The costly problem of Misdescribed charities

 
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Benefiting a not-for-profit organisation, a charity is lay terms, is altruistic. It is a common intention with some testators when making their will. However, getting it wrong is far too common, often because insufficient care is taken to correctly describe the intended charity. Judith Walsh’s last will is an example which pointedly illustrates the problem.

The will appears to have been prepared without legal advice. (This probably explains why so much money was spent on legal action to work out what the gifts in the will meant.) It left 75 per cent of her residual estate to three entities which were described as charities but which didn’t exist by the name stated in the will. As to the first entity, the Court rectified ‘the State Center for Critical Burns Unit for Children’s Burns Research, Westmead Hospital’ to be ‘Burns Unit at the Children’s Hospital at Westmead’  even though the Children’s Hospital was no longer a charity as it was a ‘government entity’ since the commencement of the Charities Act 2013 (Cth).

The second entity the court considered in Morrison-Conway; Estate of the Late Judith Christine Walsh [2018] NSWSC 685, ‘Dr John Holt Cancer Research Unit’ was found to have never existed but the will evinced a general charitable intention so that the gift didn’t lapse. (The same result was reached with the gift to the non-existent Avondale College Foundation in another case, John Greer v Attorney-General for NSW [2018] NSWSC 725.) As the gift did not exceed $500,000 the Court referred the matter to the Attorney-General for the establishment of a scheme to benefit an appropriate charity pursuant to the Charitable Trusts Act 1993.

The third gift was to ‘Orbis, The Flying eye hospital to provide eye surgery for the blind in third world county’s’ (sic). The Court gave judicial advice that the executors would be justified in treating the beneficiary as Project Orbis International, Inc of New York as the charity intended to be benefited under this gift in the will.

The problem with the meaning of the will didn’t stop there. The last 25 per cent of the residue was left to three grandchildren. The will stated that, where there were minor beneficiaries, the minor beneficiaries couldn’t receive their full entitlement until they attained the age of 25 years. No trustee was appointed but the Court said the will implied that the executors would continue as trustees.

Another issue was that the will stated that the investment of the 25 per cent residue ‘must be made as a Diversion of Investment (both offshore and Australian)’. This was meaningless. The Court construed the clause to require diversified trust investments pursuant to a particular section of Trustee Act 1925.

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