Charitable Gifts and Contesting a Will

Bequeathing gifts to charity in a Will is a noble and commendable choice however caution should always be made so to avoid a dispute.

Problems arise when people feel they have not adequately been provided for in comparison to the chosen charity. Pursuant to the Administration and Probate Act 1958 (Vic), if a person thinks they have not been adequately provided for by the deceased, they can launch a Testator Family Maintenance Claim (TFM) to ensure that they get their ‘fair share’ of the estate.

A study by the Australian Centre for Philanthropy and Non-profit Studies at the Queensland University of Technology found that challenges to charitable bequests by the testator’s family members are becoming more and more common where: ‘Courts are vigorous in upholding proper family provision against charitable bequests, portraying the family provision as based on moral obligation’.

Types of Bequests

There are four key types of bequests you can make while estate planning

  1. Residual – Once your other gifts have been allocated and any legal fees paid, the remainder of your estate is left a recipient(s)
  2. Fractional – A certain percentage of your estate is awarded to the charity, organisation or individual
  3. Pecuniary – A specific gift is nominated. This could include a sum of money, stocks, property or shares
  4. Whole Estate – Your entire estate and assets are bequeathed to one beneficiary

The most common bequest chosen when leaving a gift for charity in a Will is the residual sum – so all beneficiaries are taken care of before the organisation receives a share. However, it is this exact method of donation which creates inheritance disputes as financial situations often change between completing the Will and passing away.

What often causes a dispute?

The situation is such: You bequeath your family members $600,000, pay $10,000 in legal fees and have an estate worth $650,000 at the time of creating your will, thus you may assume $40,000 will be given to charity. However, if between the creating of your Will and your death, your estate expands to $1,000,000, your charity is suddenly awarded $440,000!

If the original gift of $600,000 was split between multiple family members, this means the charity would be awarded a larger proportion of your estate than your intended beneficiaries…thus, we quickly have a Will dispute on our hands.

Are there ways to avoid this?

If you would like to leave a charitable gift via your Will, the most recommended way is to update your Will regularly to reflect your current financial situation. However, we appreciate that this is not always possible.

So, alternatively if you plan something out of the ordinary such as giving different amounts to different family members of leaving a chunk of the estate to charity if might be better to do such things while you are alive. Yet, be careful of the fact that amounts given away close to death can be classified as ‘notional estate’, and can be caught up in courts if there is a complaint.

Another option is to check your super and life insurance arrangements. A valid binding death benefit nomination is very hard to dispute as it does not form part of the estate. As such, if you feel strongly about a certain charity, you could make the nominated beneficiary the charity and not write the charity into the Will reducing possibility of a dispute.

Nevertheless, if someone in your family has recently passed and has left you inadequately provided for in comparison to their chosen charity, you have the option to contest their will. For professional assistance in disputing a will, please do not hesitate to contact the team at Hentys Estate Lawyers. With one simple phone call we can assess your claim and help you receive what you are entitled to!