Bequests: guidelines and family fund options
THIS month wills and estate planning lawyer Dylan Heffernan of the Sydney law firm McCabes outlines what can be in a bequest and what are the rules around them.
What can I bequest?
You can give any personal property away that you own - cash, investments, property, even loans owed to you. "Clients with family trusts will often have loaned money to the trust but may not have realised that the loan will remain owing to them when they die; that's an asset which will form part of their estate, and it should not be overlooked when the client is implementing their estate management plan" Mr Heffernan said. Like other assets, the right to be repaid money under a loan can generally be given to beneficiaries under a will. Loans can also be forgiven under a will, which is yet another form of a bequest.
As noted in last month's story, you should ensure the charity is registered with the Australian Charities and Not-for-profits Commission and that your will accurately describes the charity by using its full name, registered address and even it's ABN so that you leave no doubt as to who the intended recipient is.
"The law is pretty restrictive when it comes to leaving property under will on trust for a specific purpose, rather than for actual people" Mr Heffernan said. "By checking the ACNC register, you can ensure that the charity you intend to make a gift to under your will has a recognised charitable purpose."
Private ancillary funds are becoming a more common way for older Australians to set up charitable gifts. It's also a way of teaching the younger generations of a family about gifting to charitable organisations.
Set up while a person is still alive, funds are gifted from the private fund while the person is alive and maybe also on the death. "The control of that fund can pass to their family under the terms of the will," Mr Heffernan said. "It then becomes the family's job to determine how those funds are applied for charitable purposes."
It's not a complicated to process to set up such a fund, but a lawyer is needed to draft the documents, a well- researched investment strategy put in place and a commitment made to meet the various regulatory requirements that go with private ancillary funds.
There may be tax benefits attached to this type of gifting which an accountant would be able to advise.