Working with charities to admininster estates

Administering Trusts and Estates

Administering a Trust

Charities are obliged to take steps to protect and maximise the legacies left to them, and as such, as when they are beneficiaries of a Will, they need certain documents when they are the beneficiaries of a Trust.

This includes the annual trust accounts to enable them to see how the trust assets are being managed and to monitor the value for long term financial planning.

During the administration of a trust, charities require the following documentation:
• a copy of either the Trust Deed or the Will setting out the Trust
• a copy of the estate accounts.
• a copy of the annual trust accounts

Where the trust asset is a property, they are usually grateful for confirmation that the property is insured and reasonably maintained. Many charities are able to assist the trustees with this if there are no arrangements in place.

Where there is a trust fund or investment portfolio charities would appreciate receiving a copy of the trustees’ investment policy and an annual copy of the portfolio valuation (these should be provided by the client’s investment advisor).

It is worth noting that many charities have relationships with IFA’s who charge reasonable rates when instructed by the charity and are experienced in investing trust funds for these charities. Please contact the charitable beneficiary directly to see if this is the case.

Administering an Estate

There are a number of different documents that are required by charities when administering an estate.
Practice varies as to whether a copy of the Will should be provided before probate has been granted, but provision at an early stage is appreciated on the understanding that it remains confidential until probate.

The documents that are required by charities after probate are as follows:

Pecuniary legacy – the name and address of the deceased, the date of death, the amount of the legacy and a copy of the clause containing the legacy in the Will;

Specific legacy – the name and address of the deceased, the date of death, a description of the legacy and a copy of the clause containing the legacy in the Will;

Residuary legacy
• a photocopy of the Will and any codicils
• a schedule of assets and liabilities (or copy of the HM Inland Revenue Account)
• valuations of significant assets, such as property or an investment portfolio
• a copy of the estate accounts – this is a requirement under law for any beneficiary who requests them and the Charity Commission requires charities to request these where they benefit from the residue of an estate
• a statement of estate income Form R185 (Estate Income).

If a legacy is not paid within the executor’s year, beneficiaries are entitled to statutory interest as part of their legacy. Interest runs from the first anniversary of death. From July 2003, interest is payable at the basic rate of funds in court.

If there are a number of charity residuary beneficiaries named in a Will, most of the larger charities will be prepared to act as the lead charity in co-ordinating a common view (as far as possible) or simply acting as postman. Generally, the first-named charity will undertake the task if requested.


General Points

When considering the rights of beneficiaries to information please bear in mind that charity legacy officers have obligations to their trustees and to the beneficiaries of their work, and being able to predict their income within a particular timeframe is very important.

All charity fundraisers also have an obligation to maximise any gift to the charity and therefore appreciate being involved in all stages of the administration process.

This means that early notification of an interest in a Will or codicil is much appreciated by charitable beneficiaries. Many charities subscribe to Smee and Ford’s notification service, which means that they will be informed if a Will is proven with them as a named beneficiary (or there is a discretionary gift that specifies a particular area e.g. animals).

If a charity is notified that they are a beneficiary, particularly if they are a residuary beneficiary, they may contact you directly to ask for the documents relating to the Will that they are required to see by law.

Charities also appreciate being kept up to date with progress on the estate and being notified of any issues that occur.


Selling Assets

If a charity has been given specific assets, or if the charity is a residuary beneficiary, often assets will need to be sold to realise the value of the bequest to the charity.

  • Land or property
    If the asset concerned is land or property it is helpful to charities to have notification of these significant assets and be given details regarding the marketing, sale price and offers received. In all cases the property should be exposed to the open market, and if it has development potential charities appreciate being informed of this and being closely involved in any decisions. Charities may have relationships with local estate agents or surveyors that could facilitate any sale and often have considerable experience in this area.
    If property or land is appropriated to a charity before sale, charity law usually requires a special valuation report. Charities can usually arrange this and it is advisable to contact them directly.
  • Shares or investments
    With shares or investments charities often prefer that the assets are appropriated to them so that Capital Gains tax can be avoided.
  • Chattels
    Some larger charities have a network of shops that are often able to help with house clearances. Some smaller local charities (especially hospices) also have a shop that may be able to help. Many charities also have relationships with firms of national auctioneers who will sell specific items left to the charity. As with property, the probate valuation should always be at market value at the time of death, and in all cases it is helpful to notify the charity as soon as possible.


Sending the legacy

When you are ready please send a cheque for the appropriate amount directly to the charity. It is helpful to include a final version of the estate accounts if it is a residual legacy, or a reference to the specific clause in the Will if it is a specific or pecuniary legacy. Payments can also often be made by bank transfer. In all cases please contact the charity to determine the best way to send the gift.