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Charitable Giving in a Tough Climate

It has long been the case that gifts in Wills provide a vital source of income for charities. It may surprise you to learn that many charities state that 80% of their voluntary donations come from legacy income.

With sweeping cuts in funding due to the current economic climate and with charities facing problems maintaining and renewing sources of donations, legacy income is more important than ever to the vital work of UK charities.

If you are considering remembering a charity in your Will, here are some basic tips to ensure that your chosen charity receives your generous gift.

Make a Will

There are a variety of schemes and organisations offering free Will writing services, where the fee is waived in return for a gift to a charity in your Will.

Whether you take advantage of such a scheme or not, see a professional to record your wishes independently. You might want to let your family (or anyone else who might expect to be included in your Will) know about your intentions, especially if the gift to charity is large in proportion to the size of your estate.

It is impossible to prevent people fighting over your estate when you have gone, or to prevent someone from challenging the validity of your Will, but you can minimise the risk by having your Will prepared and executed by an independent third party such as a Will-writer or solicitors’ firm.

Remember a charity in your Will – and get the details right

In the Will itself, make sure you identify the charity correctly, to avoid confusion, as some different charities have very similar names. Most charities will have a unique registered charity number (which can be found on the Charity Commission website at www.charity-commission.gov.uk), which you should be include in the wording of the legacy. Check with the charity itself if you are unsure.

Make sure your gift to charity is as flexible as you want it to be

Although you may be particularly interested in a specific project – for example the building of a local hospice by a national charity – you may still wish to leave the gift to that charity for its general use if, at your death, the project is finished or no longer needed. Alternatively, you could leave a gift for the charity’s general purpose, but with the wish that it is used on a certain project.

Similarly, if you leave money to a local branch of a charity, the gift may be restricted for the use of only that branch. If this branch does not exist on your death then the gift may fail. If this is not your intention, you should ask for advice on how to leave a gift so that use of the funds is unrestricted.

Lastly, the current climate will see even more charities changing their names, amalgamating with, or transferring assets to another charity. If you still want your favoured charity to benefit in these circumstances, your adviser can include a “Cy-près clause” which will facilitate this.

Leave the choice to your executors if unsure

If you want to benefit a charity but are unsure which one to choose, you can leave a gift in your will and allow your executors or trustees discretion to choose which. Be aware though that, once it has gone through probate, your will is a public document. Many charities are informed when gifts are left with a discretion to choose the charitable recipient and your executors or trustees may be inundated with requests from charities, which may be upsetting and / or irritating for your executors – especially if they are close family or friends.

Remember that professionals or charities can act as executor

If a charity is one of the main beneficiaries (or indeed your only beneficiary), it may be preferable to appoint a professional as executor rather than a lay person, or indeed to appoint the charity itself as your executor. The charity can then deal with the administration of the estate, or appoint its chosen representatives to do so on its behalf.

Taking the heat out of the process

Sometimes, letters from charities may unintentionally upset lay executors or seem unduly intrusive. This is because lay executors may not fully understand why charities make certain enquiries.

Charities are legally obliged to collect in assets and to ensure that they are receiving everything to which they are entitled. They are also in a different position when it comes to making ex-gratia payments (i.e. voluntarily reducing the amount they receive) than an individual person.

Charities may have technical questions about, for example, expenses of the estate, which professional executors would be able to field and answer with ease.

There also may be technical matters to consider where one of the beneficiaries is a charity, as the way the assets are treated may minimise or reduce the tax to which the estate is liable.

Additionally, professionals dealing with the estate may be able to speed up the administration of the estate meaning that both personal and charitable gifts are received faster.

Polly Hosier is Legal Assistant at Kings Court Trust. You can reach her on 01225 787 111 or at polly.hosier@kctrust.co.uk.