In June 2021, at the same time as announcing that the extension to the ban on commercial evictions and commercial rent arrears recovery would continue until 25 March 2022, the Government announced that new legislation would be implemented to “ring...
Mr Papadopoulos makes a will leaving £50,000 to ‘Scarborough Dog’s Home’ for their work in rescuing abandoned dogs. The rest of his estate is to pass to his estranged, extremely well off daughter, Arabella. When Mr Papadopoulos passes away and his executors attempt to pay ‘Scarborough Dog’s Home’ their gift, they realise this charity did not exist at the time Mr Papadopoulos made his will. There are, however, several other dog shelters in the area that could really benefit from the money. What happens to the £50,000? Does it fall back into the estate and pass to Arabella?
What does the will say?
A well drafted will should contain provisions that deal with this type of situation. For example, there may be a clause that provides in the event any charity ceases to exist, the executors can pay the value of the gift to a similar charity or if the charity had merged with another, it is the transferee charity that receives the gift. Unfortunately, in the case of Mr Papadopoulos, his will does not have these provisions. At first glance, it looks as if the gift may fail and fall back into the estate, meaning Arabella will inherit the £50,000.
Are there any other ways the gift can be saved?
A legal concept, known as the ‘cy-pres doctrine’, can apply where it is impossible to pay the gift to the intended charitable recipient, for example in the case of Mr Papadopoulos where the charity did not exist at the time he made his will. Cy-pres means ‘as near as possible’ so that a gift to a particular charity that no longer exists may be given to another charity carrying out similar work. For example, a gift to ‘Scarborough Dog’s Home’ could be substituted as a gift to ‘Battersea Dog’s Home’ as they both have similar purposes as an animal rescue facility.
To benefit from the cy-pres doctrine, the person making the gift must have had a general charitable intention. What is meant by a general charitable intention? The exact definition passed down by the courts over the years is somewhat unclear. It appears to be a gift where you can extract a particular purpose e.g. benefitting the poor or the furtherance of education, even though the way the gift should apply e.g. paying it to a particular charity, cannot be carried out.
How to apply for a cy-pres scheme.
An executor can make the decision themselves that the cy-pres doctrine applies and pay the gift to a similar charity with similar purposes as the original charity. Making this decision can be open to challenge from other beneficiaries under the will, especially if they stand to benefit if the gift fails, such as Arabella in the case of Mr Papadopoulos.
An executor may wish to make an application to the Charity Commission who will decide whether the gift can be substituted to a replacement charity. Their decision is normally referred to as a ‘scheme’. A scheme is a legal document that records the transfer of the gift to a replacement charity.
What if cy-pres does not apply?
In situations where a general charitable purpose cannot be established, it may still be possible to save the gift by making an application to the Treasury Solicitor's office under the Royal Sign Manual procedure.
Generally, the Royal Sign Manual procedure applies to charitable gifts that do not have a trust element.
Tips for ensuring a charitable gift in your will does not fail
1. Identify the charity accurately by including the address and registered charity number.
2. State the gift is for the charity’s ‘general charitable purpose’. As this article explains, the purpose can continue to be performed by another charity or at least help to establish a general charitable intention to allow the gift to apply to another charity.
3. Include an express provision permitting the executors to apply the gift to a similar charity should the original recipient charity cease to exist.
Harold Benjamin are specialists in the drafting of wills and providing estate planning advice. It is important to appreciate that proper estate planning does not end once you have made your will. It is important to regularly update your will to ensure that the beneficiaries named in the will are still alive or (in the case of a charity) in existence.