Charity Regulation and Ambiguous Gifts to Charities webinar - Part 2

Over 100,000 charitable bequests are made each year. However, every year, over £1 million is left to misnamed charities. This note explains the eight ways that personal representatives can work out who should receive an ambiguous charitable gift.

The problem

It is not unusual for a testator to misdescribe a charity in their will. The most common mistake is to try to leave money to ‘cancer research’. Should the money go to Cancer Research UK, The Institute of Cancer Research, the Childhood Cancer Research Trust, or one of the many other charities with the words ‘cancer research’ in their name? It can be very difficult to know for sure if all you have to go on are the words ‘cancer research’ in the will.

Fortunately, there are eight options available to personal representatives to help them work out who should receive the money. Some of these options involve the personal representative making the decision themselves and the others involve asking someone else. Each option has benefits and drawbacks.

Decisions by the personal representatives

First option: If the misdescription is so minor that it is clear which charity should receive the money, then the personal representative can simply ignore the error and make the gift. This is the simplest and easiest option for personal representatives. It is most appropriate if the will has only made a small spelling mistake. For example, it is pretty obvious who should receive a gift to ‘Cancer eRsearch UK’. However, in practice, this option is only appropriate for the most trivial of mistakes.

Second option: If the gift is actually for general charitable purposes rather than a specific charity, then the personal representatives are entitled to select an appropriate charity which operates in that area. For example, a gift ‘for the relief of children with disabilities’ could be given to any appropriate children’s disability charity. However, this option can put personal representatives in a difficult position if they need to choose between equally deserving charities. It is also sometimes difficult to know if a gift is for a particular but misnamed charity or general charitable purposes. For example, is ‘cancer research’ a purpose or a misnamed charity?

Third option: If there are only a couple of possible recipients, then the personal representatives can try to broker a compromise between the different charities so that (for example) the money is split equally between them. This is a practical and cost-effective solution in simpler cases. However, the Charity Commission will not sanction any compromise, so personal representatives are on their own here.

Asking the Attorney General

Fourth option: If the personal representatives cannot use any of the first three options, then they can write to the Attorney General (at the Treasury Solicitor’s Department) to ask for instructions on who to pay. This is known as ‘the royal sign manual procedure’ because up until 1986 the monarch gave the instructions in a signed letter. This procedure is a quick, cheap, and easy way to get authoritative guidance. However, this option only works for gifts to charities. You cannot use this option if the deceased’s money is held on trust for a charity. Unfortunately, in practice, this rules out many situations.

Asking the Charity Commission

Fifth option: If the deceased left money on trust for an ambiguously named charity, then the personal representatives can ask the Charity Commission to make a ‘scheme’. A scheme is simply an order which allows or directs charity trustees to do something. In this case, the scheme would allow the personal representatives to pay a particular charity. To get a scheme, personal representatives would need to explain why the gift cannot take effect without the Charity Commission’s involvement (i.e. why the gift has ‘failed’), who they think should receive the money, and why. They will also need to consult with any third parties who might otherwise benefit from the money. This could include the potential charity recipients and the residuary beneficiaries in the will. The Charity Commission can consider a wide range of factors when making its decision, so make sure you think practically. For example, did the deceased support any particular kinds of charities in their lifetime and/or did they live near any relevant charities? However, the requirement to consult third parties can make this option a little complicated if there are many possible recipients and/or difficult beneficiaries who want to claim the gift for themselves.

Asking the court

Sixth option: If you cannot avoid going to court, then the cheapest and quickest option is usually to rely on section 48 of the Administration of Justice Act 1985. Under this section, the court can permit trustees to rely on an opinion from a senior barrister on the meaning of an uncertain will. These claims are usually decided without a court hearing, so you don’t usually have to pay as much as you would for a fully contested claim. However, an order under section 48 will not protect the charity which ultimately receives the money; they could still be sued by a disappointed residuary beneficiary. As a result, this option may not be appropriate in high-value or difficult cases.

Seventh option: In particularly difficult cases, or in cases involving litigious third parties, the personal representatives could issue a claim which asks the court to make a declaration on the true meaning of the will. This type of claim would allow everyone who might benefit from the gift to have their say. It would also mean that all of those people are bound by the outcome. However, contested litigation will be expensive, time-consuming, and possibly stressful for the personal representatives.

Eighth option: If the personal representatives suspect that the will does not give effect to the testator’s intentions because the draftsman made a clerical error or misunderstood the testator’s instructions, then they can ask the court to correct (‘rectify’) the will. For example, in an appropriate place, the court could replace the words ‘cancer research’ with ‘Cancer Research UK, registered charity number 1089464’. However, because this is such a serious action – the testator’s words are literally being rewritten – the court will only rectify a will where there is clear evidence to support the claim. This is unlikely to be appropriate in many charity cases.

Conclusion

It is not easy being a personal representative. The role is made harder when the deceased’s will is unclear. Fortunately, in cases involving ambiguous gifts to charity, there are various options open to the personal representatives to work out who to pay.

This article was written in conjunction with [Natalie Pratt/Matthew Mills] of Radcliffe Chambers.