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Beware of pitfalls in charitable giving

By  Rosanne T. Rocchi, Catholic Register Special
  • November 4, 2021

Many well-meaning individuals who intend to make a gift to charity or a charitable purpose in a Will have their wishes defeated for a number of reasons. Set out below are some common pitfalls.

Making Gifts To The Charity You Intend

It is important that you have the name of the charity correct. If the name is incorrect or if the name has changed or if there are a number of charities with similar names or that fall within the description of the charitable purpose, your executors may need to apply to the Court for advice and directions. These applications are exceptionally expensive. 

If you intend to make a gift to a specific parish, you must remember that parishes are not legal entities. The gift must be to the diocese or archdiocese in which the parish is located, with the direction that the gift benefit the parish. Another problem with making a donation to a parish is that saints’ names apply equally to Catholic saints and saints of other religious denominations, so having the correct name is imperative.

Purpose Gifts

If you are making a gift for a purpose, ensure that the gift is for a charitable purpose and not one which is considered to be non-charitable or simply “benevolent.”

A gift in trust for a non-charitable purpose may fail. Rather than designating a purpose, it is preferable to suggest a list of registered charities that actually carry out such purposes.

Ensure The Charity Will Be Able To Accept Your Gift

Remember to keep it simple and avoid restrictions or burdens.

Some testators leave property for a specified purpose that is almost impossible for the charity to accept. For example, a testator may believe that a home or a cottage would be suitable for a home for retired priests or for a camp for underprivileged children. In these circumstances, the charity might decline the gift because it is not able to fulfill the purpose or because it would be too costly.

Generally, any gift which has attached to it a burden runs the risk that the charity will not be able to fulfill that purpose. Always check with the charity beforehand.

In general, a charity will prefer to receive cash or marketable securities or at least property without restrictions so that they might sell the property and reduce it to cash.

Even if a testator leaves cash to a charity, the gift may be made to fulfill a purpose which is impractical. For example, a testator may stipulate that a fund be invested and the income used to sponsor an annual lecture series. If the fund is unlikely to produce sufficient income to sponsor such an series, the charity may have to decline the gift or take an expensive Court application to vary the trust.

Avoiding Challenges To Your Will

Gifts to charity are often challenged by relatives, beneficiaries under a previous Will or persons who claim to have been promised property in exchange for services.

Testators often leave small amounts to their beneficiaries and the bulk of their estate to charity. In such cases, the beneficiaries may challenge the Will.

The beneficiaries (or those who were left out of the Will) may claim that the testator lacked the testamentary capacity to make the Will or that someone was exerting undue influence on that testator.

Such challenges by relatives or prospective beneficiaries often occur if the testator had no history of benefiting the specified charity or if the Will under which the charity is to receive the bequest is radically different from previous Wills.

There are many instances where relatives have made claims against the estate on the basis that they were promised a specified portion of the estate. For example, the testator might stipulate that if he or she could live with the family or if they resided in their own home and were taken care of by that child, that child would inherit, or where there are multiple children, that the child who is performing the service will receive a greater share of the estate.

The basis of the claim would be on a quantum meruit basis as the family member provided services without compensation in the expectation that he or she would receive some portion of the testator’s estate.

In certain circumstances, the Court will enforce that bargain and either transfer the property to the person claiming entitlement or at least provide the disappointed prospective beneficiaries with a monetary award to compensate for the services that they rendered.

Charity Begins At Home

If a testator has dependents, they should be taken care of.

If a testator has incurred debts or made promises to pay for services, they should be paid.

Charities are placed in a difficult position when a family member or a friend who has provided services and had legitimate expectations challenges a Will.

Although a charity has a fiduciary duty to receive funds that are left to it, many charities will find it difficult to mount a vigorous defence to a claim by a family member, particularly where there is a possibility of adverse publicity.

(Rocchi is Associate Counsel with Miller Thomson LLP in Toronto.)

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