Man left $8m house to charity and not relatives

Charity begins at home, as the adage goes, but a big gift to an endowment fund in Singapore that involved a house and a contested will turns that notion on its head.

It should all have been straightforward: An anonymous donor who died in 2018 stated in his will that his house in a prime estate would go to a charity of his choice – the National University Hospital Endowment Fund. The house is estimated to be worth about $8 million based on similar homes that are on sale in the estate.

All seemed clear but the donation in the will signed in 2006 hit a roadblock because the stated charity no longer existed in that name after having undergone two significant changes and eventually becoming the NUHS Fund.

The gift was supposed to be handed to the charity after the man’s widow, who continued to live in the house after his death, died in 2020. The couple had a son and grandchildren but none of them were named as beneficiaries in the man’s will.

The man’s former daughter-in-law, who is the sole surviving manager of his estate, then filed a claim to contest the donation, arguing that the gift had lapsed because the man’s intended charity no longer existed. If so, the house would go to the man’s son.

But the High Court upheld the man’s final wish and ruled that his donation would go to the new entity, the NUHS Fund, because it is the successor to the previous charity and that its funds are also being used for the same charitable purposes.

Justice Kwek Mean Luck noted that even if the old fund had ceased to exist, anyone reading the “gift clause” in the man’s will would agree that the donation was meant for its charitable purposes. And as the same charitable mission continued through its successor, the NUHS Fund, the gift had not lapsed and the house would go to the new entity.

The charity’s website states that it was set up to promote medical research and development as well as provide health-related services for the Singapore community.

“Every dollar donated to the NUHS Fund goes in its entirety to support the patients assessed to be in financial need to help them with their recovery journeys,” the website notes.

Justice Kwek’s landmark ruling will have significant impact on how similar gift clauses should be drafted in wills as it was the first time the High Court had adjudicated on such a case here.

Here are three important points to note:

Make your intention clear

It goes without saying that you should always have a will so that you pass on your assets to your chosen beneficiaries. More importantly, if you make your wishes clear, it is hard for anyone to challenge your will.

In this case, the man was absolutely clear on what he wanted because he specifically prohibited the sale of his house during the lifetime of his widow. Indeed, he stated in his will that his widow could live in the house “free of rent so long as she so desires”.

“Upon the demise of my said wife, my trustees shall vest the said property to the National University Hospital Endowment Fund,” he added.

All his money and other assets were given to his widow after he died.

When she died in 2020, there was apparently over $200,000 left in the bank account. As she did not make any will, these funds and all her assets would go to her son under intestacy rules.

Name of beneficiary and charity

You should make sure that the names of your beneficiaries are spelt correctly. That said, a misnaming or mere mistake on the name will not render your gift void.

For example, if you did not state the precise legal or registered name of a charity, the gift can still go to a body that matches the description. But things can become slightly complicated when the charity named in the will has ceased to exist.

However, as Justice Kwek noted in the case involving the NUHS Fund, the focus should be on substance over form, especially if there is a successor to carry on the same mission of the old charity. “A mere change in name or an alteration in objects will not mean that a charity has ceased to exist,” he said.

Specific beneficiary

If you intended to give something to a particular relative, but that person is no longer alive when your will comes into force, the gift will lapse.

This rule applies to charities as well if there is a clause that states that the gift is intended for a specific charity and is not one for general charitable purposes.

In upholding the wishes stated in wills, Justice Kwek noted that the court “will not strain the will” just for the purpose of gaining money for charities and deprive other potential beneficiaries of their shares.

If the gift contains detailed terms that express a clear intention that the gift is exclusively for specific persons, particular structures or a specific locality, the limited character of the gift should not be ignored, he added.

For instance, if someone has made a gift to a fund set up solely to build a welfare home in a particular location but that project has since been scuttled, the gift will lapse.

Justice Kwek noted that the donor in this case had intended to give his house for the charitable purposes of the old fund, and was not a donation specifically meant for the fund only.

Such a reading “does not strain” the gift clause of the will because the donor only stated that the gift was meant for the old fund without any further instruction on specific purposes.

“There is nothing in the language of the gift clause which indicates a particular intention to gift an institution per se, or to a particular building or locality, where there might arguably be a stronger case that construing the gift as a gift for charitable purposes would strain the will,” the judge noted.

Indeed, Justice Kwek noted that there were various audited financial statements which supported his finding that all the money from the previous charities that was transferred to the NUHS Fund had been deemed as “restricted funds”.

This meant they could only be applied towards charitable purposes that were in substance the same as the two charities that preceded the NUHS Fund.

So Justice Kwek upheld the donor’s wish and ruled that the NUHS Fund is entitled to receive the generous gift of the house.

Professor Tang Hang Wu, Singapore’s leading expert on social and charity cases, said donors can avoid similar legal disputes if they make their wishes to donate clearer in their wills.

For instance, in addition to their chosen charities, they should also state that their gifts will still be valid even if the charities have changed names, structures or have joined with other bodies with similar purposes.

“In relation to a charity that has closed, if this clause is found, the court can order ‘cy-pres’, which means that the gift will go to a charity that is ‘as near as possible’,” said Prof Tang, who acted for the NUHS Fund in this case.

As a gesture to fulfil the donor’s wish of remaining anonymous, he asked the High Court not to release the name of the man, who only disclosed that his house was donated “in memory of LSK”.

How to ensure your money is going to the right charities

There is wisdom in the saying that charity is more fulfilling when you are alive, as you can make sure your donations are going to your chosen beneficiaries.

Although disputes involving gifts to charities are not that common, they do pop up once in a while when aggrieved relatives feel they have been deprived of their rightful inheritance.

Although such conflicts seldom end up in court here, overseas cases show that most disputes are caused by the changing names of charities and the question of whether these institutions still exist.

Charity or charitable purpose

If you want to leave your money to a charity that helps man’s best friend, you should make it clear whether you wish to support animal welfare in general or only a specific charity that looks after dogs.

This is because if you state that your gift is meant for a specific dog shelter only, the gift will lapse if the shelter is no longer around.

This was what happened in a case in Britain when a wealthy woman left a large amount of money to 11 charities, but problems cropped up involving two of her gifts.

The first concerned a gift to the National Radium Commission, which had ceased to exist. But the court ruled that the gift was still valid because the commission was never set up as a specific organisation and so the donation could be used for the similar charitable purpose of helping cancer patients.

However, the other gift – made out to a specific body, the National Council for Maternity and Child Welfare – was ruled to have lapsed because that charity had since closed.

Error in name

In another English case, a woman died and left a sum of money for “Mrs Bailey’s Charity” but there was no known charity by that name.

There was one called “Hannah Bayly’s Charity” that was founded in 1756 by a Mrs Bayly to help poor widows in Rotherhithe, a district in south-east London.

However, this charity had since been consolidated with 13 other charities and any donation would be used for the benefit of “poor persons of good character resident in the parish of Rotherhithe”.

There was no specific mention of widows in the scheme of consolidated charities, which benefited a wider group of people, but pensions paid out to widows under Hannah Bayly’s Charity continued under the scheme.

In round one of the dispute, the judge decided that Hannah Bayly’s Charity had ceased to exist due to the change of its constitution and because its objects had entirely changed, the gift was deemed to have lapsed.

But the English Court of Appeal upheld the gift, ruling that the charity was an endowed one that could not be destroyed. So the consolidated charities were entitled to the gift.

Address of charity

When it comes to giving money to charities, the purpose of the gift matters more than the location or building that houses their premises.

A dispute in West Yorkshire involved a gift to the Crippled Children’s Home that had the mission of helping poor crippled children living in that area of north England.

Although the home was closed in 1941, the charity commissioners used its assets to establish a new charity, known as “The Huddersfield Charity for Crippled Children”, which had the object of sending poor crippled children to holiday or convalescent homes.

As there were no longer any premises used as a home for crippled children there, the gift was ruled to have lapsed initially.

But the English Court of Appeal held that the purpose of the charity survived, even though the way it was run had changed. The court noted that if the donor had wanted to upkeep the home, she would have added some specific reference to its maintenance. Without such terms, the donor probably wanted to support the charitable purpose, and not a home that used to house the children.

If there is a lesson to be learnt from these cases, it is that you should always make your wishes clear in your will. As there is no restriction on the number of words in a will, you should avoid any ambiguity that can result in a dispute.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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