How do I donate to a charity in my Will?

Lizia Lim

PrincipalAitken PartnersView Profile

Leaving a gift (bequest) to a charity in your Will can be a meaningful way to support a cause that is important to you after your death. However, there are several ways to structure a charitable gift, and the wording of your Will can have an impact on whether your wishes can be carried out exactly as you would like. This guide explains the key aspects to consider.

A charitable gift should be considered as part of your broader estate plan. This includes deciding what you want to give, identifying the intended recipient correctly, considering how the gift should be used and making appropriate provision for other beneficiaries. Circumstances can change over time, and it is important to consider contingencies so your wishes can still be carried out. This article covers some of the key considerations involved in planning to leave a gift to a charity in your Will.

What are the different ways to leave a gift to charity?

A charitable gift under a Will does not just have to be cash. Depending on your circumstances and intentions, you may consider:

• A fixed sum of money: A nominated amount paid to the charity.
• A percentage of your residuary estate: A share of what remains after debts, estate expenses and any specific gifts have been dealt with.
• A specific asset: Such as property, shares, investments or another valuable asset. Specific asset gifts require additional planning and are discussed further below.
• All or part of your estate: You may choose to leave a substantial proportion, or in some circumstances all, of your estate to one or more charities.

Each option can produce a different outcome. For example, a percentage of the residuary estate will generally rise or fall with the overall value of the estate, while a fixed monetary gift will remain the same size unless the Will provides otherwise.

The most appropriate approach will depend on the size and composition of your estate, the other beneficiaries you intend to provide for and the type of charitable support you want to leave.

Should the charity decide how the gift is used?

You can leave a charity an unrestricted gift, allowing it to use the funds where they are most needed, or direct the gift towards a specific purpose such as research, equipment, scholarships or community support. If you want to restrict how the gift is used, consider:

• whether the charity undertakes the activity you want to support
• whether it will accept a gift subject to those conditions
• whether the gift is sufficient for the intended purpose
• what should happen if the program or activity no longer exists
• whether the charity should be able to apply the funds to a similar purpose.

Restrictions that are too narrow can make a gift difficult to administer and, in some cases, may lead the organisation to decline it. For significant or highly specific gifts, it would be recommended to speak with the charity before finalising your Will.

Make sure you identify the right charity

Charitable organisations can change over time. They may merge, restructure, change their name or cease operating altogether. Your Will should therefore clearly identify the organisation you intend to benefit.

Before including a charitable gift, consider checking:

• the charity’s correct legal name
• its Australian Business Number (ABN)
• whether you intend to benefit a national, state or related organisation
• whether the charity is currently registered and operating
• what should happen if the organisation merges, changes structure or no longer exists.

You can check the legal name, ABN, registration status and other details of Australian registered charities through the ACNC Charity Register.

Your Will can also include provisions dealing with future changes, such as allowing a gift to pass to a successor organisation or another charity carrying out similar work.

We have covered this issue in more detail in the insight article: 
What happens if you leave a gift to a charity and they no longer exist?

Gifting property, shares and other assets

Instead of leaving cash, you may choose to leave a specific asset to a charity. This could include:

• real estate
• shares or other investments
• artwork or valuable collections
• another significant personal asset.

Specific gifts can require more careful planning than cash gifts. Before including one in your Will, consider:

• whether you are likely to still own the asset when you die
• what should happen if the asset is sold, transferred or replaced during your lifetime
• whether the charity is able or willing to accept the asset
• whether the asset should be transferred directly or sold by the estate, with the proceeds donated
• any tax consequences associated with the transfer or sale, including potential capital gains tax implications.

If you no longer own the nominated asset when you die, your Will should provide an alternative, otherwise the gift may fail.

It is useful to consider that many charities have a special Deductible Gift Recipient tax status which may allow them to receive a transfer of certain assets tax free, whereas Capital Gains Tax may be payable if the asset was sold within the estate and the proceeds of sale given to the charity, therefore the charity will receive a lesser net amount.

Planning for larger gifts or ongoing charitable giving

For larger charitable gifts, a direct bequest in your Will may not be the only option. Depending on the amount involved and outcomes you want, it may be appropriate to consider a charitable trust or another philanthropic structure.

These arrangements can be used to provide ongoing support rather than a single distribution. For example, assets may be invested and the income distributed to charities or causes over time, allowing the original capital to continue supporting a charitable purpose into the future. A private charitable trust may also be established around a particular objective, such as scholarships, research or another defined purpose.

For people who are already undertaking regular philanthropic giving during their lifetime, the same approach can be extended into their estate planning. This can help preserve the objectives, structure and priorities they have already established, rather than leaving future decisions entirely to family members or executors.

Because these arrangements can involve more complex legal, tax and financial considerations, specialist advice should be obtained when planning larger or ongoing charitable gifts.

Considering other beneficiaries

A charitable gift should not be considered in isolation from the rest of your estate plan. The size of the gift, your family circumstances and the needs of other beneficiaries may all be relevant.

Leaving a substantial proportion of an estate to charity while making limited or no provision for certain family members may increase the chance of disputes made against the estate, including family provision claims.

Important factors to consider:

• your spouse or partner
• children and other dependants
• other people you intend to benefit
• the current value of your estate
• how that value could change over time
• whether particular assets are likely to remain part of your estate.

This does not mean that significant charitable gifts should be avoided. Rather, they should form part of an estate plan that considers your assets, relationships and legal obligations as a whole, and the potential for disputes after you are gone. 

You can read more in our insight article: Estate Planning Essentials: How to Avoid, or Navigate Will Disputes

Review your charitable gifts as circumstances change

Like other parts of your estate plan, charitable gifts should be reviewed periodically. You may need to revisit your Will if:

• the organisation you nominated changes its name or structure
• your preferred charitable causes change
• you sell an asset specifically mentioned in your Will
• the value or composition of your estate changes significantly
• your family or financial circumstances change.

Regularly reviewing your Will can help ensure that your charitable intentions continue to reflect your wishes and remain practical to administer.

Getting advice about charitable gifts in your Will

A charitable gift can create a lasting benefit for an organisation or cause that matters to you. Careful planning can also help ensure the gift operates as you intended and works effectively alongside the other provisions of your Will.

Our Wills and Estates team at Aitken Partners can advise on preparing or updating your Will, structuring charitable gifts and considering those gifts as part of your broader estate plan. Please get in touch with our team to discuss further. BOOK A CONSULT.