Many people leave gifts to charitable organizations in their Wills. BC sisters in Galloway Estate v. British Columbia Society for the Prevention of Cruelty to Animals, 2021 BCSC 413 did just that. Each sister left her estate to the benefit of the other during her lifetime, with the residue to be divided into shares and distributed among several charities. After the surviving sister’s death, a problem arose. One of the charitable organizations had ceased to exist. The BC court was called upon to answer: if a charity no longer exists, what happens to its share of a BC estate?
BC wills in the Galloway Estate case
Twin sisters, Sheila Holland and Lea Galloway, each made a Will in 2008. Ms. Holland died in 2010, when she was 86 years old. She was predeceased by her husband and had no children. Pursuant to the terms of Ms. Holland’s Will, her nearly $3.3 million estate was held and invested by her executor, with the net income paid to or for the benefit of her sister Ms. Galloway for Ms. Galloway’s lifetime. On Ms. Galloway’s death, the residue was to be distributed among several charities including Pacific Coast Public Television Association (“PCPTA”).
Ms. Galloway died in 2020, when she was 96 years old. She never married and had no children. Ms. Galloway’s Will had also left her estate to the benefit of her sister if she survived her, with residuary gifts to named beneficiaries, including PCPTA. Because Ms. Holland predeceased Ms. Galloway, the entirety of Ms. Galloway’s $2.144 million estate was to be distributed pursuant to the residual clause among the charities named in the Galloway Will. The problem was that PCPTA was no longer in existence when Ms. Galloway died. What happens to that share of her sizable estate?
When the sisters made their Wills in 2008, PCPTA was a registered Canadian charity, incorporated to support public broadcasting by KCTS Television (“KCTS”), a United States company that owned and operated PBS Channel 9, a television station that delivers commercial-free educational and informational programming in the US and Canada. PCPTA was formed by KCTS for the sole purpose of receiving Canadian donations and providing tax receipts to Canadian donors. In 2015 KCTS changed its name to Cascade Public Media (“CPM”). At the time of Ms. Galloway’s death, CPM continued to be a non-profit and continued to operate Channel 9.
Does gift fail if charitable organization no longer exists?
If a charity named in a Will has ceased to exist before the death of the will-maker, and no successor organization can be found by way of amalgamation or reorganization, the BC courts may apply the “cy-près doctrine” to prevent lapse of the gift. Cy-près is short for “cy-près comme possible,” which translates to “as near as possible.” Cy-près can’t be used to vary the terms of a Will to effect a different charitable purpose than that intended by the will-maker. It can only be applied by the Court to direct the bequest to some charitable purpose that falls within the will-maker’s general charitable intention. It is settled in BC estate litigation that the Courts are to apply a subjective approach in interpreting Wills, described as the “armchair rule” under which the Court puts itself in the position of the will-maker at the point in time when they made the Will, and from that position, construes the language in the Will in light of the surrounding facts and circumstances known to the will-maker.
Can cy-près be applied in the Galloway Estate litigation matter?
The issue for the court was whether CPM was entitled to distribution of PCPTA’s share with respect to Ms. Galloway’s Will. The Attorney General (“AG”) took the position that Ms. Galloway’s gift to PCPTA failed as it did not disclose a general charitable intent, and as such, PCPTA’s share became part of her net estate to be divided among the remaining named charitable organizations in existence at the time of her death. In support of its position, the BC AG relied on the introductory language to the residual clause in Ms. Galloway’s Will which provided that she gave the balance of her net estate in equal shares “to such of the following charitable organizations that are in existence as at the date of my death” (emphasis added). The AG also argued that CPM was not a legal successor to PCPTA, so cy-près should not apply. Noteworthy in this case was that the eight other charities who stood to benefit from the position argued by the AG did not appear to support that argument.
BC Court rules that gift is subject to cy-près doctrine
The role of the court in applying cy-près is to determine the will-maker’s actual intention. In this case, the sole reason for PCPTA’s existence was to funnel Canadian donations to KCTS. A gift to PCPTA was a gift to KCTS/CPM with a Canadian tax receipt. There was no question Ms. Galloway would have been aware of that when she prepared her Will, as PCPTA was a charity Ms. Galloway supported during her lifetime and she was a member of KCTS 9 for several years. Although CPM was not a successor to PCPTA in strict corporate terms, the concept of a “successor” under the cy-près doctrine is not limited to a strict corporate successor. The Court’s focus should be on which organization “succeeds” in meeting the will-maker’s charitable intent. In the unique circumstances of this case, PCPTA had no other purpose than as a charitable vehicle for funnelling money to KCTS 9 for its use in non-commercial public broadcasting. No other entity provides that service. Although PCPTA did not exist as a formal charity on Ms. Galloway’s death, CPM assumed responsibility for its obligations and continued to receive directly, rather than indirectly, donations to support KCTS 9 broadcasting. The BC Court ruled that the share of Ms. Galloway’s net estate left to the PCPTA should be distributed to CPM under the cy-près doctrine.
Bottom line on charitable gifts in BC Wills
Where the purposes or objects of a charitable gift in a Will have become impossible or impracticable because the charitable organization no longer exists at the time of the will-maker’s death, the court may intervene. However, a cy-près order can depart from the intentions of the will-maker only to the extent required to remove the problem. Cy-près will not apply if the Court is unable to conclude that the will-maker had a general charitable intent with respect to that gift, or if the Court is unable to determine an alternative charity with the same purpose to which the gift should go.
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Frequently Asked Questions
What happens if a charity in my will no longer exists when I die?
The court has to decide what to do with that share. It may apply a doctrine that redirects the gift to a charity with similar purposes where the will shows a general charitable intention, or the gift may fail and fall into the residue. The outcome depends on how the will is worded and what the will-maker intended.
What is the cy-pres doctrine?
It is a rule that lets a court redirect a charitable gift to a similar charitable purpose when the exact one named cannot take effect, for example because the named charity has wound up. The court applies it where it finds a general intention to benefit charity, rather than an intention to benefit only that one specific organization.
How does the court find the will-maker’s charitable intention?
By reading the will as a whole. If the will shows a broad wish to support a cause or charitable purpose, a court is more likely to redirect a failed gift. If the will-maker intended to benefit only one named charity and nothing else, the gift is more likely to fail and pass to the other beneficiaries.
How can I make sure a charitable gift in my will works?
Name the charity carefully, including its full legal name and registration details, and consider adding a clause that directs where the gift should go if the charity no longer exists. Reviewing your will periodically helps, because charities merge or dissolve over time, and updated wording avoids a later court application.