Charities and contested estates – a £5bn question

In the UK, gifts left to charities by will are worth over £3.4 billion each year. Research conducted by Legacy Foresight predicts that this amount is set to reach £5 billion by 2030,  with increases not only in the number of people leaving charitable gifts by their will, but an increase in the size of those legacies on average. Among the most popular causes to benefit are air ambulances, wildlife trusts, arts and education charities, NHS hospitals and mental health charities.

Given that legacies represent the single biggest source of income for UK charities, the upward trend in legacy donations will be welcome news for many charitable causes and the projects that they serve. The increased market for charitable legacies, however, is likely to coincide with the increasing litigation of wills and estates in England and Wales.

Challenging a charity legacy

Disgruntled family members or those forgotten under a will may feel that they have cause to challenge the validity of a will, particularly where the legacy is only a recent addition. Alternatively, qualifying dependants may assert that the deceased has not made reasonable financial provision for them under the Inheritance (Provision for Family and Dependants) Act 1975. In either scenario, the charitable legacy may become vulnerable to attack, and unless this can be resolved between the beneficiaries, for example by way of alternative dispute resolution, the charity is likely to become embroiled in inheritance dispute proceedings. While litigation carries inherent risks for any litigant, charities will have additional considerations when deciding whether to engage in formal proceedings, for example reputational exposure where proceedings are heard in public or subject to media coverage.

It should not be assumed, however, that charitable legacies will simply be handed over if challenged. Charity trustees have obligations to act in the best interests of the charity, including safeguarding and recovering assets, and the courts will be guided by the principle of testamentary freedom in respecting the wishes of the deceased. There are many published decisions which involve charities adopting an active stance to litigation, and prospective claimants should not assume that claims involving charities are any easier to mount.

Legacies are increasingly valuable assets to charities in England and Wales. As charitable gifts in wills become more popular, they will need to contend with other social changes, such as an increasing reliance on the intergenerational transfer of wealth by younger generations, predominantly driven by the rising costs of living and exclusive property market. Charities and beneficiaries will need to be well advised if faced with an inheritance dispute, as there will be more at stake for all involved over the coming decades.