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Creating a legacy – Gifting charities in your Will

Did you know that when you are planning your estate, you can leave a gift to charity?

If you are a charitable person and want to continue that legacy, you are free to leave gifts in your Will to whomever you choose because of a principle called ‘freedom of testation’.(1) However, before you go ahead and gift your whole or majority of your estate to charity, you must first consider whether the charitable organisation you wish to donate to still exists and if you have fulfilled your moral duty to any family or loved ones, if you have any, before making a charitable gift.  

There are four different types of gifts you can leave to charity, these include residual gifts, specific gifts, gifts in the form of a percentage of your estate and whole estate gifts.

  1. Residual gift – the remainder of your estate which can be gifted to charity after gifting your loved ones and settling your debts. This is the most common type of gifting to charities.

  2. Specific gift- the donation you want to make to charity, where it be through money, shares or property, is specified. 

  3. Percentage of estate – the gift you leave will take into account the changing value of your Estate due to economic conditions such as inflation and fluctuations in the value of your Estate.

  4. Whole estate – you may leave your entire Estate to charity if you do not wish to gift any of your families or other beneficiaries.(2)

Does your desired charity still exist?

A gift on charity failed in the significant case of Estate Polykarpou; Re a charity [2016] NSWSC 409 (‘Polykarpou’).(3) Euphemia Polykarpu (‘the deceased’) left her entire estate with a value of $1.4 million to charity.(4) Half of the estate was gifted to the charity organisation known as Oprah’s Angel Network (‘OAN’). OAN was operating as a not-for-profit, charitable organisation at the time the deceased made her Will in 2004, however was no longer in existence when the deceased passed away in 2015.(5)

When a charitable gift within a Will fails, the court may establish a scheme known as ‘cy pres’, to distribute the failed gift to a similar charitable organisation. To do this, the court must find that the deceased had a charitable intention to administer the gift to charity.

In Polykarpou, the Court decided upon two issues: whether the gift was for charitable purposes and if so, whether a general charitable intention was manifested within the Will which would allow the donation to be administered cy pres.(6) The Court held that the gift would fail and be held on trust by the executor for the deceased person’s parents if either of the questions were answered negatively.(7) With regards to the first question, the gift was for a charitable purpose as it was a gift to a charitable organisation.(8) The Court was also satisfied that there was a charitable intention by the deceased because her entire estate was gifted to charity, including the failed gift. As a result, a cy pres scheme was adopted to distribute the failed gift to an alternative charitable interest.(9)


The outcome of this case demonstrates the importance of planning your Will effectively and ensuring that if you are intending on gifting to a specific charity, it is still in existence in your lifetime.

Have you fulfilled your moral duties?

In Stejskal v Hely & Ors [2019] NSWSC 1417 (‘Stejskal’),(10) a father in NSW left his only adult son, Tomas, a small pecuniary gift and gifted the remainder of his estate to charities.(11) Tomas sought further provision from his father’s estate arguing that his father failed to make sufficient provision to him so he could meet his accommodation needs.(12) The issue for the Supreme Court to determine was whether the deceased had a moral duty to provide his son with a sufficient sum to enable him to meet his accommodation needs and necessary expenses.(13) Tomas lived in rented accommodation, had very little assets and cash in the bank, and could not reasonably be expected to work full-time because of his age and health.(14) The Court was satisfied that a moral duty was owed to Tomas, and an order for additional provision was made.(15) To exercise the deceased’s freedom of testation, the Court gave appropriate weight to the charities which he elected after Tomas receives an adequate provision from the estate.(16)

This case illustrates the importance of fulfilling your moral duty to your beneficiaries in your Will so that your freedom of testation can be exercised. 

Jurisdiction

The freedom of testation is a principle which is upheld Australia wide. The general consensus is that only you can decide how to distribute your estate in your Will.(17) However, as each State has their own succession law, this is why your best chances in fulfilling your wishes is by contacting our lawyers at Wills & Estates.

At Wills & Estates, we understand that there are certain wishes you want to prioritise for the distribution of your Estate, including your wishes for charity. That is why we want to ensure that all the relevant considerations have been made before you leave charitable gifts in your Will.  

Don’t wait until it’s too late – contact us today!

Phone 1800 22 33 90

Email wills@willsnestates.com.au

Or request a free call back on our website


References

(1) Goodsell v Wellington [2011] NSWSC 1232, per Hallen J.

(2) ‘How to Leave a Gift to Charity’, Include a Charity (Web Page) <https://www.includeacharity.com.au/make-a-will/how-to-leave-a-gift-to-charity/>.

(3) Estate Polykarpou; Re a charity [2016] NSWSC 409 (‘Polykarpou’).

(4) Ibid [7].

(5) Ibid [9].

(6) Ibid [1].

(7) Ibid [2].

(8) Ibid [94]—[100].

(9) Ibid [101]—[114].

(10) Stejskal v Hely & Ors [2019] NSWSC 1417 (‘Stejskal’).

(11) Ibid [3].

(12) Ibid [49].

(13) Ibid [65].

(14) Ibid [8].

(15) Ibid [10].

(16) Ibid [73].

(17) ‘Fact Sheet 3 – Testamentary Freedom’, University of Adelaide (Web Page, 2017) https://law.adelaide.edu.au/system/files/media/documents/2019-01/ifpa_fact_sheet_3_testamentary_freedom.pdf

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