WILLS, DEMENTIA AND CHARITABLE GIFTS: PREPARING TO GIVE GENEROUSLY
When a client with dementia wants to make a will and leave his or her estate or a significant portion of it to charity, certain considerations arise, especially if there is a spouse and/or children. To try to ensure that the client’s charitable intentions are fulfilled, it is necessary to confirm both that the client has the requisite capacity to make a will and the client’s reasons for preferring the charity over family. Alleging incapacity is a common way disappointed beneficiaries challenge a will, and, in the case of a spouse and/or children, such a bequest may trigger an attempt to vary the terms of the will.
To make a will, a person must understand what a will is, what property he or she has, the persons who should be considered to receive a share and how those shares are to be distributed. An individual with Alzheimer’s disease or other dementia may be able to make a will, as capacity can vary from day to day and throughout the day. If a will is successfully challenged for lack of capacity, the law provides how assets will be distributed and would eliminate a gift to charity. Therefore, determining capacity is important.
In B.C., under the Wills, Estates and Succession Act, a spouse and/ or children of a deceased person can make a claim against the estate, alleging that the will does not provide adequate maintenance and support.
There are cases where the courts have found in favour of adult independent children on moral grounds rather than financial need, taking into account the relationship between the claimant and the deceased, assets passing to the claimant outside the estate, and reasons given for the bequests as made. The court may order any of the amount left to charity be paid instead to the spouse and/or children.
Therefore, it is important to document reasons for giving a large portion of an estate to charity.
If someone is diagnosed with dementia, the sooner a will is done, the better chance it has of withstanding a challenge. If appropriate, clients should talk to their families about their wishes to leave a large gift to charity. Or, consider leaving money to a charity other than through a will, such as donating during life, making the charity the beneficiary of life insurance policies or registered plans, or setting up a trust. This is important because claims to vary the terms of a will only apply to assets that pass by the will.