Keep it legal: Charitable legacies

There are a number of pitfalls to avoid when preparing wills that include charitable gifts.

For example, charities or individuals involved in the process should ensure that the person or persons drafting the will correctly describe the organisation that their client intends to benefit.

Getting this wrong should not necessarily lead to the gift failing, provided that the will shows an intention to benefit a charitable purpose. However, automatically tagging on the phrase "for their general charitable purposes" can itself lead to problems if the recipient organisation is not a registered charity. Many good causes are not registered charities, but clients do not always understand this distinction.

Another problem can arise for married couples who wish independently to benefit charities in their wills. The adviser may wrongly assume that the client wants the legacy to be paid only if they are the survivor of the couple, whereas the client might want the legacy to be paid on their death irrespective of who survives whom. Failure to get this detail right can lead to gifts falling through altogether.

Ideally, clients should avoid specifying the purpose for which a legacy must be applied. Doing so can restrict the charity in applying the funds, or render the gift ineffective if the purpose specified cannot be fulfilled. A non-binding expression of wishes is preferable.

In the case of smaller charities, it can be difficult and time-consuming for executors to verify the legal standing of the person giving them a receipt for the legacy. Even more difficult is the job of ensuring that the gift is actually applied for charitable purposes. It is important, therefore, that executors be expressly allowed to pay legacies to the person who purports or appears to be the proper person and that the executors have no responsibility to check on how the legacy is actually applied.

Finally, where testators with taxable estates split their gifts between charitable and non-charitable beneficiaries, an unintentional additional tax charge can arise if the question of who is to carry the tax burden is not clarified in the will. Most solicitors are aware of the issues that arise from this situation, but the important thing is that the client makes an informed decision as to the amount ultimately passed to their intended beneficiaries.

- David Rhodes is an associate solicitor at Yorkshire law firm Andrew M Jackson

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