BEQUEST TIPS: Learn about some of the challenges around bequests.
BEQUEST TIPS: Learn about some of the challenges around bequests. DragonImages

What limitations can you encounter with bequests?

WILLS and estate planning lawyer Dylan Heffernan of the Sydney law firm McCabes explains there are some limitations with giving bequests.

Charity limitations

Conditional bequests to charities are possible, but there are practical limitations.

"If a client was looking to give an amount to a charity but wanted that amount to applied to particular project, we would generally recommend specify that as a wish," Mr Heffernan said. "You might say, for example, 'I give $... to RSPCA Australia and I express a sincere wish that this amount is applied to finding homes for dogs that are rescued from puppy farms'."

So, if you apply your bequest to a particular project, and when you die that project no longer exists, the bequest can still go to the specified charity and it will apply the funds as it sees fit.

Once the bequest is received, there are no obligations for the charity to carry out any actions for the donor's estate. Most of them will however issue a receipt or letter of thanks to the donor estate. "What we would generally say in the will is that a receipt from the treasurer, secretary or public officer of the charity is sufficient to discharge the executor's obligations in relation to the gift," Mr Heffernan added.

Other organisations

You can also give your assets to a non-charitable, private organisation as the people who will benefit from the bequest will be the shareholders.

Challenges to gifts

Family members may be able to challenge a testator's bequest decision if it can be proven that the testator didn't approve the contents of their will.

Another area of challenge may be where a testator leaves all or a large part of his or her estate to a charity and doesn't leave anything in their will for persons that they have duty to provide for under the will. "They can make an application to the court on the basis that they haven't been adequately been provided for and they can seek to have that gift reduced," Mr Heffernan said.

If you give a bequest to 'natural person' who has died before your estate is settled, the gift will fail. The exception here is in NSW where the intended beneficiary is a direct descendent of the deceased and leaves surviving children. In that case the children of the intended beneficiary will share the gift.

Executors discretion

It may be that by the time you die the charity you have nominated for a bequest no longer exists or at the time you are drawing up your will you can't decide which charity you want to support.

"If a client wishes to make a bequest to a particular charity under their will, we would generally recommend that they also give their executors direction to give the amount to some other charity that has a similar purpose in circumstances where the intended charity no longer exists or for some other reason it is not possible to pay out the gift," Mr Heffernan said.

Keep your will up to date

Over time your decision of which individual or charity should receive a bequest can change. As a result, you should review your estate planning -

  • If you are still working, every three to four years.
  • Whenever a significant life occurrence happens.
  • If retired, every two or less years, as a lot more changes in their circumstances, from births to deaths, affect their situation.

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