Estate Distribution

Use formal structures and documentation to plan the distribution of your estate.

Deceased estates are often professionally administered to ensure that estate distribution follows the deceased’s wishes.

Many Australians use formal structures to distribute their estates to beneficiaries that are organisations such as registered charities. It is their way of providing an enduring legacy for their favourite charitable causes.

Can I name a charitable entity as a beneficiary?

Yes, however you must identify a specific entity. For example, "RSPCA" rather than "animal welfare groups".

Estate planning

This is the process of anticipating, and arranging for, the disposal of your estate. In addition to your will, it may involve trusts, beneficiary designations, powers of appointment, gifts and powers of attorney. Many estate planners advise clients to also create living wills.

You should always seek the advice of a financial or legal adviser regarding your estate distribution.

The main purposes of estate planning are to:

• eliminate uncertainties over the administration of probate
• maximise the value of your estate by reducing taxes and other expenses

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It is worth the effort because it ensures that your wishes and passions will continue when you are no longer here.

The following excerpts from Philanthropy Australia’s publication “A Guide to Good Giving”, which is also available on their website, provide more detail for you to consider.

Leaving a bequest in your will to a charity

Many people choose this option. If you choose to leave a bequest, you will have the use of your funds or property during your lifetime. You may choose to leave your bequest freely – “no strings attached” – so that the charity can apply the money to the area of most need. It is also possible to leave a bequest with a specification that it is used for a particular purpose – for example, to establish a scholarship for rural students. In this case, it is important to ensure that you are not leaving the charity more trouble than assistance. Making a bequest of a historic building, specifying that it must be used for a particular purpose, but not leaving any money for the maintenance 25 and rates can be placing a burden upon that charity. It may be wise to speak to the charity beforehand to discuss your plans.

If you choose to leave a bequest to a particular organisation is extremely important to ensure that you specify the correct legal name of the charity, and that you keep the will up to date. If the organisation specified in the will ceases to exist under that name, or if there is doubt as to which organisation is meant, it can be very difficult for executors to resolve. The resulting court process may be lengthy and expensive, and as costs are usually paid out of the estate, it may substantially reduce the size of your legacy.

Leaving money in your will to establish a foundation

This was the most common way to establish a foundation in Australia during the twentieth century, and some of the biggest foundations in Australia, such as the Felton Bequest and the Sidney Myer Fund, have been established this way. A testamentary trust, as this type of foundation is known, can be established by committing a particular sum or specific assets, or it may receive the residuary estate.

Establishing a foundation in this way will mean that you have the use of your funds during your lifetime, and may then choose to leave a specific sum to family members or other beneficiaries and the residue to establish your foundation. A foundation established after your death may benefit individuals, whereas most types of foundation established during your lifetime may not, and is entitled to be endorsed as a Tax Concession Charity (TCC) so that it will not pay tax on its income. The trustees may be the same persons who are executors of the will, or separate trustees may be appointed; professional trustee companies can also be called upon to establish the trust and act as sole or joint trustees of the foundation.

Care must be taken in establishing the funding purposes for a testamentary foundation. Sometimes the conditions or organisations which exist when a will is drawn up may no longer exist when the bequest comes to fruition. For example, in past years, charitable trusts were sometimes established to fund orphanages, which are no longer in existence due to changed social conditions. It may happen that in the future specific medical conditions may be cured or prevented so that there is no need to make provision for research into them. Similarly, conditions may arise which we are unable to foresee from the present day. A well-written will can provide some flexibility for changing needs while still honouring the spirit of the original benefactor. It may be useful to write a document which details your values and the reasoning behind your charitable decisions, as this may be very useful to guide future trustees so that they can continue to carry out your wishes.