Additional points to note

Please see below for some additional points to note when writing a Will with a charitable beneficiary.

Charity mergers

If two charities merge, a gift to either of them will not always take effect as a gift for the successor charity, and it may be advisable to provide for this in the Will, to avoid an application to the Charity Commission.

To ensure that the executors can benefit a replacement charity if the correct charity cannot be correctly identified at the testator’s death, the Will should include a general cy-pres clause as follows:

“If before my death (or after my death but before my Trustees have given effect to the gift) any charitable or other body to which a gift is made by this Will or any codicil to it has changed its name or amalgamated with any other body or transferred all its assets to any other body then my Trustees shall give effect to the gift as if it were a gift to the body in its changed name or to the body which results from the amalgamation or to the body to which the assets have been transferred”.

Expenses outside Will

You should make your client aware that only legitimate testamentary expenses (such as funeral expenses) or legacies left under a Will can be agreed by an executor.  Charities do not have the same freedoms as a private individual to give away part of their entitlement – charities are much more constrained in what they can agree to because they may not lawfully expend their funds other than in support of their charitable objectives.  Any request outside of this can amount to an ex-gratia payment and if this is the case, the consent of the Charity Commission will have to be obtained.

To avoid any doubt, if your client wishes to make financial provision for a headstone or memorial, they should make this clear in the terms of their Will.

Grossing up

Where there are non-exempt legacies which exceed the nil-rate band, these will have to be grossed up and the tax borne by the residue equally (Inheritance Tax Act 1984 section 38). Where there are non-exempt pecuniary and/or specific gifts and the residue is partly exempt and partly non-exempt, double grossing up will need to be performed in order to calculate the tax. The tax will then have to be apportioned between the whole of residue (tax attributable to pecuniary and specific gifts) and the non-exempt residue (tax attributable to that part). The HMRC’s website includes a very helpful grossing up calculator.

Charity as an executor

Some clients like to appoint a charity as an executor, either alone or with an individual.  This is perfectly in order, although it can cause difficulties if a charity does not have Trust Corporation status.  In that case, the charity has to nominate an individual to take out the grant on its behalf.

In this instance it may be preferable to nominate the holder of a particular office (e.g. the finance director at the time of death).  You should discourage clients from appointing an individual by name, in case that person has left the charity by the time your client dies.

Also bear in mind that some smaller charities may lack the expertise, or the desire, to administer an estate themselves.

In all cases where a charity is named as an executor, it is prudent to consult the charity in question at the time the Will is made to confirm whether they have Trust Corporation status, and their protocol if they do not.