Family Challenges to Charitable Bequests

Charities are losing out on bequests meant for them because more families are contesting wills following death, according to a new study by a Queensland University of Technology academic.

The latest report by The Australian Centre for Philanthropy and Nonprofit Studies (CPNS) at QUT, funded by financial management company Perpetual, found that Australian laws are favouring the family when it comes to challenges to gifts to charity in loved ones’ estates.

Even when bequest intentions for charities seemed clear and amounts involved relatively modest, the charity may lose out – of 47 contested cases studied, 33 charities lost more than half the amount originally designated to them.

Centre Director Professor Myles McGregor-Lowndes, who conducted the study, says the best way for people to avoid having bequests to charity eroded was to provide adequately for their dependants in wills, and be informed by appropriate legal advice.

Another option was to donate the money before they die, or even establish a foundation that will enable donations to continue over time.

Professor McGregor-Lowndes says there has been a large increase in recent years of disputes by family members who expected to receive more from the will and in the vast majority of these cases, the charity ends up with a fraction of the amount originally bequeathed.

He says it is perhaps surprising that most of the time, family members are successful in receiving the part of the estate earmarked for charities and even in cases where offspring had been estranged for years, they dispute the will.

The report found many charities relied heavily on will bequests to keep their doors open or to enable programs to reach more people in the community.

People who leave a charitable bequest were commonly strong believers in a cause, or a particular organisation, and had been supporting the charity during their lives.

Professor McGregor-Lowndes says studies have shown that in planned giving, such as bequests or committing to repeat donations, people tend to outlay more financially than with impulse or one-off giving.

Losing such individuals’ support through will disputes can have a detrimental effect on the work of the charity.

He says what is causing distress is that we are not talking about situations where charities have badgered people for money; cases involve people in sound mind making a voluntary bequest, and their wishes are not being adhered to.

He says the prospect of high legal costs deterred many charities from defending cases and, apart from this, they were reluctant to put up an aggressive fight for funds.

He says by nature, charities are grateful for any bequests they do receive and they want it to be a genuinely voluntary gift, but they are highly concerned that money should go where it was intended to.

The complete research report called Every Player Wins a Prize can be downloaded at: https://wiki.qut.edu.au/download/attachments/84285787/Every+Player+Wins+a+Prize.pdf?version=1