FOR IMMEDIATE RELEASE
On the day after Kids Company closed its doors, Jill MacMahon, of Thackray Williams in Bromley, looks at how executors can deal with problems over charitable gifts in Wills.
The people of the United Kingdom have a long history of charitable giving. We readily support good causes – mostly those which are registered at the Charity Commission. We know that, when we give to a registered charity, we are donating to an organisation which is supervised by the Charity Commission and whose finances are subject to external scrutiny.
There are over 160,000 charities registered in England and Wales. Many are household names such as the RNLI, Barnardo's, the RSPB and so on. Others are like mayflies - small and short lived. In our society, it is common practice to leave charitable gifts in a Will. You may not worry about the fate of the charity you choose to include in your Will if you pick one of the big names in the charity world. But every so often, something unexpected happens.
Kids Company found itself in the midst of unexpected circumstances. Although it has not been around for as long as other similar organisations, Kids Company was a big name in the charity and media world and attracted much attention and generous donations – as well as government grants. But on Wednesday 5 August, the charity closed its doors. If you left a gift to Kids Company in your Will, you may well wonder what will become of it if you don’t update that Will.
Fortunately, many Wills contain provisions that deal with the various events that can affect a charity's status. These provisions may be found in the wording of the Will itself. Alternatively, they may appear in a set of conditions incorporated by reference into a Will. Here, the wording directs the executors on how they should deal with a charity which closes, amalgamates or changes its name. If you want to look at your own Will, check for clauses headed "Cy pres ", "Charity Changes" or instead, look for the incorporation by reference of the Society of Trust and Estate Practitioners Standard Provisions (2nd edition). Condition number 4.16.2 deals with the situation when charities change their spots.
Older Wills however may not include such provisions. What then if a gift to a charity fails? The law has for centuries provided a solution in the form of the cy-pres doctrine. This ancient way of dealing with a gift to a charity turned the matter over to the courts to decide how to proceed. Of course, if one makes a small gift, this approach to dealing with the problem is rather akin to applying the sledgehammer to a nut. For this reason, the Charity Commission now has the statutory power to apply the cy-pres doctrine.
However, this is only one solution to a number of problems that can arise with gifts to charities. A charity might be wrongly named, or have ceased to exist or be of uncertain identity, or the gift may be able to be saved because it had a general charitable intention. In all these cases different solutions will apply. The main aim is where possible to ‘save’ the gift for charity, but sometimes this is not possible and the gift will simply fail (and thus return to the deceased’s estate).
So it is always better if the Will itself provides a solution to any problem with a charitable gift that fails. The solution will normally be to require the executors to make the gift to a charity or charities chosen by the executors as having the same charitable aims as the original charity (or as close as possible, anyway). Of course if the charity simply changes its name, the solution is to pay the gift to the renamed organisation. And if it amalgamates with another charity, then it is usually the amalgamated body which will receive the gift.
There is no substitute however for ensuring that your chosen charity still exists, is correctly named and its registered charity number is also included in the Will
Don’t forget that if you leave at least 10% of your net estate to charity, you can benefit from a reduction in the rate of Inheritance Tax payable to 36%. Your usual private client legal advisor will be pleased to give you further details.
Thackray Williams is a leading law firm in South London/Kent with expertise in all aspects of property, family and commercial work.
06 Aug 2015 12:00
23 Jul 2015 17:15
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