A Lawyer’s Perspective on Charitable Bequests

A Lawyer’s Perspective on Charitable Bequests

We asked lawyer Tracy Yarrell of Duncan Cotterill what people should consider when leaving a bequest to their favourite charity.  Her response?  “Use a lawyer”.  Then she shared with us why, along with a few tips.  Here’s what she wrote:

Less than 8% of Kiwis give to charities in their wills. However, those that do give, donate generously. New Zealanders bequeath over $192 million annually to registered charities. For many of these organisations, bequests are an important source of income. If you’d like to bequeath a gift to a charity there are two main considerations: the use of a lawyer and your family’s expectations.

The Lawyer’s Role

A lawyer’s responsibility is to ensure that a bequest clearly defines a willmaker’s wishes, and also aligns with the purposes of the chosen charity.

The lawyer will first confirm that the charity exists and determine the correct wording for the bequest, including the correct definition of the charity and its purpose.

The lawyer should also determine the willmaker’s preferred use for the bequest, and which region he or she would like to benefit. A bequest can fail if the chosen charity no longer carries out the activity defined in the bequest, or if the chosen region is no longer served.

Although some clients have a particular use for their gift in mind, if the purpose of the bequest is broad, then the charity can more easily use the funds responsibly and ethically. Again, this is why it is important for the lawyer to check whether the organisation can meet the defined purpose of the bequest.

A lawyer can add a provision to a will allowing executors to vest the bequest in another charity if the chosen charity no longer exists. In this case, the alternative charity must nearly meet the will-maker’s wishes and intentions.

Family Expectations

If you’re planning a bequest, consider discussing your intentions with family first, with a lawyer present. The lawyer will record the discussion, which will help in the case of a future challenge to the will.

Charity bequests can go sour if family members feel they have missed out on an inheritance, and so take the estate to court. The Family Protection Act 1955 allows the Court to determine whether a will-maker has discharged his or her moral duty to make adequate provision for the proper maintenance and support of eligible persons. Court battles are expensive for charities, so will-makers need to consider the cost to a charity if their bequest is challenged.

The alternative is to donate during your lifetime. But regardless, never attempt to draft your own will. Seek advice from a lawyer to ensure your wishes are expressed clearly and without confusion.

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

About the author:

Tracy Yarrell is an associate at Duncan Cotterill and specialises in property and commercial/ company transactions and succession planning.

If you would like information about making a bequest to Presbyterian Support USI, including a printed copy of our bequest booklet, please e-mail meganw@psusi.org.nz  or phone Megan Waddington at (03) 363-8209. We would love to hear from you.