Charity trustees’ power over legacy dispute settlements set to change

Charity trustees’ discretion over the offering of financial settlements in legacy disputes is set to change later this year.

Trustees must currently act in the best interests of a charity as is their duty. This puts the brakes on financial settlements with third parties who are disputing a legacy that has been left to the charity.

However, with the Charities Act 2022 to come into force later this year, trustees will no longer need the permission of the Charity Commission to make ex gratia payments in order to settle a disagreement.

The maximum offering is set to depend on the charity’s turnover. For example, a charity with income of over £1 million will be able to make payments of £10,000. Trustees will be able to delegate this discretion to others within the charity.

The DCMS published its implementation plan for the Act in June, which received Royal Assent in February. Implementation is expected to take place in three phases; Autumn 2022, Spring 2023 and Autumn 2023 which could have consequences for estate planners.

The implementation of changes to the Act is not a major overhaul of charity law, but will introduce slight changes with the purpose of reducing “unnecessary bureaucracy in current processes”.

A summary of the changes is set out here, with provisions less likely to need adjustment and planning being introduced first in earlier phases, and those requiring more guidance being introduced later.

Read more stories

Join over 6,000 wills and probate practitioners – Check back daily for all the latest news, views, insights and best practice and sign up to our e-newsletter to receive our weekly round up every Friday morning. 

You’ll receive the latest updates, analysis, and best practice straight to your inbox.