Charitable Gifts By Will
A Choice of Approaches

Francesca Quint examines several important considerations for those of your clients who are intending to provide a gift to charity upon their death

It has always been quite natural for an intending testator to think about including a charitable bequest in his or her will. (Except that I prefer "testator" to "testatrix", I am going to use the feminine form in the rest of this article because women make more charitable gifts than men.) It used to be said that one third of a person's estate should be left to God, or to charity, and this was not merely the propaganda of a hungry Church but reflected a genuine benevolence on the part of those contemplating a future in which they would play no active part. In more recent times substantial testamentary gifts to charity have had a bad press, as indicating a Victorian desire to "cut out" one's relatives on the ground of some supposed misdemeanour. The worst excesses of that kind are now adequately dealt with by the Inheritance (Provision for Family and Dependants) Act 1975, as amended, but many testators nevertheless have perfectly good reasons for making charitable gifts of reasonable amounts.

There is a range of possibilities which the testator should consider, and on which advice should be offered before a final decision is made.

1. Straightforward legacy

The most apparently simple solution is to leave a legacy, whether specific or residuary or consisting of a share or shares of residue, to one or more named charities. The most usual problems in this case are as follows:

(1) Misdescription. In an astonishing number of relevant wills the intended charitable beneficiary is referred to by the wrong name, or by a name or address which does not exist, or by a vague description (eg "for Cancer Research") which does not distinguish between charities for similar purposes.

In the vast majority of cases it is in fact very easy to check the correct name and current address of the chosen charity by consulting the Charity Commission's central register of charities, and even to obtain the charity's registration number, which is a further method of identifying it. A telephone call may be sufficient.

A minority of charities are not registered, however. These include Universities, charitable housing associations and grant-maintained schools (exempt charities, which cannot be registered) and places of worship, church halls and voluntary schools (excepted charities, need not be registered). In those cases an approach to the charity itself, which can be made anonymously by a professional adviser if preferred, should not be an excessive burden.

(2) Ceasing to exist. Since a will takes effect only on the testator's death it can happen that a charity named in a will has ceased to exist by that time and there is therefore a risk that the gift will lapse. This risk can be guarded against by including an alternative recipient for that eventuality or making the gift conditional on the charity's being in existence at the date of the testator's death. (It is not desirable to make the gift conditional on the charity's being in existence at some later date, e.g. the termination of a life interest, since this will hinder the beneficiaries from making a variation of the will - should this prove necessary or desirable.)

Neither ceasing to exist nor misdescription is always fatal to a gift by will to charity but it undoubtedly causes delay and needless administrative expense, and among other disadvantages can easily lead to family disharmony.

2. Gift for Charities selected by Trustees

An alternative is to leave a sum of money to trustees for them to distribute to charities selected by them. This form of gift is unlikely to fail, since a gift for exclusively charitable purposes (which this is) will not fail for uncertainty and the law will not, of course, allow a trust to fail for want of a trustee.

This form may be attractive if the amount likely to be available is unknown, or if there is considerable urgency in preparing and executing the will. It is normally accompanied by a Memorandum of Wishes in which the testator sets out the kinds of charity she most favours (and any, of course, which she does not want to support). It must be said, however, that the trustees are given a great deal of discretion by such a gift and the testator should therefore choose them with great care, ensure that they are willing to act, and appoint enough of them to allow for the possibility that one or more might predecease her or become incapable of acting.

It has been held that such a gift requires the trustees actually to distribute the available funds within a reasonable time, and does not allow them to set up a fresh charity to receive and administer the funds at leisure. It is therefore not an effective method of keeping the testator's memory green, and has little or no scope for strategic planning.

3. Charitable Trust

A third alternative is to leave specific property, or a sum of money, or a residuary gift, either to a specified charity or to trustees to hold on charitable trusts. The will thus becomes the governing document of the new charity which it creates, and which will in most cases require to be registered either as a subsidiary of the "parent" charity or as an independent charity in its own right. The most usual difficulties with this form of gift are as follows:

(I) Failure to express the purposes in exclusively charitable form. Appropriate specialist advice should be obtained.

(2) Failure of the purpose through impossibility, lack of planning permission, insufficient funds or other forms of impracticability. This can be avoided by including an alternative to the first- mentioned purpose or by expressing the purposes in a broad fashion so as to include, for example, "similar charitable purposes selected by the trustees".

(3) An excess of property or funds.

(4) Unwillingness on the part of the "parent" charity to accept the terms of the gift. This can be avoided by advance discussion.

(5) The trustees misunderstand the testator's intentions (as where a gift to a teaching hospital for a "theatre" could mean either a lecture theatre or an operating theatre).

4. Gift to Testator's own Charity

A final possibility may be particularly suited to a testator or intending testator who either already has a particular charitable interest or is open to the possibility of developing such an interest in her later years. This is to set up a charity inter vivos (however modest its initial endowment), take part in running it and then leave it a straightforward gift by will. All the formalities of formation and registration are thus taken care of under the specific instructions of the testator, who may well be one of the first trustees or will at least have a power to appoint the trustees during her lifetime. The testator therefore has the opportunity of hands-on experience of administering the charity, assessing the needs to be met and creating the policies under which the charity operates. It can be infinitely more rewarding for her as well as being less troublesome for her executors.

Francesca Quint practises from 11 Old Square, Lincoln's Inn, London WC2A 3TS (Tel 0171 242 5022, DX 164 Chancery Lane) and Exeter, and was formerly one of the senior lawyers at the Charity Commission. She is the author of "Running a Charity" (Jordans) and contributor to "Charities: The Law & Practice" (FT Law & Tax) and Butterworth's Encyclopaedia of Forms & Precedents, Vol 6(2) "Charities and Charitable Giving".

Useful addresses:

Charity Commission
St Alban's House, 57-60 Haymarket, London SWIY 4QX (Tel 0171 210 4477)
2nd Floor, King's Parade, Queen's Dock, Liverpool L3 4DQ (Tel 0151 703 1500)
Woodfield House, Tangier, Taunton, Somerset TA1 4BL (Tel 01823 345003)

UK Charitable Trusts Initiative
c/o Mr Peter Marshall, Netherwood, Ilkley, West Yorkshire LS29 9RP

Trusts in Partnership
49 Laburnum Road, Maidenhead, Berkshire SL6 4DE

Charitable Gifts By WillA Choice of Approaches

Charitable Gifts By Will
A Choice of Approaches