The gift that keeps on giving: Leaving charitable gifts in your will

The gift that keeps on giving: Leaving charitable gifts in your Will

For many people, leaving a gift to charity in their Will is a meaningful way to support a cause or community that has mattered to them during their lifetime.

A charitable gift does not need to be large to make a difference. It might be a fixed amount, a particular asset or a share of what remains in your estate after provision has been made for family and other beneficiaries.

There are several ways to create a charitable legacy. The right approach will depend on what you want to achieve, the size and nature of the gift, and the needs of the people who are important to you.

Give directly to a named charity

The simplest option is often to leave a fixed amount or a share of your residuary estate to a named charity (or charities).

You can leave the gift:

• for the charity to use wherever the need is greatest; or
• for a particular purpose, such as supporting animal welfare in your region or funding a scholarship for a particular area of education or research.

Careful drafting is important. Your Will should identify the correct legal entity, rather than relying only on the charity’s commonly used or trading name. It should also address what will happen if the charity has changed its name, amalgamated or ceased to exist by the time your estate is administered.

If you want your gift to be used for a particular purpose, it is important to ensure the restriction is practical and will not unintentionally prevent the charity from using the funds. Discussing the proposed gift with the charity before finalising your Will can help ensure your wishes are workable and align with the charity’s activities.

Your legal advisor can help structure the gift so it has the best prospect of achieving what you intend.

Establish a charitable trust

For a significant charitable gift, another option may be to establish a charitable trust during your lifetime or under your Will. This might be appropriate where you want to create an enduring legacy in memory of someone or support a particular cause over the long term.

Establishing a new charitable trust can be an impactful way to achieve your goals, but it will not be the right option in every case. Factors to consider include:

• whether other charities are already working effectively in the area you want to support;
• whether there will be enough capital to make the trust sustainable;
• who will act as trustees, both initially and in the future; and
• the ongoing governance, investment, reporting, compliance and administration involved.

Specialist legal, accounting and investment advice should be obtained before deciding whether a separate charitable trust is appropriate.

Give through a community foundation

Community foundations provide another way to support the community or causes that matter to you. They pool and professionally invest charitable funds and make distributions over time to support local organisations and initiatives.

Depending on the foundation and the type of gift, you may be able to contribute to an existing community fund or establish a named or special-purpose fund supporting particular causes or communities.

This can provide an enduring charitable legacy without the cost and administration involved in establishing and operating your own trust. Some foundations may also offer alternatives where the gift is distributed over a defined period rather than being invested indefinitely.

If you are considering this option, speak with the relevant community foundation about the types of funds it offers and how the gift would be administered. Your legal advisor can then ensure your Will directs the gift to the correct foundation and fund.

Local community foundations

There are community foundations operating across Aotearoa New Zealand, including:

You can find foundations serving other regions through the Community Foundations of Aotearoa New Zealand regional directory.

Balance charitable giving with your other responsibilities

Charitable intentions should be considered as part of your overall estate plan, including appropriate provision for the people who are important to you.

It is also important to consider your obligations to eligible family members under the Family Protection Act 1955, and whether you have promised to reward anyone for work or services they provided during your lifetime. Click here to see our article on claims against estates.

A successful claim against your estate could reduce a charitable gift or prevent your wishes from being carried out as intended. Your legal advisor can help you balance these considerations and, where appropriate, record the reasons for your decisions.

Is it time to review your Will?

If you would like to leave a gift to charity, careful drafting can help ensure your generosity has the impact you intend while still providing appropriately for family and other beneficiaries. Contact a member of our Private Client team to discuss making or updating your Will and the options for creating a charitable legacy.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.