The cat’s in the bag: The rules about gifting to charity in your Will

It was all things bequeathing in this week’s episode of Fisk on ABC TV; that is, the act of leaving something via a Will, and in this case, a gift to charity.

We return to the Grueber and Associates office to learn that Fisk is managing a deceased client’s Will, which has left a bequest of $10 million to the Cat Welfare League of Australia. But the Will is old – written in 1972 - and the name of the charity she has left the money to has since changed its name to the Cat Welfare Alliance.

How does one navigate this tricky situation? We asked one of our resident Wills and Estates lawyers, Bianca Stafford, to explain further. 

Fisk’s client has a charity name that no longer exists on the Will. Is this a risk with not updating your Will, that details of the beneficiary could be incorrect?

As seen in this episode of Fisk, failure to review and update your Will could result in some difficulties in the administration of the estate once you have gone, which may take time and money to resolve.

When drafting a gift to a charity in a Will, it is very important to ensure that the charity or organisation is named correctly in the Will. If the charity is named incorrectly, this can cause confusion and uncertainty of what the intention of the person making the Will was.  

There are also other risks to an estate - for example, if you made your Will prior to getting married, your Will may no longer be valid when you get married, or if you have gifted something to individual people and you no longer own those assets at the time of your passing, those gifts could fail, and there would be an imbalance in the distribution of the assets of your estate.  

As a general rule of thumb, we recommend that you review your Will and estate plan every three years or in the event of any big life changes such as:

• starting or ending a relationship
• growing a family
• changes in assets
• becoming ill; or
• in the event of a loved one’s passing. 

Do many people leave bequests or gifts to charities? What advice do you have for people doing this – should they contact the charity directly to make sure all of the details are correct?

My advice for anyone who is considering leaving a gift to a charity is to obtain advice from an experienced wills and estates lawyer. These gifts require precise and well considered drafting. When drafting these gifts in wills, we recommend contacting the charities to obtain their preferred wording and we consider any contingencies (for example, change of name of the charity, amalgamation, or if the charity ceases to exist at time of passing) to ensure that those various scenarios have been accounted for in the drafting of the Will, to best avoid a Cy Pres application, as we saw in Fisk.

In the Fisk episode, it becomes clear that the person who made the Will intended it to go to the charity, as when the Will was made, the charity name was the Cat Welfare League. But even though that’s obvious to Fisk, she still requires the help of a Barrister to make a cy pres application in court to have the court decide. Can you explain a little bit how that all works, and why a court application is necessary?

The French term “cy-près” means “as near as possible”. 

In Queensland, under the Trusts Act 1973, the Supreme Court has the power to alter the original purpose of a charitable trust to allow property gifted under a Will to be applied “cy pres”, where the original purpose cannot be carried out.

A gift in a Will to a particular charity is treated as a gift “for the advancement of the charitable work or purpose” of that institution. Accordingly, in these applications, the Court must consider the work or purpose (or the objects) of the charity included in the will and, in instances where that gift cannot be fulfilled, endeavour to give effect to the will maker’s intentions as nearly as possible.  

These types of applications are often complex, expensive and require a significant amount of evidence to be brought before the courts.

To best avoid a Cy Pres application, we recommend you have your Will prepared by an experienced wills and estates solicitor, so that various contingencies (as seen in Fisk) can be accounted for in the drafting of your Will.

Once that issue has been resolved, Fisk then tries to locate the funds in the trust account and discovers George (the Probate Clerk) transferred them to a new, interest-bearing account. Why is that important?

A law firm’s trust accounts does not earn any interest. The executor of an estate has a duty to maximise the assets of the estate where possible, or they could be found liable for wastage. Therefore, for any larger sums of money it is generally recommended that they are held in an interest earning (controlled money) account while the estate is being administered. 

_{This content is not endorsed by the ABC and Maurice Blackburn has no association with the ABC. Views and legal commentary are our own.}