How universities can protect their legacy donations
Legacies are becoming an increasingly important source of income for universities. A recent report from Smee & Ford shows that legacy income for charities reached a record high of at least £2.8bn in 2017, up by £37.8m from the previous year.
Universities in particular have benefitted – as the Ross-Case survey 2019 reported, cash income from legacies has increased by 19% on the previous year. It is therefore important that universities look to protect that source of income as best they can.
Many donors who leave large legacies to universities don’t have any close family, such as Reginald W J Hewson, a civil engineer who amassed a £12 million fortune before he passed away in South Africa in 2010. He left his estate to be divided between five charities, two of which were Loughborough University and the University of London. However, it can often be the case that leaving a legacy to a university is often to the detriment of a donor’s family members – if a university inherits, then the family lose out. It can come as a nasty shock to those disappointed family members and that anger and upset is directed towards the university, leading to disputes.
Legal proceedings can significantly impact on a university’s finances; there is a risk of losing the vast majority, if not all of the legacy if a disgruntled family successfully challenges the will or brings an inheritance act claim. It could also cause damage to a university’s reputation, as it may not want to be seen as fighting over a donor’s estate with a grieving family.
Whilst it is not possible for a university to completely safeguard its legacies and prevent claims being made, there are some steps which can be taken to reduce the risks:
1. Use a solicitor
Donors who wish to leave legacies to universities should be encouraged to use a solicitor to prepare their will.
• The solicitor can ensure that the donor’s wishes are followed properly and recorded, particularly their reasons for making the legacy to the university if it is to the detriment of other family members.
• The solicitor can ensure that the will is validly executed (many wills are invalid because they weren’t witnessed properly).
• The solicitor should satisfy themselves that the donor has capacity to make the will and advise the donor to get a medical report if capacity is in doubt.
• If a claim is made against the estate, then the solicitor’s will file will crucial evidence and the solicitor who prepared the will can be a key witness.
Donors should be encouraged to communicate with their family and be open about their testamentary wishes. Some family members simply cannot accept that their parent/relative didn’t want them to inherit and are immediately suspicious of any will which doesn’t align with their expectations, even if there are no real grounds to contest it. If the donor has had “the conversation” with their family and addressed concerns during their lifetime, then that makes it less likely a claim will be made against the estate.
When the terms of the will become known, universities should be encouraged to liaise with the donor’s family members in a timely and sensitive manner – explaining the good work that the university does, how the legacy will be used and how the legacy is not a windfall for the university, but helps promote the university’s interests.
The university can also use this opportunity to address the oft-held mistaken belief that it is free to give the money back to the family if it really wanted to. Many people simply don’t know that, as charities, universities are legally obliged to only use legacies for their charitable purposes, and only in very specific circumstances are they free to depart from that.