When a Gift Cannot Be Made, What Happens?

October 22, 2012

When a Gift Cannot Be Made, What Happens?

When a charitable gift in a will fails (other than because the estate lacks the assets necessary to make the bequest), the resulting effect on the distribution of the estate depends on the circumstances.

Normally, such a gift fails because the charity named in the will has ceased to exist. When this happens, if the charity has been taken over by another, that charity will receive the charitable bequest instead.

Sometimes, however, things are a bit more complicated. In a recent case, the High Court dealt with a situation in which a bequest had been made in a woman’s will for the benefit of a bird charity.

The charity was set up as a limited company and had become dormant by the time the woman died. It had not ceased to exist, however, being still on the Register of Companies, although it had been removed from the Register of Charities. A little later, the company was struck off the Register of Companies also and it then ceased to exist. In principle, therefore, it could not now receive the bequest.

The Court considered that the bequest was a valid gift at the date of death, but it could not now be given effect. The solution to the problem was for the Court to direct that the bequest be used in a manner as close as possible to that intended by the deceased. It was therefore given to a charity with similar aims.