Despite the advantages, including tax relief incentives, the needs and intentions of families will sometimes compete with the philanthropic interests of those leaving money. Families will at times want to contest the will of a loved one who has left a legacy to charity.
According to Loydon: “Those family members that are successful in contesting the will (or indeed lifetime charitable gifts) tend to be those family members who had a reasonable expectation to inherit, were dependent on the deceased, or where there is a question over the capacity of the deceased at the time the will was drafted or gifts made.”
Loydon advises: “If clients wish to make gifts to charity, the most sensible way to do this is via a charitable trust. If the plan to do this is via your will, and you are concerned that it might be challenged, take professional advice and ensure it is clear that you were of sound mind when the decisions were made.”
There are, however, positive protective methods for ensuring that philanthropic gifts reach the intended recipient.
For Kay Ingram, public policy director and Chartered Financial Planner at LEBC Group, early communication is key to bringing family members on board. “Where large sums are to be donated to charity, particularly if these are stipulated as a legacy in a will, it is ideal for the family members to be informed and or a discussion about the reasons why this is important to the donor”.
Ingram explains that “disputes often arise when the news that a charity is to benefit is only revealed at the reading of the will, at which time the deceased cannot explain their motives.”
In line with the mutual benefits in philanthropic giving for all family members, Ingram says: “Getting children and grandchildren on board with charitable giving can be part of their education about the responsibilities of good citizenship and an appreciation of the values which the donor wishes to pass down, as well as the purpose and value of money.”
At Equilibrium, Lawson and his staff “encourage clients to write ‘letters of love’ to explain how the money came about, what it means to them, and how they would like the recipients to deal with it.”
Striking a balance
With the awareness that such potential tensions between kin do exist, it is vital for advisers to help clients set up financial plans that include philanthropy and provide an inheritance plan for children and grandchildren.
