Why Do Charity Beneficiaries Ask for Estate Administration Documents?
A note for executors administering estates with charity beneficiaries.
If you are administering an estate with one or more charity beneficiaries, you may be asked to provide documents such as:
a copy of the Will
the inventory of assets and liabilities
interim or final estate accounts
We understand that these requests can sometimes feel like extra administration on top of an already complex process. This article seeks to explain that when a charity asks for estate documents, it is not questioning the executor’s administration, but meeting its own governance, record-keeping, audit and reporting obligations. These documents are needed so the charity can properly record and administer the gift in accordance with its obligations under Australian law.
Why charities need to keep clear records
Charities are required to keep appropriate financial and operational records. These records help demonstrate that the charity is continuing to operate for its charitable purposes, manage funds properly and meet its obligations to regulators, auditors, donors, government funding sources, and the public.
A charitable bequest is different from an ordinary donation and may contain legally binding conditions or restrictions that the charity must understand before accepting the gift. We’ve seen situations where because a copy of the Will wasn’t provided a charity has had to:
cancel and re-issue a receipt;
refund the Estate because the funds weren’t actually meant for them;
make urgent adjustments because there were conditions attached to the gift they weren’t aware of.
These instances can create significant delays for the funding to reach the actual intended beneficiaries and take valuable staff time and resources away from other charities involved.
To meet their record-keeping obligations, charities need enough documentation to show:
where the gift came from
the named legal entity nominated as the intended beneficiary
what the Will required
whether the gift was unrestricted or restricted
how the amount received was calculated
whether any tax issues were considered, particularly if the charity is tax-exempt
that the funds were received and recorded correctly
Auditors may ask charities to produce supporting documents for estate income. If a charity cannot show the basis for a bequest it has received, this can create avoidable and costly forensic audit and compliance issues. In some cases, charities may also need records to demonstrate that funds have been applied consistently with their charitable purposes and any restrictions imposed by the bequestor.
Why the Will matters to the charity
The Will is one of the most important documents for the charity to review.
Sometimes a gift is straightforward: a fixed dollar amount to a named charity, with no restrictions.
But sometimes the Will reveals important details that are not obvious from a distribution letter alone. For example:
the gift may be for a specific program, location or purpose
the gift may be restricted to research, capital works, animal care, scholarships or another defined activity
the Will may name an old or informal charity name that needs to be matched to the correct legal entity
the gift might have conditions attached or be specified as being in honour of another person
These details matter. A charity must know whether funds can be used for general purposes or whether they must be quarantined and applied in a particular way.
Providing the Will early can also avoid delays later. If the charity needs to confirm the correct entity, clarify a restriction or obtain internal approval for how the funds will be recorded, it is much easier to do that before the estate is ready for final distribution.
We’ve unfortunately seen examples where an executor has been hesitant to provide a copy of the Will, only for us to then discover it was actually directed to a totally different organisation! Charities are in a good position to check that the gift is ending up where the bequestor wanted it to go.
The asset list can help identify the tax position
The inventory of assets is also essential where the charity is a residuary beneficiary – regardless of the size of the estate.
Charities have a tax-advantaged status that can affect the treatment of certain estate assets. For example, shares, franked dividends, investment properties and other assets may have tax consequences depending on how they are handled during the administration of the estate.
In some cases, understanding the estate assets may help a charity identify tax considerations relevant to its entitlement. This can also determine how the gift can be transferred and allow the charity to provide support and essential information to the executor to simplify the process, such as if shares can be accepted in specie.
In addition to tax considerations, understanding the size of the estate and asset types can help a charity predict what funds might be available and when. This information allows the charity to carefully plan their project expenditure to allow for their important work to continue uninterrupted.
The final statement allows us to close the file
The final statement of accounts helps the charity understand how the distribution was calculated and close their file. The charity needs to be able to reconcile the amount received against the estate accounts and keep a clear record for audit purposes.
Auditors not only ask for evidence that the gift was fully received, they also review all related correspondence with the estate’s executors to ensure the organisation is adhering to the agreed best practice policies and procedures. We need to demonstrate that the donor’s bequest used to the maximum benefit.
A charity might ask for an interim statement where there are requests for executor’s commission or expenditure from the estate. This is so that they can take the information to the appropriate legal and financial delegation level within the charity and provide prompt feedback to the executor. Having the full scope of work undertaken by the executor also helps us expedite approval for executor commission claims.
Final statements also protect everyone involved. Clear final accounts reduce follow-up questions, avoid misunderstandings and help bring the estate administration to a clean conclusion.
Charities can obtain probate documents from the court, but would prefer not to waste valuable resources
Once probate has been granted, probate documents can be obtained directly from the relevant court. Charity beneficiaries can, and sometimes do, purchase these documents if they are not supplied by the executor or their solicitor.
We prefer not to do this wherever possible as there is a time and financial cost for the charity.
Every court search, copy fee and staff hour spent obtaining documents independently is money and time diverted away from the charity’s core work. In most cases, it is far more efficient for the executor or solicitor to provide the relevant documents directly.
Where a charity is a beneficiary and the documents are relevant to its entitlement, it is appropriate for the charity to ask for them. Providing them upfront can save time, reduce correspondence and avoid unnecessary costs for the charity. By supporting the charity to work more efficiently and dedicate their valued and often limited resources to furthering their charitable purpose, you are also honouring the wishes of the extraordinary individual behind the bequest who chose that charity because they greatly believed in the importance of their work.
We are all working towards the same outcome
Solicitors, executors and charity beneficiaries all want the same thing: for the estate to be administered properly and for the deceased person’s wishes to be honoured.
When charities ask for estate administration documents, it is not about creating unnecessary work. It is about accountability, compliance and making sure the gift is used exactly as the generous person who wrote the Will intended.
Providing these documents early is one of the simplest ways to help charitable gifts reach their intended purpose with fewer delays, fewer follow-up questions and less avoidable cost.
- Morgan Koegel, Managing Director, Bequest Assist
- Cristina Caamano, Planned Giving Senior Manager, Royal Flying Doctor Service – South Eastern Section
