The Regulator for Charities in England and Wales

Paying For Wills with Charity Funds

Contents

Introduction

1. A will is an extremely important document. Within the constraints of the law everyone is free to dispose of their own property as they wish. A heavy duty rests on advisers to make sure that a will properly reflects the wishes of the testator, and the Courts have power to overturn legacies where this is not the case.

2. Charities can become involved in meeting the cost of will preparation for two main reasons. The first of these is as part of the delivery of charitable purposes. For example, a charity whose aim is the support of the terminally ill may consider it appropriate to meet the cost of the preparation of the wills of beneficiaries as part of the support it provides for them. Secondly, a number of charities have adopted fund-raising initiatives to promote the inclusion of gifts to charities in wills. For example, as part of an organised campaign to raise funds, a charity may offer to meet the cost of preparing a will for an individual in the belief that the charity will receive a legacy.

3. There is no objection in principle to either of these arrangements. Charities do need to be alert to the potential difficulties involved in these arrangements and act in accordance with best practice if they are to avoid risks to their reputation. For a charity its reputation is vital – and if it meets the cost of the preparation of a will which is challenged, its reputation for fair dealing could be compromised.

The aim of this guidance

4. This guidance is principally about some of the issues that arise in the fund-raising context, although the advice in paragraph 14 is relevant more generally. It aims to provide trustees, charity employees and solicitors with advice about the legal position and best practice when a charity offers to meet the cost of will preparation as a fund-raising venture.

5. We strongly advise that charity employees should never become involved in drafting an individual’s will. A charity employee’s involvement in drafting a will is likely to be viewed with suspicion and could well increase the risk of a legal challenge to a legacy left to the charity in the will.

6. We would expect trustees of charities that are involved in, or that are considering involvement in, offering to meet the cost of will preparation to take into account:

  • the difficulty of measuring the benefits obtained by the charity in relation to the costs incurred;
  • the possibility of a legal challenge to a bequest to a charity in a will which has been prepared at its expense; and
  • the danger of giving the impression that a charity is either over-resourced already or lavish with its resources.

Measuring benefits and costs

7. Like all fund-raising ventures, the trustees must consider the cost-effectiveness of offering to meet the cost of will preparation. We would expect trustees to have good reason to believe that, overall, the benefit the charity will gain from meeting the costs of preparing wills is going to outweigh the costs it will incur. The ongoing costs and likely benefits should be kept under review and the venture should be stopped if it appears that, contrary to the charity’s original expectations, the costs are likely to be out of proportion to the benefits. Before starting the venture, we recommend that charities consider developing a measurement tool for use in judging this. In any event, we would advise that charities only meet the reasonable cost of the preparation of a will up to a pre-agreed maximum.

Avoiding a legal challenge to a legacy in a will prepared at the expense of a charity

8. It is plainly not in the interests of a charity, or indeed of charities generally, for a legacy to a charity to be challenged because the charity helped fund the preparation of the will which contains the legacy. We recommend that charities which offer to meet the cost of writing a will consider what steps they can take to minimise the risk of such a challenge. Some suggestions are made in paragraph 14.

9. The risk of a challenge being made may depend on the precise nature of the relationship that exists between the charity and the person whose will is to be prepared (“the testator”). For example, the risk may be greater where the charity takes the initiative in offering to meet the cost of writing a will, (as is the case in a fund–raising campaign), than where it simply gives financial assistance to a person who has approached it with a request for such assistance. The risk may also be increased where the testator is ill, very elderly or lacking in ordinary understanding.

10. A challenge to a legacy contained in a will prepared at a charity’s expense may come from a person who would benefit from the invalidity of a particular charitable legacy and is likely to be based on a claim that the testator:

  • was, at the time he or she made the will subject to the “undue influence” of people who manage or work for the charity; or
  • did not fully understand that he or she was making a gift to the charity and did not intend to do so (“want of knowledge and approval”).

Undue influence

11. A claim that the testator had been the subject of “undue influence” means that he or she has been coerced into giving someone a legacy. Coercion extends beyond direct physical compulsion. It would include various forms of pressure or encouragement. Offering to meet the cost of the independent preparation of someone’s will in the hope of being given a legacy is unlikely by itself to be treated as coercion. It is, however likely to be one of the factors taken into account by a Court in considering whether there has been undue influence. An example might be where the testator is particularly vulnerable because of his or her dependence on the charity (as a beneficiary) that has offered to meet the cost of the preparation of the will.

Want of knowledge and approval

12. A claim of want of knowledge and approval means that, when including a particular legacy in his or her will, the testator has failed to understand the effect of what he or she is doing, and did not really intend to give the legacy at all. Normally the onus of proving this falls on the person who makes the claim. It is for the solicitor who prepared the will to demonstrate that the testator really did know what he or she was doing, and really did intend to give the charity that benefit. This may not always be an easy thing to do.

Giving the right impression

13. The way in which this type of fund-raising arrangement is presented is a matter for the charity trustees, with the benefit of appropriate professional advice. However, to some people, a charity which can afford to meet the cost of preparing an individual’s will regardless of whether or not it is promised a legacy in the will might appear lavish with its resources. We would advise charities involved in offering to meet the cost of will preparation to be alert and sensitive to external opinion and criticism of this arrangement as a method of raising funds. A charity may wish to consider communicating its policy in this area and the principles that it follows in its Annual Report. Guidance on fundraising in general can be found in our publication CC20.

General safeguards

14. Charities can greatly reduce the risk of a legal challenge being brought against a will for which they have paid, and from which they benefit, by ensuring that basic safeguards are put in place. The nature of the safeguards is a matter for the charity itself, in the light of the legal advice it receives; but we would normally expect charities to do what they reasonably can to ensure that:

  • written clarification is given to the testator and to the solicitor explaining the basis upon which the charity is offering to meet the cost of the preparation of the will and the procedures to be followed;
  • solicitors preparing a will make it plain to all concerned that they are acting exclusively in the interests of the testator, even though their cost will be met by the charity;
  • solicitors take instructions directly from the testator, rather than from the charity. Where possible, we recommend that these instructions are confirmed in writing;
  • before the will is executed the solicitor is satisfied that the testator fully understands the effect of the will and that it reflects his or her instructions, and that this is recorded.

15. We would not expect solicitors to suggest that the testator should benefit any charity in their will. If the testator raises the possibility of benefiting a charity we would expect the solicitor to advise that adequate provision for family and dependants ought to be made first.

16. Charities may wish to consider developing standard procedural documentation in this area. For example, a checklist covering the above points could be completed by the solicitor and then initialled by the testator. Where standard procedural documentation is used we recommend that:

  • charities consider taking steps to ensure as far as possible that the content is properly explained and brought to the attention of the testator to avoid any subsequent claim that a testator signed it without properly understanding; and that
  • the documentation does not include any reference to a legacy to the charity. We would also recommend that the charity regularly review the standard procedural documentation.

17. Charities may wish to seek written confirmation from any solicitor who prepares a will for a client at their expense that in any case where the testator after advice decides to leave a legacy to the charity, that they are fully satisfied that the testator:

  • was not subject to any influence;
  • didfully understand and intend what he or she was doing; and that
  • the charges made (indirectly) to the charity will correspond to those normally charged for preparing a will.

The relationship between the charity and the testator

18. Where a charity offers to meet the cost of making a will we advise that it recommend that an individual’s own solicitor is instructed to carry out the preparation of the will. An individual’s own solicitor will be familiar with the broad range of his or her interests and personal circumstances and so be best placed to advise on the drawing up of a will that takes account of all these interests. Where an individual does not have a solicitor, we advise the charity to recommend that a solicitor is instructed, but to decline to recommend any particular firm or individual.

19. There is no objection in principle to a charity supplying an individual with a list of solicitors, provided the individual chooses from the list themselves. The charity should make it clear to the testator that it is not assuming any independent responsibility for the conduct or competence of the solicitors whose details are supplied and it should get a written acknowledgement of this from the testator. An alternative to supplying the details of solicitors might be for the charity to suggest that the individual contacts their local Citizen's Advice Bureau to obtain details of local solicitors who could be considered.

The relationship between the charity and the solicitor

20. Charities involved in offering to meet the cost of will preparation need to take great care to avoid inadvertently creating any contractual relationship between them and the solicitors who actually prepare the will. There are two main risks involved in this area. These are:

  • the risk that the charity might be regarded as having taken responsibility for the will, even though it was prepared by the solicitor. This could expose the charity to financial liability if the solicitor’s conduct of the business proves to be negligent.
  • if the charity, rather than the solicitor, is regarded as having taken responsibility for the will, there may be a greater risk that any legacy in the will to the charity will be invalid on the grounds of undue influence or want of knowledge and approval.

The relationship between the solicitor and the testator

21. The normal professional relationship must exist between the solicitor and testator. The solicitor must act in the interests, and on the instructions, of the testator alone. This means that primary legal liability for paying the fees remains with the testator, although he will be entitled to recover them from the charity. It also means the charity will only have information about the content of the will if the testator gives permission to the solicitor to release it. All of this must be made clear in any promotional material issued by the charity.

Professional practice issues

22. The Law Society has stated that where clients are referred to a solicitor by a third party the solicitor can agree to be paid by the third party (in this case the charity) provided the referral arrangement complies with The Solicitors’ Introduction & Referral Code 1990. This code governs all arrangements between solicitors and third parties that refer clients to them. It requires the solicitor:

  • to act exclusively in the interests of the testator.
  • to retain the freedom to advise the testator impartially
  • to keep the testator’s instructions confidential, unless the testator authorises these to be disclosed.

23. Where the third party is paying the solicitors fees the Code specifies additional requirements. These are:

  • that the terms of the referral agreement between the charity and the solicitor are set out in writing, with a copy available for inspection by the Law Society and the Office for the Supervision of Solicitors’ ; and
  • that the terms of agreement between the charity and the testator, relating to the payment and the preparation of the will, includes specified information relating to the solicitor’s independence and their duties to the testator.

Further information

There are a number of other publications offering advice on raising funds from legacies. The following are two examples:

Institute of Charity Fund Raising Managers (ICFM) Legacy Fundraising - Code of Practice London ICFM 1999

Legacy Fundraising, (ed. Sebastian Wilberforce) West Malling Charities Aid Foundation 1998.