who you might be expected to provide for in your Will. If you do intend to substantially benefit a charity over people who are eligible to make a claim on your estate, this should be done only with very carefully considered legal advice from one of our estate planning experts.

For more information about when a person might be eligible to bring a Family Provision Claim against an estate, please see our article  Disputing a Will: When can a person apply for provision out of an estate?

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Elringtons Lawyers are big believers in giving back to our local community, so if you are considering leaving a gift to a charity in your Will, call elringtons experienced Estate Planning team on (02) 6206 1300 and make an appointment today. For information about elringtons’ partner charities, see our community page.

For more information or to make an appointment in either our Canberra or Queanbeyan office please do not hesitate to contact Mitchell Evelyn or Kerin Cotchett:

+61 2 6206 1300 | e: info@elringtons.com.au

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