Seek legal advice to ensure charity bequest is smooth, efficient
By Kirsten McMahon, Associate Editor
When leaving a bequest to a charitable organization in your will, it’s important to seek legal advice to ensure your gift is dealt with properly, Cornwall wills and estates lawyer Michele Allinotte tells AdvocateDaily.com.
There are different considerations depending on the size of the gift, says Allinotte, principal of Allinotte Law Office Professional Corporation.
If the bequest is a modest amount, she says you want to make sure that the charity is named correctly and that you are clear about who you're giving the gift to.
“If you just say ‘the humane society,’ is that your local humane society, the national organization or a provincial branch?” she says.
At the same time, Allinotte says sometimes people get too specific or put strict conditions on the gift.
“For example, you may want to give the money to a specific church so they can replace the pews. But if the pews were recently replaced and the church won’t do it again for another 80 years, the money can’t be used for anything else,” she explains.
Instead, a testator could state that the money is for general purposes or to be put towards restoration, maintenance and capital improvement. This way, the church can use the funds as needed, Allinotte says.
In some cases, a charitable organization may cease to exist by the time the testator passes away. This is why the wording in the will is so important, she says.
“Most major charities are likely still going to exist, but if the gift is going to a local project or committee, sometimes they stop operating,” Allinotte says.
“Even with a $1,000 gift you need to think about these considerations and make sure that the money goes where you would like it to go,” she says, recalling a matter that took months to figure out because the bequest was not clear.
If the charitable bequest is large, the same considerations apply as with a small gift, but there are also a few additional issues to take into account, Allinotte says.
“If you intend to leave a very large gift — say $500,000 to a $1 million — to a charity, it's a good idea to speak to someone at the organization ahead of time,” she says. “You don’t want to put too many conditions on the bequest so you can work with the charity ahead of time.”
As well, Allinotte advises speaking with an accountant and/or financial adviser to discuss ways to donate to the charity efficiently and to maximize tax savings.
“You might be able to give gifts of publicly traded securities or make the charity a beneficiary on a life insurance policy or a tax-free savings account,” she notes.
If circumstances change and you decide you no longer wish to leave a large bequest to a charity named in your will, Allinotte says it’s best to seek legal advice.
“You should indicate why you're changing your will, especially if the charity was aware that they were getting this large gift. If, for example, you now want to give the residue of your estate to your 22-year old nephew, the charity may inquire if these changes were made voluntarily.”
An experienced estates lawyer will assess to see if there's any undue influence or capacity issues and document everything accordingly.
Allinotte adds that sometimes people forget about charitable giving as part of their estate planning.
“Even a gift of $1,000 in your will can make a big difference to a charity,” she says.