Leaving a gift to charity in your will

What could be easier than giving away valuables? You would think there would be no issue, but in fact giving away money or assets in your will can be problematic if not done correctly.

Recently, a client generously instructed me to draft a will leaving most of their assets to a charity. My instructions were that the client wished to give away real estate and furniture to be used by the selected organisation for a specific charitable purpose of providing accommodation for those in need. However, the chosen organisation was not a charity, but a private company. It was not possible to leave the gift to the company as the company served no direct charitable end (although it did itself support other charitable purposes and provided worthy, though commercial, services).

My client then instructed me to draft the gift clause in favour of another organisation, which was a charity. The selected charity was not capable of giving effect to the charitable purpose my client had in mind (support and accommodation), however, as it was a in fact a lobby group not concerned with support at the coalface.

The gift of real estate and furniture was also problematic, for various reasons, but particularly because many charities would not want the responsibility of having to deal with real estate and goods.

Finally, the client found a local charity that seemed to fit the bill – and bonus - it was a registered charity. This was good because it is difficult to support a charity which is not a registered, by will. The risk is that the gift could easily fail.

This charity was able to give effect to the client’s charitable aims and was willing to accept the gift of furniture. As to the real estate, by then the client had agreed with me that it would be better to instruct their executor to sell the house after their death and gift the balance after the costs of selling the property were paid to the charity. The client also agreed to support the general purposes of the charity as these could change over time, but I inserted a non-binding clause in his will directing that where possible the proceeds be applied to the specific endeavours my client wished to support.

I am confident that the will will be effective because we did our homework.

So, for anyone thinking of benefitting a charity by will, my tips for doing your homework are:

1.       Support a registered organisation (it should have an ABN); and

2.       Support a charity that is a registered charity (not just a registered company with a noble cause or an unregistered charity); and

3.       Check that the charity that it is willing and able to accept the gift you propose to give, and that includes cash; and

4.       Make sure the beneficiary charity does provide the charitable services you want it to provide with your gift; and

5.       Preferably leave a cash legacy rather than items such as property, vehicles, furniture and so on; and

6.       Preferably leave the benefit to be applied to the charity’s ‘general purposes’ or make the charitable purpose you wish to support non-binding to allow the charity some flexibility to apply funds as they know best; and

7.       Finally, be sure to name the charity’s full and correct name and state their ABN correctly in your will. Charities could be known by one name but be registered under another. For example, it will not do to support “the local animal shelter”. It should be properly named and steps 1-6 checked.