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Leaving too much to charity leads to inheritance disputes

Bequeathing gifts to charity in your will is a noble and commendable choice, yet caution should be used to avoid inheritance disputes.

While deciding to donate a portion of your estate to your favourite charity can be a relatively painless affair, there are a number of factors that could affect how much your other beneficiaries receive and even result in a family member contacting a contesting wills lawyer.

There are four key types of bequests you can make while estate planning, including those gifts you wish to leave to charity.

  1. Residual – Once your other gifts have been allocated and any legal fees paid, the remainder of your estate is left to one or more recipients.
  2. Fractional – A certain percentage of your estate is awarded to the charity, organisation or individual.
  3. Pecuniary – A specific gift is nominated. This could include a sum of money, stocks or property.
  4. Whole estate – Your entire estate and assets are bequeathed to one beneficiary.

When deciding to leave a gift for charity in a will, the most common bequest chosen is the residual sum. This means all other beneficiaries are taken care of before the organisation receives a share.

However, this method of donation can create inheritance disputes if your financial situation changes between completing the will and passing away.

While you may have first intended for your family members to receive the majority share of your estate when you wrote your will, naming specific monetary sums for these beneficiaries could lead to their proportion becoming unfair.

For example, if you bequeath your family members $500,000, pay $10,000 in legal fees and have an estate worth $550,000 at the time of creating your will, you may assume $40,000 will be given to charity. However, if between the creation of your will and your death your estate expands to $900,000, your charity is suddenly being awarded $440,000.

If your original gift of $500,000 was split between multiple family members, this means the charity would be awarded a larger proportion of your state than your intended beneficiaries. This situation unfortunately does commonly occur and often leads to expensive and costly contesting wills cases.

It is therefore recommended that you regularly update your will to reflect your current financial situation, or only make factional or pecuniary bequests to non-family members and charities.

If someone in your family has recently passed and left a significant amount of their estate to charity, you may want contact a contesting wills lawyer to investigate the deceased intentions. For more information, get in touch with GMP’s contesting wills lawyers today.

© 2021 
Contesting Wills
 — Gerard Malouf & Partners

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