It is not uncommon for people to give a gift or even a percentage of their estate in their Will to a charity or charities.
In the media lately, the RSPCA received $2.7 million in sale proceeds of an estate property gifted to the RSPCA in a Will.
Whilst this is a great example of a successful gift to a charity, if a charity is not precisely identified in a Will, a number of issues can arise.
Identifying the correct branch and particulars of the charity
Taking the example of the gift to the RSPCA in this online article, the article is silent as to whether the gift was made to the Australia branch or the Queensland branch of RSPCA.
It is critical that the correct particulars are identified for the charity in the Will.
When identifying a charity in a Will, your Will must address the following:
- the full legal name of the charity as it is legally registered – it is prudent to check the legal name of the charity on the Australian Securities and Investment Commission register;
- the ABN or ACN of the charity – this can either be found on the Australian Securities and Investment Commission register or the website for the charity;
- the business address or registered office for the charity; and
- the purpose of the gift – generally speaking, it is best the gift is made for ‘general purposes’. This allows the charity to use the gift for the charity’s general purposes. If a specific purpose is included in the gift, it may curtail or limit the charity’s ability to use the funds.
As an example, presuming the gift in the online article was to the RSPCA Australia, the particulars for the gift would be as follows:
“… to the RSPCA AUSTRALIA ABN 99 668 654 249 of Unit 4/5, 6 Napier Close, Deakin in the Australian Capital Territory for its general purposes.”
Other matters to consider when gifting to a charity, is what type of distribution you wish to make to the charity, below are some examples:
Pecuniary gift
A pecuniary gift is a gift of a fixed sum of money.
For example, if you wished to gift an amount of $50,000 to the RSPCA Australia, then the Will should state this along with clarification on whether the costs of transfer are met from the gift, or from the estate generally.
Residuary gift
A residuary gift is a gift that occurs after all specific gifts are made under the Will, and the balance is remaining.
A residuary gift can be:
- the whole of the residue (or balance) of the estate; or
- a percentage of the residue (or balance) of the estate – for example, 1/3 or 1/6 of the balance.
When including a charity in your Will, it is important that the charity is properly identified and the gift or payment to the charity is clear in the terms of the Will.
If the charity is not properly identified, or the gift is not clear, it is likely your executor may have to make an application to the Court to clarify the gift. Sometimes this can end up costing the estate unnecessary money in legal costs, not to mention, it may outweigh the amount of the actual gift.
If you require any assistance with the drafting of your Will, or a gift to a charity, please do not hesitate to contact us.
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