Hello everyone - my first post!
My client is single, without children. She has decided to leave 10% of her Estate to charity.
Her Estate is very straightforward - £1m, house and cash.
I wonder if it is best to do this by way of a specific clause in the Will (I have a Practical Law template) or to prepare a Will that creates a Discretionary Trust, with a letter of wishes?
Thanks
Andrew Taylor
A letter of wishes is not binding on the executor, and its content would not normally be shared with the beneficiaries.
The answer therefore may depend upon how much the testator trusts the executor to comply with their wishes.
If the client has already decided to give 10% to the charity, I would be inclined to include this in the will, so that there can be no uncertainty or dispute.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I completely agree with Paul. If you were to have a DT, you’d probably also need to limit it to 2 years or include a paragraph in the side letter with a request to appoint out the 10% to charity within 2 years.
Thanks both. Very helpful.
My slight issue is that my client doesn’t want to leave the 10% equally between selected charities. She wants her Church to receive a specified amount and the balance of the 10% to charity.
Would the following Will clause be appropriate:
I give the Charitable Amount to be held as to income and capital to pay to such charity or charities, as my Trustees shall in their absolute discretion think fit.
Charitable Amount is defined as 10% etc.
If she’s leaving specifically 10% to charity, then she’ll get a 4% reduction in her IHT bill. If the 10% is split between church and charities it doesn’t matter as long as the church is a registered charity. Just specify the split as a % if possible, or specify one gift as an amount, and the other a % to make up any deficit resulting in 10% in total. A simple calculation for the Exec to make.
My inclination would be to make a gift of the intended amount to the church, with the balance of the Charitable Amount to be divided between the other charities, whether as specified in the will or subject to the executors’ discretion.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thanks everyone. Very helpful!
One thing to consider: Some charities trawl published wills for legacies and hassle the executors for payment. This is avoided by using the letter of wishes.
To use a letter of wishes to avoid a charity learning that it is a beneficiary seems a little suspect to my way of thinking!
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I can’t imagine why. It is perfectly possible and legal to leave legacies in secret. The beneficiary need not be told they are to inherit. A testator should only appoint an executor they trust completely, so why not leave such legacies to their discretion?
Your first post read as though a DT should be used to avoid the charities being aware that they were beneficiaries, which is what I suggested was “suspect”. I have heard of cases where the testator told the charity it was a beneficiary, but was persuaded by the family to use a DT, which the family PRs then kept in the family.
As you say DTs are frequently used with a letter of wishes (to allow flexibility), perhaps I was over-reading your original post.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I’ve now another matter which is a variation on the charitable theme.
My clients wants to leave his entire estate for charitable purposes.
I’ve located a precedent that states:
The Trustees shall hold the Trust Fund upon trust for such charities in such shares as the Trustees in their absolute discretion appoint.
In this precedent, the appointment must be made within one year from date of death? Is there any reason why this is so?
The Discretionary Period in this precedent is the standard two years, less one day.