Working with Charitable Beneficiaries
I read with interest the article by Kate Johnson at Wedlake Bell in Today’s Wills and Probate in which she states her stance in relation to charitable giving within Wills.
The suggestion was made within the article that gifts to charity should be made by way of a discretionary trust.
The reasoning behind this suggestion was that, it stops disputes and saves the Executors from having to account quite so heavily to the charity beneficiaries.
Charities employ legacy managers whose role is to ensure the charity receives the correct amount from the estate. Such Legacy managers generally do a wonderful job and are employed because the charities know they deliver a positive return on investment and because they help to ensure that the wishes of supporters are carried out.
For Executors it can sometimes feel uncomfortable knowing that their work will be checked by someone with skill and experience, but that does not detract from the fact the work of legacy managers delivers positive results.
Whilst some practitioners may fear dealing with charity beneficiaries, personally I welcome having a skilled legacy manager involved as a second pair of eyes as sometimes they can identify opportunities to maximise the amount received by their charity which is presumably what the testator originally intended by leaving such a gift within their will. .
It is not to say that legacy managers help secure additional funds in every case, it is simply that on occasion legacy managers are able to identify opportunities which would otherwise be missed, especially if there are lay executors who are choosing to administer the estate themselves without the help of legal support.
If gifts to charities are set up behind the curtain of a discretionary trust, then legacy mangers are less able to use their knowledge and experience to help deliver as much support to the executors.
Further it isn’t, in my view, strictly correct to say the charities cannot hold the executors to account. As trustees a duty is owed to the beneficiaries of the trust and once those beneficiaries are chosen, they are well within their rights to ask for a breakdown of the administration of the estate or the funds involved. Whilst trustees have more power to refuse to provide such documentation, doing so can suggest there is something amiss and in fact could cause more arguments and litigation as a result.
Whilst there are lots of good reasons for creating and using discretionary trust’s within a will, using one simply because I didn’t want to account to the beneficiaries seems a missed opportunity to build better relationships with other skilled professionals.
I believe that when dealing with estates and in fact in all areas of law in which private client lawyers operate, we never stop learning, improving and developing our skillset. We need to continue to raise standards in our industry and in ourselves and working in conjunction with charity professionals and skilled legacy managers is one way to do this.
It is wonderful that of each year more and more people are trusting charities with significant gifts in their wills. Currently more than 1 in 6 wills submitted for probate contain a charitable gift and it is expected that £3.4bn will be received by UK charities from gifts in wills in 2021. That is a huge statement of the trust people have in charities, at a time when people’s trust in big organisations is diminishing.
As a result my view is that as private client lawyers we should welcome their involvement and input and I have found if you involve the legacy manager in the administration early, you can have a really constructive relationship and maximise the estate for the benefit of all.
Michael Culver is Chair of Solicitors for the Elderly and a Partner at Bolt Burdon Solicitors