High Court rules on unclear gifts made in a Will


3rd July 2024

Many people choose to leave gifts to charity in their Will. There are specific inheritance tax benefits to leaving at least 10% of your estate to charity, but many choose to make smaller donations to support causes close to their hearts or if they do not have family to whom they can leave their estate. These donations are often not tax-led (although there are still potentially tax advantages), but still need to be drafted with care to ensure the intended outcome.

A recent case heard by the High Court (Dryden v Young & Ors [2024] EWHC 1095 (Ch)), highlighted the importance of clear drafting in a Will to identify the intended recipient of a gift to a charity. Charities can often change name or address, change their charitable purpose or cease to exist entirely in the period between a Will being made and the estate being distributed. This can cause difficulties for an executor who has a duty to ensure they are distributing an estate to the correct beneficiaries and honouring a deceased’s wishes.

In the Dryden case, Marjorie Thompson instructed a now retired solicitor to draft her Will in May 2016. This shared her residuary estate between fifteen charities. When Mrs Thompson died in April 2020, it became apparent that seven of these gifts were ambiguous and difficulties arose in identifying the intended recipients.

The issues with the gifts varied but included there not being a charity with the name given in the Will, a charity being placed into liquidation and a charity being taken over by another charity.

The case came before the High Court, who had to determine whether the seven gifts were valid and whether any should lapse, pass by intestacy or be applied to a charity with a purpose as close to that of the named charity as possible (known as being applied cy-prѐs).

The court identified several key principles that determine how charitable gifts should be dealt with:

  • First, the court must interpret the wording of the gift to identify its recipient. The court should consider whether the gift is made to a charity in existence at the date of the Will and what that entity is. If this is unclear, is there a charity with a purpose as close as possible to the named charity?
  • Where the intended charity is identified, the gift is considered as a gift for the charitable purposes for which that charity operates, rather than being a gift to the charity itself.
    • Where the named charity ceased to exist and there is no charity carrying on its purpose, the gift shall be applied cy-prѐs.
    • If the charity is continuing but has changed its charitable purpose, the gift will be deemed to be for the purposes now carried on by that charity.
  • However, the court did note that there may be circumstances where it is clear that the gift is entirely dependant on that charity being in operation. Where that is the case and the intended charity is not in operation at the time of death, the gift shall fail.
  • If it is found that the gift was made to a charity that never existed but the testator had charitable intent, the gift will be applied cy-prѐs. Should there be no charitable intent, the gift fails.
  • Where a gift has failed, it can be applied cy-prѐs if a general charitable intention can be shown. The court noted that this may be more difficult where the gift was to a named charity which has ceased to exist.

In this case, the court were able to identify the beneficiaries and none of the gifts failed. However, it makes clear the importance of a clearly drafted Will in ensuring your estate can be distributed as intended. Whilst a charity being wrongly named (or changing its name) or ceasing to exist will not necessarily cause the gift to fail, the precise wording of the gift in your Will can ensure it can be paid without issue (and the associated costs of resolving any such issues) and prevents difficulties for your executors.

In this case, there was much discussion around clause 13 of the Will, which stated that a gift should fail where a charity changes its name or amalgamates with another charity before the estate was distributed. It was commented that the wording of the clause was unusual and was not drafted to cover all eventualities where a charity may cease to exist, for example due to insolvency. The court acknowledged the clause likely had consequences not intended by the testator, so decided to interpret its limitations narrowly. This is a clear demonstration of the care that needs to be taken when drafting a gift to a charity in a Will, or indeed to any beneficiary (where, for example, beneficiaries defined by their relationship to the testator can cause problems).

Our specialists have experience in drafting Wills with gifts to charity and can provide you with tailored advice on making these gifts. We can also advise you on the inheritance tax consequences of so doing.

Looking to plan for the future and manage your assets?

Contact our Private Client team

Arrange a call

Enjoy That? You Might Like These:


newsletters

4 July -
Welcome to this month’s edition of Private Client Issues, Blake Morgan’s monthly round-up of the topics you may find of interest. It features insight and advice on developments affecting private... Read More

articles

25 June -
The question of whether Royal Wills should remain sealed or be made public has long been a topic of debate in the United Kingdom. In contrast to the standard legal... Read More

articles

25 June -
With the general election fast approaching and a constant stream of proposed policy announcements being made by all major parties it can be difficult to cut through the noise and... Read More