Un-happy Holidays Part 1 & 2

Un-happy Holidays Part 2: The Spirit of Giving – Charitable Bequests & Contested Estates

Are you inspired by the spirit of giving this festive season? There are number of ways charitable bequests might be impacted by a contested estate dispute, but there are also steps that can be taken to bolster the chances of a gift succeeding.

The Australian Charities and Not-for-profit Commission (ACNC) reports that there are around 60,000 registered charities in Australia[2]. For a variety of reasons, including the rising cost of living and the impact of adverse weather events around the country, many Australians will seek assistance from a charity this year[3], increasing the demand on the charitable sector.
In the 2020 reporting period, the ACNC found that charities received around $12.7 billion in revenue from a mix of donations and bequests, with $4,894 million of that in NSW[4]. The ACNC hasn’t reported on what percentage of these figures are from bequests alone, and other statistics available aren’t definitive.
For example, the ‘Include a Charity’ campaign states that their research has shown that ‘at least a third’ of Australians are considering a charitable bequest (but have not yet included it)[5]. Older research from 2005 found that 7% of will-makers intended to make a charitable bequest of some type[6] and still other research claims it may be around the 14% mark[7]

Regardless of the exact figure, charitable bequests form part of the contested estates landscape in a variety of ways including:

  • Unclear, incorrect, or inconsistent descriptions of charitable organisations, possibly requiring court determination or resulting in the failure of the gift entirely.
  • Challenges to the validity of the will itself, for example issues surrounding testamentary capacity, undue influence, and unconscionable conduct.
  • Family provision claims.

If you are considering making a charitable bequest:

  • Have a valid and up to date will prepared with expert advice. Ideally this would include a statutory declaration recording your charitable intentions and motivations for leaving the bequest.
  • Notify your intended charitable recipient(s) so they are aware of your testamentary intentions.
  • Try to make recorded donations (even small ones) during your lifetime - demonstrating the testator had an ongoing relationship with the charity may assist the charity in responding to a contested estate dispute[8].

If you are a charitable organisation who receives or would like to receive bequests:

  • Encourage testators to obtain expert (and independent!) advice in preparing their will.
  • Discourage DIY wills- we would all rather see the testator’s hard-earned funds put to good use, not sorting out a mess in a DIY will.
  • Be alert to elder abuse and undue influence.
  • Your level of engagement in a contested estate is a mix of commercial, legal, reputational and risk-based factors, but expert advice can assist you in understanding your options and prospects and provide you with a strategy to best represent your interests.

In next week’s ‘Unhappy Holidays Part 3’ we will consider the impact elder abuse has on end of life documents.

Un-happy Holidays Part 1: The ‘Festive’ Season & Contested Estates

With the end of year holidays rapidly approaching, who won’t be seeing one another because of a dispute over a will? Probably siblings.

A review of family provision judgments delivered so far in 2022 indicates that, of those claims which resulted in judgment, the majority were brought by adult children. There were also noticeable numbers of claims by grandchildren and persons claiming to have been in a de-facto relationship.

Meanwhile, the majority of appointed Executors in such judgments were children of the deceased, meaning that the opposing parties were predominantly siblings (or step-siblings).

Given that over 90% of family provision cases settle,[1] drawing conclusions based on the judgments alone only gives us a snapshot of those cases which were so contentious they couldn’t be resolved without court determination.

At minimum, we can say with certainty that the parties involved in matters resulting in a judgment would have incurred legal costs in running a contested hearing – which leads to the other noticeable outcome of this year’s judgments delivered to date.

Like all litigation, contested estate disputes are not ‘risk free’ and costs are not always ordered out of the estate. During 2022, we have also seen a number of judgments dealing with costs arguments - particularly applications to cap costs and the impact of the strategic deployment of offers with possible costs consequences.

In next week’s ‘Unhappy Holidays Part 2’, we will examine the impact of family provision claims on charitable bequests.

Should you require any assistance with contested estates, please contact me on 02 4907 5678, or by email [email protected].

[1] Greg George, Review of Family Provision Judgments at First Instance and Appeal Published in 2021 by the Supreme Court of New South Wales, 5 May 2022
[2]  https://www.acnc.gov.au/for-public/understanding-charities/are-there-too-many-charities-australia
[3] Samantha Freestone, Major charities see increase in donations, but need for services is increasing, published 19 July 2022, Major charities see increase in donations, but need for services is increasing - PBA (probonoaustralia.com.au)

[4] Australian Charities and Not-for-profits Commission, Australian Charities Report, 8th Edition
[5] https://www.includeacharity.com.au/about-us/faq-s/
[6] Diana Olsberg and Mark Winters, Ageing in Place: intergenerational and intrafamilial housing transfers and shifts later in life, a report prepared for the Australian Housing and Urban Research Institute, AHURI Final Report No. 94, October 2005, cited by Myles McGregor-Lowndes and Frances M. Hannah, ‘Every player wins a prize? Family provision applications and bequests to charity’ October 2008, The Australian Centre for Philanthropy and Nonprofit studies, Brisbane, Queensland
[7] McGregor-Lowndes and Hannah, above
[8] McGregor-Lowndes and Hannah, above

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