Families contesting wills mean charities miss out on bequests

According to a new study many charities never see the money left to them because more families are contesting wills following death.

A study by Professor Myles McGregor-Lowndes from Queensland University of Technology has revealed that charities are increasingly losing out on bequests meant for them because Australian laws are favouring the family when it comes to challenges to gifts to charity in loved ones' estates.

The report from the Australian Centre for Philanthropy and Nonprofit Studies at QUT, which was funded by financial management company Perpetual, found that even when bequest intentions for charities seem clear and the amounts involved relatively modest, the charity may lose out and out of 47 contested cases studied, 33 charities lost more than half the amount originally designated to them.

Centre Director Professor McGregor-Lowndes says the best way for people to avoid having bequests to charity eroded was to provide adequately for their dependants in wills and get appropriate legal advice or else donate the money before they die, or 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 often 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 study found contrary to common stereotypes, that many bequestors are not lone, wealthy individuals, but strong believers in a cause, or a particular organisation and had been supporting the charity during their lives.

Individuals with an annual household income of under $52,000 per annum were significantly more likely to have included a charity in their will than those on higher incomes.

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 and Professor McGregor-Lowndes says research has 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.

He says losing such individuals' support through will disputes can have a detrimental effect on the work of the charity and what is causing distress is that these are not situations where charities have badgered people for money but cases involving people in sound mind making a voluntary bequest, and their wishes are not being adhered to.

Professor McGregor-Lowndes says the prospect of high legal costs deterred many charities from defending cases and they were also reluctant to put up an aggressive fight for funds.

He says charities are by nature, 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.