We have a situation where the testator made a Will leaving the residue of his estate to be divided in equal shares amongst 18 charities, all of which are animal welfare charities. Three of those charities are no longer operational. There is no substitution clause in the Will. However, the will incorporates the second version of the STEP provisions.
On reading provision 4.2, I interpret it to say that the executors can redistribute the funds to another charity with similar values to those no longer in existence. However, in this case, the executors would like to pay the relevant share of the residue to the remaining charities as they are all animal welfare charities.
Does anyone agree at the second edition of the STEP provisions covers this situation?
Or, as there is no substitute provision, does this result in an intestacy?
I think you mean clause 4.16.2 of the STEP Provisions 2nd edition. Yes, “If any charity ceases to exist, changes its name, or enters into insolvent liquidation, before the time that a gift to the charity takes effect in possession” - ie on death - “the gift shall instead be paid to such charity as the Trustees decide having regard to the objects that were intended to benefit.”
On a very literal reading of the provision it suggests that each ex-charity’s share must go to another charity, rather that being shared between several. Simply sharing it out among the others also suggests that the trustees may not be giving full consideration to which existing charity would be best suited to giving effect to the objects of the ex-charity, so I would recommend a more tailored approach.
You will not need to seek a court order. Under the relevant STEP provisions the executors have power to make the payment to another charity that has similar objects. The court will not want to get involved with that I think. You should retain a detailed note of the decision.