This Spring and Autumn will see the implementation of two parts of the Charities Act 2022, both of which will be pertinent to solicitors and legacy professionals involved in trusts and wills within the charity sector.
Peter Jeffreys, a Partner at Wilsons Solicitors LLP (a corporate partner of the Institute of Legacy Management) explains the three key changes due to come into effect and the benefits likely to be achieved:
The Charities Act 2022 makes a number of changes which, as a professional within the legacy sector, I believe will be extremely useful for practitioners and for charities themselves.
There are three key points, all of which are very relevant to legacies and gifts in wills. The new rules will apply to existing as well as all future cases, as soon as they come into effect, so it is important for solicitors and practitioners managing wills to be aware of them.
Sales of charity land
Due to be formally implemented this Spring (date TBC) this part of the Act refers to the sale of charity land. At present, where land or property is held by or in trust for a charity, and is due to be sold, then a surveyor’s report under section 119 Charities Act 2011 is required.
This is a formal procedure and can apply in probate cases whether the land is being sold on behalf of a single charity or multiple charities. What differs currently, however, is that single charities can formally approve the report themselves; whereas if multi-charities are involved, it is the executors who have that responsibility.
This can be confusing – especially if unqualified executors are involved – and is likely to cause delays and potentially even the loss of a property or land sale because the buyers don’t want to wait.
The new provision will only require a section 119 report where a single charity is the beneficiary of the land or property, therefore making estate administration much easier.
Of course, there will still be a duty of care in multi-charity cases and those charities may seek advice to ensure the land to which they are entitled is being sold at an appropriate price.
Simplifying the section 119 process should help to speed up estate administrations, and I see this as a really positive change.
An additional streamlining measure is that where a section 119 report is still required, it can be prepared by a “designated adviser” such as a registered estate agent or auctioneer, once again making it easier and simpler to press ahead with the estate sale.
Gifts to charities where names have changed
At present, if you have a gift in a will to a charity and, by the time the person dies, the charity has merged or been taken over, then there is a risk that the gift might fail.
Due to come into effect in the Autumn, section 33 is a new provision under the 2022 Act, which is fantastic news for charities in this situation and should make their life simpler.
The Act will say that if the original charity named in the will would have inherited the legacy if it had existed at the time of death (even on a hypothetical basis) then the successor charity will still receive the legacy.
It is, in effect, a rather artificial but very pragmatic way to ensure that a charity that is named can still benefit.
The key is that charities must remember to register their merger or takeover with the Charity Commission in order to secure the benefits of this provision.
Ex Gratia payments
Many legacy professionals and charities will be familiar with this topic, which is always a tricky one.
We know from experience that the charity sector will often have someone come to them who feels hurt because they have been “left out” or they say a will is “not fair”. You then have to tactfully explain that a charity can’t give property away just because someone asks (and indeed it is not legally allowed to), unless there is a valid legal claim or such a strong case that it would be morally wrong to refuse. These moral obligation cases are known as ex gratia payments.
At present, the procedure for dealing with ex gratia payments is quite cumbersome – a payment of more than £1,000 has to go to the full board of charity trustees and be approved by the Charity Commission, both of which can add months of delays.
The Charities Act 2022 was meant to address the topic last Autumn, but unfortunately this section has been delayed and we are currently waiting to find out if there will be a new date, or indeed if this section will be implemented at all.
For the largest charities, the changes would have allowed for payments of up to £20,000 to be made without consulting either the Charity Commission or the full board of trustees and, for the legacy world, this was going to make life so much easier.
The provision is still there, but it is down to the Government and its legal officers to add further clarification before it comes into force. In the meantime, the delay continues to cause additional time and effort on behalf of charities and those legacy professionals working with them.
I believe that when (hopefully all) these changes are implemented in full, they will result in a great deal of positive change for the legal and charitable sectors.
I urge anyone involved in wills or trusts from a charitable angle to ensure they are aware of both the new Act and the impact it will have on the way they work, so they can maximize its benefits for all concerned.