Gifts in wills are a vital source of charity income.  In accordance with Legacy Future's most recent Legacy Giving Report, legacy income in 2024 is reported to be standing at £4.5 billion and 39% of wills naming at least one charity beneficiary.

It is estimated by Legacy Future that legacy income is to increase to £5 billion by 2030.

With more and more individuals making charitable gifts in their wills, it is important that personal representatives (PRs) and charities are aware of their rights and obligations in relation to charity legacies.

In this article, we summarise some common points to consider:

Notification and information

Beneficiaries' rights are limited to having the estate properly administered in accordance with section 25 Administration of Estate Act 1925. PRs are required to deliver up an inventory and account when required by the court, however, there is no automatic right for beneficiaries to receive estate documents or to be updated as to progress of estate administration.

However, unlike private individual beneficiaries, charities have obligations to their trustees and beneficiaries. Charities must therefore be able to demonstrate that they are receiving their full entitlement from an estate. Accordingly, the PR should adopt a sensible approach when updating the charity and provide sufficient information so that the charity can be satisfied that their proper entitlement has been received. The nature and extent of this information will depend on the nature of the legacy.

It is often sensible to notify charity beneficiaries as soon as possible, if they have an interest in an estate, and thereafter, it can help to agree to provide updates at reasonable intervals.

Tax considerations

Tax on charity legacies can work differently to gifts to individuals. For example, it may be beneficial to appropriate or transfer assets to charity beneficiaries prior to sale, rather than the charity receiving the sale proceeds. Further, charities may be able to reclaim income tax on income received by the estate during the administration, and, typically, charities can attract exemption on inheritance tax.

Therefore, it is essential that due consideration is given to the tax implications of estates providing for charity beneficiaries, and PRs/charities should ensure the appropriate tax advice is obtained.  

Claims against estates

Claims against estates are not uncommon and charities can often find themselves defending claims made by individuals either wishing to dispute the validity of a will, or seek greater provision under the Inheritance (Provision for Family and Dependants) Act 1975.

Typically, PRs will adopt a neutral stance however it is important that PRs and beneficiaries receive appropriate advice, particularly if they are acting in both capacities.

Misnamed charities

This is an issue that crops up from time to time, and subject to the nature of the nature of the misnaming, PRs may be required to adopt different approaches.  
If the name contains a mere typographical error or minor misdescription, the PR may be satisfied that it has located the correct charity and proceed to make the gift.

However, if it is less clear, or the error is significant, the PR may need to seek guidance from the Attorney General or Charity Commission.

Alternatively, a court application may be required, for example, an application under section 48 of the Administration of Justice Act 1985 (to determine the construction of a will), or under section 20 of Administration of Justice Act 1982 (seeking the rectification and/or interpretation of a will).

Cy-pres doctrine

This doctrine applies where an original charitable gift fails but the PRs wish to honour the testators wishes as close as possible. The Charity Commission has a statutory power to apply the doctrine. This means that if, for example, a charity named in a will no longer exists when the estate is being administered, the PRs can re-direct the gift to another charity whose purposes are close to those of the original charity.   

The above reflects only a handful of the many considerations and issues which may arise for PRs and charities where a will contains a charity legacy. If you are a charity beneficiary of an estate and/or are acting as PR and have concerns on your position, we recommend you seek specialist legal advice.