Charitable Bequests: Post-Death Problems

Francesca Quint examines some of the problems that can occur in trying to fulfill bequests to charities.

In a previous article (Volume 2, Issue 2), I outlined the options available to an intending testator who wished to leave some of her wealth to charity, and drew attention to some of the pitfalls to avoid. I now wish to consider what can be done when executors find that the charitable gift cannot be carried out, or not according to the provisions of the will.

Misdescription

Solicitors (and other will writers) are not always as careful as they could be when drawing up a will to give the correct name of the charity which is intended to benefit (let alone its registration number, if any). How then can the executors give effect to a gift to a charity which does not appear to exist?

If ,on enquiry, the charity named in the will is not on the central register of charities at the Charity Commission, does not answer post sent to the address given in the will, is not known to the testator's relatives (or her solicitor) and is not identifiable from her papers, it may be that it has been misdescribed. The name given in the will may be similar to the names of more than one charity, in which case it is likely that one of them was intended and it is then a matter of determining which. A charity which was not in existence in any shape or form at the date of the will can be ruled out. Otherwise, the relevant charities should be approached, and asked to supply evidence that the testator corresponded with or supported them during her lifetime. A specific previous connection is the most telling evidence in support of a particular charity. Other important indications are whether the testator was known to support the charitable work or objects of a particular charity or group of charities, and whether the charity was operating in her locality, or among people with whom she was in touch, at the date of the will.

Sometimes it rapidly becomes clear that a particular charity was intended. Occasionally, however, it is simply not possible to reach a conclusion as to which charity was referred to, and there may be competing claims from two or more charities with similar names or purposes. The executors for their own protection must take steps to ensure that if they pay out the funds to a specific charity they will not be the subject of a claim from some other charity, or indeed from those entitled to residue under the will or in the event of a partial intestacy.

H M Attorney General represents the Crown in its capacity as protector of charities, and is normally a party to any proceedings in which the construction (or rectification) of a charitable bequest in a will is referred to the court. If agreement can be reached with those entitled to residue an application to the court can often be avoided by an approach to the Treasury Solicitor, who may confirm (often after consultation with the Charity Commission and/or with counsel for the Attorney) that if the matter were to come to the court the Attorney General would support (or at least raise no objection) to the proposed solution.

Charity ceasing to exist

Whereas a will has to be interpreted in the light of circumstances in existence at the date when it was executed, it takes effect, of course, only at the date of the testator's death. It therefore happens from time to time that a will contains a gift to a charity which existed at the date of the will but has ceased to exist by the time that the will takes effect. A change in the name of the charity, or constitutional change (even if brought about by a scheme of the Charity Commission or the court and even if it alters the objects of the charity), does not automatically destroy the gift, and it has recently been held that the gift also survives if the charity is a corporate body which is actually in insolvent liquidation at the date of the death, and has accordingly been removed from the register of charities: Re ARIMS (Multiple Sclerosis Research) Limited (1996) The Times, 29 November.

If the charity has absolutely ceased to exist at the time of the death it may still be possible to save the gift and give approximate effect to the testator's intention. Where the charity, when it existed, was unincorporated (and thus not a legal person in its own right), the gift can more easily be interpreted as a gift on trust for charitable purposes than merely a gift to a particular institution, and may therefore be treated as effective, although the method of carrying out the relevant purposes - whether by transfer for the general purposes of another named charity already active in the chosen field or by the appointment of a body of trustees to carry out the purposes direct - will normally have to be set out afresh in a scheme.

It is, however, quite likely even in the case of a gift to an incorporated charity which has ceased to exist that the correct interpretation of the will would treat the gift as a purpose gift: most gifts to charity (as distinct from gifts to other organisations such as a private club, with which the testator's connection may be more personal) are intended to further the work of the charity rather than to benefit the organisation per se: see Re Finger's Will Trusts [1972] Ch 286. It may therefore be possible to establish that the corporate charity referred to was, in effect, intended to be the trustee of the testator's gift - and "Equity does not allow a trust to fail for want of a trustee."

Questions of pure interpretation where the named charity has ceased to exist can be dealt with in the same way as cases of misdescription.

Initial Impossibility or Impracticability

Where it is clear that, as at the date of the will, a purpose gift simply cannot be carried out, or would be wholly impracticable, as where a building is given for a purpose for which Planning Permission is not available or where the amount of the gift is clearly inadequate, the question will arise whether the gift lapses or whether a cy pres scheme can be made to modify the purpose sufficiently to enable the gift to be applied.

The attitude of those entitled to residue will be relevant in all cases, but the Charity Commission can establish a scheme only if satisfied that the testator had a "general charitable intention" as opposed to being committed exclusively to the particular purpose specified in the will. Indications of a general charitable intention can be found from the wording of the bequest in question, from the rest of the will and (in cases of uncertainty) from anything relevant that may have been said or written by the testator during her lifetime. Detailed, lengthy and specific terms suggest that the particular purpose was uppermost in the testator's mind, whereas a gift which is one of a series of charitable gifts, especially if without detailed directions and if constituting shares of residue) is more likely to show a general charitable intention.

Once a general charitable intention has been identified to the satisfaction of the Charity Commission and an alternative, workable set of proposals which both accords with the underlying wishes of the testator and is acceptable to those who would be entitled to the gift if it had lapsed, they will usually wish to consult the Treasury Solicitor (as representative of the Attorney General) before offering to establish a scheme to put the new proposals into effect. The draft scheme will be subject to the outcome of advertisements under the Charities Act 1993 inviting objects and suggestions from the public (including relatives and friends of the testator), and in practice will not be brought into effect in the face of serious objection.

Sign Manual

The establishment of a scheme pre-supposes the existence of a charitable trust (however informally expressed) since the jurisdiction of the court and thus of the Charity Commission (which shares it) is based on the trust concept. Sometimes a will contains no express or implied trust but a simple gift to charity (eg "to Cancer Research") from which a particular institution cannot be identified. In such cases a different procedure applies, and directions can be given by the Attorney General on behalf of the Sovereign (as the "fount" or source of charity) under the Sign Manual - originally a direction signed by the Sovereign personally. Such directions may specify either that the gift is to be given to particular charity or held by specified trustees on trust for specified charitable purposes. Such cases are handled by the Treasury Solicitor.

Costs

At present no charge is made by the Charity Commission or the Treasury Solicitor for advisory work or the establishment by the Commission of a scheme. The administrative costs of resolving a problem caused by misdescription or initial failure are normally met from the testator's estate, but where these are excessive, and are clearly due to inept drafting - and especially in those rare cases where it is necessary to make an application to the court - it may be worth considering a claim in negligence against the solicitors who drew the will.

Francesca Quint, Barrister, 11 Old Square

USEFUL CONTACT INFORMATION

Charity Commission, 57-60 Haymarket, London SW1E 4QX, Tel: 0171 210 4477

Attorney General's Chambers, 9 Buckingham Gate, London SW1E 6JP, Tel; 0171 828 7155

Treasury Solicitor, Queen Annes Chambers, 28 Broadway, London SW1H 9JX, Tel: 0171 210 447