11 April 2002 External T.I. 2001-0090205 - GIFT BY WILL - NO NAMED CHARITY

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

The terms of an individual's will provide for a donation of a specific amount to be made to charity without naming a particular charity. The trustee is provided full discretion with respect to which charity would receive the donation. Would the donation qualify as a gift by will for the purpose of subsection 118.1(5)?

Position:

Possibly, depending on the terms of the will and if the donation is made to a qualified donee.

Reasons:

It is now our view that the fact that a trustee, under the terms of the will, has full discretion to select a charity to whom the donation is to be made would not necessarily preclude the donation from otherwise qualifying as a gift by will given the broad wording of subsection 118.1(5).

XXXXXXXXXX 						2001-009020

April 11, 2002

Dear XXXXXXXXXX:

Re: Gift by Will

This is in reply to your letters dated June 21 and August 21, 2001 concerning a certain interpretation provided in our letter of March 8, 2001 (our reference 2000-005582).

In our letter, we indicated that where an individual's will stipulates that a specific amount is to be gifted to charity and provides a list of charities but the executor has discretion as to the allocation of funds to each named charity, it is our view that the donation would nevertheless qualify as a gift by will if the actions taken by the executor are reasonable and in accordance with the terms of the will and the donation is made to a charity that is a qualified donee. You suggest that this interpretation should also apply to the broader situation in which the testator has not provided a list of charities but rather has left the choice of charities entirely to his or her trustees.

We expect that in the majority of cases the testator would have identified a specific charity or charities as the intended recipients of the donation in which case concerns as to whether the donation would constitute a gift by will should not arise. However, in a situation where an individual's will directs his or her trustee to make a donation to charity without identifying a particular charity, it is now our view that this, in itself, would not necessarily preclude the donation from otherwise qualifying as a gift by will. In this regard, an individual would generally be considered to have made a gift by will for the purpose of subsection 118.1(5) of the Income Tax Act if the terms of his or her will provide for a donation of a specific property, a specific amount or a percentage of the residual of the individual's estate to charity, it is clear from the terms of the will that the trustee is required to make the donation, the estate is able to complete the donation after the payment of its debts, and the donation is made to a qualified donee.

While we hope that our comments will be of assistance to you, they are given in accordance with the practice referred to in paragraph 22 of IC 70-6R4 and are not binding on the CCRA in respect of any particular situation.

Yours truly,

F. Lee Workman
Manager
Financial Institutions Team
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch