Gifts to Charity: Avoiding the Pitfalls

Will makers leaving gifts to charities have always played a large role in enabling these organisations to continue supporting the disadvantaged throughout history. Some testators opt to leave the entirety of their estates to charities, usually where they do not have any surviving family members, but more commonly, will makers will leave a gift of cash or shares to their favoured charities.

However, there are specific rules that must be followed when drafting a will which contains charitable gifts. For example, the name of the charity must be described correctly in the will to ensure the gift goes to its intended beneficiary upon the will maker’s death. It is common for the official name of a charity to differ from its “common” name.

For example, will makers intending to leave a gift to the Salvation Army should be aware that there are multiple charities registered with the Australian Charities and Not-for-profits Commission under the Salvation Army “umbrella”. It is important for the will maker to consult with a lawyer to ensure that their gift goes to its intended recipient as gifts to a charity which has been named incorrectly in a will can lead to the gift failing.

Issues can also arise where a charity has ceased to exist at the will maker’s death. As such, it is highly recommended that a clause is included in the will that gives the executors the power to pay the bequest to another charitable organisation which best fulfills the purpose of the original gift. Failing to do so can leave your executors in the unenviable position of having to make an application to the Court for directions as to how to deal with the gift to a charity that no longer exists or has changed names since the will was made, which can be a costly endeavour.

In Estate of Polykarpou; Re a Charity [2016] NSWSC 409, the deceased left half of her entire estate to Oprah’s Angel Network, which had ceased operations five years before the deceased’s death. The Court determined that the gift was charitable in nature and that a cy-pres (“as near as possible”) scheme be established to distribute the gift to a similar charitable interest.

There are also other underlining considerations that must be given when making a gift to the charitable beneficiary, including tax considerations.

As such, it is highly advisable that an experienced Wills & Estates lawyer is consulted if you wish to leave any charitable gifts in your will. If you wish to include a gift to a charity in your will, please contact our Wills & Estates team: Charles Beresford, Sue Biggs, Leon McEvoy or Loretta Cooper.