Charitable Bequests

Tis the Season to be Giving: How to wrap up your charitable bequests so they go where you wish

You might support charity for a variety of reasons

You are a responsible steward of wealth and want to support the next generation, or there is a cause especially meaningful to you: a hospital or medical research foundation, a school or university, a church or community organisation, the RSPCA, or a charity devoted to the often-neglected arts.

Perhaps, as the decades pass, you feel a yearning within to create a personal legacy, particularly if you don’t have direct descendants.

Charitable Bequests

There are two main methods to make charitable bequests: direct gifts – whether during your lifetime or through your estate – and more structured arrangements, such as charitable trusts or private ancillary funds that distribute income to your chosen charities over time. Those longer-term structures can sometimes be tax-advantageous: donations to eligible charities may be tax-deductible, and the income earned inside a properly structured charitable vehicle is often taxed more generously than if you held those investments in your own name.

Under Australian law, for a gift to qualify as charitable it must be directed to a charitable purpose that falls within legally established categories, such as relieving poverty, advancing education or religion, or providing another benefit to the community.

When gifting to a charity under your will, precise legal drafting is crucial. It is important to use the charity’s correct legal name (and ideally its ABN), to describe the gift clearly, and to include a substitution provision to cover the possibility that the charity has merged, changed its name or ceased operating by the time your estate is administered.

Cy-près Doctrine

Although the Supreme Court is sometimes empowered to make the gift to a similar charity under the cy-près doctrine if the charity designated in your will no longer exists, the process can be protracted and stressful for your executors and beneficiaries. This application would inevitably drain your estate through legal costs, reducing what your beneficiaries – including your chosen charity – ultimately receive.

You may also wonder whether the direct, regular donations you make or intend to make during your lifetime will continue if you lose decision-making capacity. This is where an enduring power of attorney comes to the rescue. An up-to-date, properly drafted financial enduring power of attorney can enable those donations to continue, if that is your preference, should you lose capacity. Although Queensland law allows an attorney to make limited gifts and donations that are consistent with your past giving and reasonable for your circumstances, it does not require them to do so. If your enduring power of attorney is silent on this issue, a cautious attorney may decide to limit or discontinue charitable donations altogether.

Donations

The simplest way to avoid the unintended cessation of your donations is to have your enduring power of attorney expertly and explicitly drafted so that your attorney is clearly empowered to continue appropriate charitable giving on your behalf.

You may be gifting significant sums to a number of charities during your lifetime and after you have died. It is important to obtain sound legal advice to ensure your gifts are received by the right entity and your wishes are carried out.

By Trisha-Kate Meehan – Solicitor

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By taking the time now to clarify your intentions, document them correctly, and ensure your estate plan supports both your personal values and practical objectives, you give yourself peace of mind and provide enduring benefits to the causes you care about. Thoughtful planning today ensures your generosity continues to make a meaningful impact long into the future. Please get in touch to speak to a specialist Wills and Estate Lawyer.

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