Charitable Gifts Impact on Estate Litigation

How Charitable Gifts Affect Estate Litigation | Klein Lawyers

For those in British Columbia who leave charitable gifts in their wills, the intention is well-meaning–to provide financial support to a cause that is important to the will-maker. Unfortunately, these charitable gifts can sometimes be laden with errors, leading to estate litigation, family disagreements, and financial loss to those intended beneficiaries. However, these potential pitfalls should not stop those wishing to create charitable gifts–there are just some things you should know. 

What Are Charitable Gifts and How Do They Impact Estates?

In 2015, the Canadian government announced amendments to the Income Tax Act that provide greater flexibility with respect to charitable gifts that are made in a will. The amendments applied to deaths that occurred on or after January 1, 2016, and give more insight on how donation tax credits may be used. 

The problem prior to the amendment occurred when the deceased or the estate made the charitable gifts, as this complicates the tax credit. Now, regardless of whether the gift is made by the individual in his/her will or by the estate, the Act deems the gift to be made by the estate at the time the property is actually transferred to the charity. So long as the gift is transferred to the charity within 36 months of the will-maker’s death, the donation tax credit will generally be available to:

  • The estate in the taxation year in which the gift is made; in an earlier taxation year; or in the five subsequent taxation years; or
  • The deceased in the year of death; or in the year prior to the year of death.

However, in order for this flexibility to be granted to the estate, donation planning that is already in place should be reviewed and updated.

While this remedied the taxation issue, there are other common issues that arise in British Columbia estate litigation surrounding charitable donations.

Mistakes to Avoid When A Loved One Wishes to Make Charitable Donations

It’s no secret that issues with wills arise after death, complicating matters for the family of the deceased. . However, in addition to the headaches and heartaches, those charitable organizations who were to be left a donation often get left in the dust instead.

The problem exists when a will does not include a residue clause or puts it in the wrong place. 

The purpose of a residue clause is to dispose of all assets that remain after specific bequests have been made. Its proper place is after any cash or specific bequests. The absence of such a clause, or improper placement, can create a full or partial intestacy.

When a will is deemed invalid upon a family’s contest of the will, charities are the first to be written out in many cases. In addition, if the charity or organization isn’t identified properly, such as the incorrect name, location, or contact, that organization may also be left out.

It is within the will-maker’s power to provide support to organizations they cherish. But when done incorrectly, the charity and the deceased’s family can be left with mounting litigation instead of good fortune. But Klein Lawyers can help.

Contact Our Wills Variation Lawyers Today

When a will contest occurs making the charitable gifts intended to be left to an organization go wrong, your family will need legal counsel to make sure your loved one’s wishes are accounted for. We can help.

Contact Klein Lawyers at (604) 874-7171 today for a free, confidential case evaluation. Our wills variation lawyers serve clients throughout British Columbia from offices in Vancouver, Abbotsford, Burnaby, Coquitlam, Langley, and Surrey.