Last year we ‘participated’ in the 2023 Sydney Marathon. For the curious – most of us did the 10 km run in times ranging from 47 minutes to just over an hour, but one of us actually ran the full 42 kms, ably assisted by one who looked after the water bottles whilst sitting in a café overlooking the course!
Why are we telling you this? Well, we, like many of the participants, also took the opportunity to fundraise for charity. Looking at the results, it is clear Australians are generous. Every day we see that generosity reflected in our clients’ Will making where charities are often the object of gifts. But sometimes, notwithstanding the best intentions, the charitable gift doesn’t make it to the intended beneficiary. Why?
Identification
Correctly identifying the charity is very important. Some of the more common issues we see in Wills are:
Charities often have similar names or similar purposes: There may be multiple charities supporting a particular issue, for example the Breast Cancer Network Australia and the National Breast Cancer Founation. If you leave a gift in your Will merely to ‘the Breast Cancer Charity’ it is very unlikely your executors will know which one, you mean. In these circumstances, your gift may not make it to the intended beneficiary.
Identifying the charitable arm of an organisation: Schools, hospitals and universities, to name a few, are made up of different legal entities not all of which can receive charitable donations. For example, you may wish to make a gift to the hospital that looked after you when you were ill. However, the hospital may comprise of its operating or trading entity that makes sure there are beds for patients and doctors to operate on them and a foundation with a fundraising purpose that receives donations which can be directed to the research, work or facilities of the hospital. In these cases, you should make your donation to the foundation not the operating arm of the hospital.
Multiple charitable entities: Some charitable organisations, may be structured to service different geographic areas, for example the Royal Flying Doctor Services which is made up of seven legal entities operating around Australia. Each of the entities are independent, both financially and operationally, with their own Board and management. If you wish to benefit for example, the SA/NT branch, you need to direct your gift to the entity that is established for that purpose.
Charity ‘no longer exists’: What happens if, at the time of your death, the charity you wish to benefit has merged with another charity to form a different legal entity, or even ceased to operate entirely? To avoid a gift failing in these circumstances, we recommend that your Will contains a power allowing your Executor to apply the bequest to another charity that fulfills the same purpose as the intended beneficiary. You may need to investigate what activities are conducted by the charity and perhaps state a purpose for which the bequest is to be applied (see below).
What can you do? Make sure, in your Will, you put the correct name of the Charity, its Australian Company Number (A.C.N.) or Australian Business Name (A.B.N) and address. This information can usually be found on the charity’s website, by contacting the charity directly or by doing a search on the Australian Charities and Not-for-Profits Commission (ACNC) website.
Conditional gifts
We often see people making gifts to a charity to be used for a specific purpose, for example, ‘I give $x to the University of Adelaide for the purposes of supporting macular degeneration research conducted by Dr X’ or ‘I give 20% of my estate to the Adelaide Zoo for the purpose of maintaining the elephant enclosure’. At the time of the death of the Will maker, the research project may have been concluded or the zoo may no longer have an elephant enclosure. In these instances, the gift may fail, and the research facility or zoo may miss out on the donation altogether.
We have no argument with conditional gifts, but you may wish to consider how the organisation you wish to support could best use your gift, or at the very least, make sure your gift is still needed or relevant. Many charitable organisations suggest wording for inclusion in Wills and often prefer a gift be made ‘for general purposes’.
As a side note, you might enjoy the story of this famous gift to the British government that remains undistributed because of the conditions attached to the gift.
Asset is no longer part of the estate
Sometimes Will makers give a specific gift of assets to a charity, that no longer forms part of their estate when they die. The assets may have been sold by the Will maker or by their enduring attorney to look after the Will maker when they became ill. When making a gift to charity, you may wish to consider the nature of the gift you are giving and whether a specific gift of a particular asset, a cash sum or percentage of your estate is more appropriate.
Family Provision Claims
When leaving a gift to charity in your Will, you need to be aware that such a gift is vulnerable to a family provision claim if one or more of your family members can establish, they were inadequately provided for from your estate. If this a risk in your case, you may wish to consider making the charitable gift from trust assets or via a life insurance policy or even in your lifetime.
How we can help
If you are making a gift to a charity as part of your estate planning and want to make sure it gets there, call us on 1300 654 590 or email us on wehelp@adlvlaw.com.au and let us help you get it right. We offer a discount to people making Wills that support charitable causes – our small way of helping you give more.
The information contained in this post is current at the date of editing – 20 October 2023.
