How to Ensure Your Charitable Wishes Are Carried Out: Legal Considerations for Including Charity in Your Will

Including a charitable gift in a Will is a meaningful way to support a cause beyond a lifetime. Making sure the gift is carried out as intended comes down to a few legal and practical points: how the charity is named, what kind of gift is left, how it interacts with the rest of the estate, and how the donation tax credit is claimed.

Understanding Charitable Bequests in a Will

A charitable bequest is a gift left through a Will to a registered charity or another qualified donee. It can take several forms, including a specific amount of money, a percentage of the estate, or a particular asset such as real property or investments. These gifts are often called legacy gifts because they create a lasting legacy for the Will-maker's chosen cause.

A charitable bequest is an instruction in the Will like any other gift. It is most likely to work as intended when it clearly identifies the charity and the gift, which helps avoid disputes or confusion during estate administration. The Canada Revenue Agency (CRA) generally treats gifts made by Will to qualified donees as eligible for the donation tax credit, which can reduce the tax payable on the deceased's final return or by the estate (Canada Revenue Agency).

Key Legal Steps to Include Charitable Gifts in a Will

1. Use Precise Language and Identify the Charity Correctly

Clear and precise wording in the Will matters. The charity is best identified using its full legal name as it appears in CRA's records and, where possible, its charitable registration number and head office location. This reduces ambiguity and helps direct the gift to the intended organization. For illustration only, a clause might read: "I give the sum of $10,000 to [Charity Name], registration number [Charity Number], of [City, Province], to be used for its general purposes."

To help protect the gift, it is beneficial to name an alternate charity to receive the gift in the event that the original charity no longer exists or cannot accept the gift.

2. Decide on the Type of Charitable Bequest

There are several common types of charitable bequests:

• Specific Bequest: A fixed dollar amount or specific asset given to the charity.

• Percentage (Residuary) Bequest: A portion of what remains of the estate after other gifts, debts and expenses are paid.

• Contingent Bequest: A gift that takes effect only if certain conditions arise, such as a primary beneficiary not surviving the Will-maker.

The right type depends on the Will-maker's overall estate plan and charitable goals. A fixed dollar amount provides certainty, but the value of a person's estate may change drastically between the time the Will is prepared and the date of death. A percentage bequest maintains the value of the gift in proportion to the estate.

3. Review and Update the Will Regularly

Circumstances can change over time. Charities can change names, merge, or lose their charitable status; estate laws and tax rules may also change; and a person's charitable wishes may also change over the course of their lifetime.

Reviewing the Will from time to time helps keep charitable gifts effective and aligned with current intentions. Epilogue includes free lifetime updates, which makes keeping a Will current straightforward.

Tax Implications and Benefits of Charitable Bequests

Gifts made through a Will are generally eligible for the charitable donation tax credit. For deaths after 2015, a gift made through a Will is generally treated as a charitable gift made by the deceased’s estate. Where the applicable conditions are met, the donation may be claimed on the estate’s tax return or allocated to the deceased’s final tax return or the tax return for the year immediately preceding death.

When a donation is allocated to the deceased’s final return or the return for the year immediately preceding death, the donation can generally be claimed up to 100% of the deceased’s net income for the applicable year. To carry back a donation made by the estate, the gift must be made within 60 months after the date of death by a "graduated rate estate" (or an estate that was a GRE and is no longer a GRE only because the 36-month limit on GREs has expired). The donated property must also have been acquired by the estate as a consequence of the death, or be property substituted for it.

Clear instructions in the Will help the executor claim these credits efficiently. Because the choice of return can affect the outcome, executors of estates with significant charitable gifts often work with an accountant (Canada Revenue Agency).

Practical Considerations for Drafting Charitable Gifts

Naming the Charity Precisely

Using the charity's full legal name, charitable registration number, and head office location helps avoid confusion. Many charities have similar names, and a precise description helps direct the gift properly.

Specifying the Gift Amount or Percentage

A fixed amount provides certainty about what the charity receives. A percentage keeps the gift in proportion to the estate's value when the Will takes effect.

Including an Alternate

Naming an alternate charity protects the Will-maker's intention if the primary charity cannot accept the gift, and can avoid delays or disputes in estate administration.

Explaining the Gift's Purpose

Some Will-makers specify how the gift should be used, such as funding research or supporting a particular program. This can guide the charity, but overly restrictive conditions may make the gift difficult to administer or impossible to accept.

How Online Will Platforms Support Charitable Giving

Online Will platforms offer an accessible and affordable way to create a valid Will that includes charitable gifts. Epilogue was founded by estate lawyers and turns the legal language into straightforward questions, so charitable intentions are documented clearly.

A Will can be completed with Epilogue in about 20 minutes. Epilogue supports specific, residuary and contingent charitable gifts, partners with over 100 Canadian registered charities, and includes free lifetime updates, so a charitable gift can be changed as circumstances change.

Common Pitfalls to Avoid When Including Charity in a Will

Vague or Ambiguous Language

Ambiguity can cause delays or disputes. Exact legal names and clear descriptions reduce misunderstandings.

Forgetting to Update the Will

Failing to update the Will after changes in personal circumstances or in a charity's status can cause a gift to fail or be delayed.

Overly Restrictive Gift Conditions

Conditions that are too narrow may make it difficult for the charity to use the gift effectively.

Not Considering Tax Consequences

Overlooking tax rules can reduce the benefit of a gift to both the estate and the charity.

The Role of the Executor in Managing Charitable Gifts

The executor is responsible for carrying out the Will's instructions, including distributing charitable gifts. Clear instructions and correct documentation make the executor's task easier. Executors typically confirm the charity's registration status and ensure that an official donation receipt is issued to the estate.

Where the Will includes complex charitable provisions, executors may seek legal or financial advice to administer them properly.

Summary of Legal Considerations for Charitable Gifts in a Will

• Use precise language naming the charity and specifying the gift

• Choose the appropriate type of charitable bequest: specific, percentage, or contingent

• Consider the tax rules so the executor can claim the donation tax credit

• Include alternate charities or contingencies to safeguard the gift

• Review and update the Will regularly

• Seek legal advice for complex estate situations

FAQ

What are the most common types of charitable gifts in a Will?

The most common types are specific bequests (fixed amounts or assets), percentage (residuary) gifts that leave a share of the estate, and contingent gifts that take effect only if certain conditions are met. Each type behaves differently as the value of the estate changes.

How are tax benefits claimed for charitable donations in a Will?

Gifts made by Will to registered charities are generally eligible for the donation tax credit. In certain circumstances, the executor can claim the donation on the estate's return or allocate it to the deceased's terminal return or the immediately preceding taxation year. Donations of up to 100% of the deceased's net income can generally be claimed in those returns.

What happens if the named charity no longer exists when the Will takes effect?

If the Will names an alternate charity or gives the executor the ability to direct the gift to a different charity, the gift can still be made. Without this flexibility, the gift may lapse or become more difficult to administer. Considering different future circumstances and dealing with them in the Will helps avoid uncertainty.

Is an online Will service suitable for including charitable gifts?

For straightforward estates, yes. Epilogue, founded by estate lawyers, supports specific, residuary and contingent charitable gifts and includes free lifetime updates. For complex estates or unusual family situations, advice from a lawyer may still be needed.

Epilogue is not a law firm and cannot provide any legal advice. This article is for general information only and does not replace advice from a lawyer or accountant about your own situation.