A meaningful number of our clients wish to leave a portion of their estate to causes they care about. Done well, charitable bequests are one of the most lasting forms of giving available. Done badly, they end up in the wrong hands or fail outright. A clear guide to doing them well.
In our practice, charitable bequests fall into three rough categories. The first is the philanthropist who has given consistently during life and wants to continue that giving after death. The second is the testator who has no close heirs and wants their estate to do something meaningful. The third is the testator with strong personal causes — education, healthcare, religious institutions, animal welfare — who wants to honour those causes in a definitive way.
All three are perfectly valid reasons. The legal and structural questions are the same regardless of motivation: how to identify the charity precisely, how to structure the gift, how to ensure the gift reaches its intended use, and what the tax and procedural implications are.
This article walks through all of those, drawing on our experience drafting bequests of various sizes for clients across communities.
Charitable bequests are permitted and have always been permitted under Indian law. The Indian Succession Act, 1925 allows a testator to bequeath property to a charitable purpose or to a charitable institution. The Indian Trusts Act, 1882 governs trusts where the bequest is settled into a trust structure.
For Muslim testators, the one-third rule applies: a bequest to a non-heir (which includes most charitable institutions) is permitted up to one-third of the estate without the consent of legal heirs. Bequests beyond one-third require the heirs' consent after death.
For all other communities — Hindus, Christians, Parsis, Sikhs, Buddhists, Jains — full testamentary freedom applies, subject only to the formal requirements of execution under Section 63 and the limited residual claims of dependents under separate statutes.
The single most common drafting error in charitable bequests is imprecise identification of the recipient. 'I leave ₹50 lakh to a hospital for the poor in Mumbai' is not a valid bequest — there are dozens of hospitals that might claim it, and no executor can decide between them.
The bequest must identify the recipient by its registered name, ideally with the registration number under the relevant statute (Section 12A / 12AA of the Income Tax Act for tax-exempt trusts, registration under the Bombay Public Trusts Act for Maharashtra-based trusts, etc.), and the address.
Where the testator has multiple charities in mind, each should be separately identified. 'I leave ₹50 lakh to be divided equally between [Charity A], [Charity B], and [Charity C]' is fine — each is precisely identified.
A specific bequest is a fixed sum or a specific asset: 'I leave ₹50 lakh to X.' The advantage is certainty for the charity. The disadvantage is that if the estate's value changes — declines significantly between the date of the Will and the date of death — the specific sum may consume a disproportionate share of the estate.
A residuary bequest is a share of what remains after specific bequests and debts: 'After all specific bequests and debts, the residue of my estate shall be divided 70% to my family and 30% to [Charity X].' The advantage is proportionality. The disadvantage is that the charity bears the risk of estate shrinkage.
A percentage bequest is a proportional share: 'I leave 10% of my net estate to [Charity X].' This is increasingly popular because it scales with the estate. It also requires a clear calculation provision so the executor and the charity know how the percentage is to be computed.
Testators sometimes wish to restrict the use of their bequest. 'I leave ₹50 lakh to [Charity X] to be used solely for scholarships for girls from Maharashtra studying medicine' is a restricted bequest.
Restrictions are valid and enforceable, provided they are clear, lawful, and possible to perform. The charity can either accept the bequest with the restriction or decline it. If accepted, the trust deed of the charity or a memorandum of acceptance should record the restriction so future administrators understand the binding nature of the use.
Restrictions that are too narrow can fail. If the restricted purpose becomes impossible or impractical (e.g., the specific programme is discontinued), the doctrine of cy-près may apply — the court can permit the funds to be used for the nearest possible charitable purpose. But cy-près proceedings take time and cost money. Reasonable restrictions, drafted with some flexibility, work better than over-restrictive ones.
Bequests to charitable institutions that are registered under Section 12A / 12AA of the Income Tax Act enjoy the tax-exempt status of the recipient. The charity receives the bequest free of tax (subject to its own compliance with the Act).
From the testator's side, inheritance is not a taxable event under current Indian law, so the bequest does not attract tax on the testator's estate at the moment of death. However, the testator's estate may incur capital gains on the disposal of specific assets to fund the bequest, depending on how the executor effects the transfer.
Charitable bequests do not generate Section 80G deductions for the testator's estate (which is taxable for the deceased's terminal year). 80G applies to inter vivos donations, not to bequests. The structural reason: 80G is a deduction against income, and the bequest is not made out of the deceased's income but out of the estate.
Charities can be opaque. Before naming a charity in your Will, do basic due diligence. Verify the registration status (12A / 12AA, FCRA if foreign contributions are involved, charity commissioner registration in the relevant state). Look at the charity's annual reports and audited accounts.
Speak to the charity's senior leadership. Understand their governance, their fund deployment ratio (i.e., how much of their receipts go to programmes versus overheads), and their long-term plans.
We have seen testators name charities in good faith only for the family to discover, after death, that the charity has been deregistered, has had governance issues, or has been wound up. A periodic review of the charities named in your Will — say, every three to five years — is good practice.
For larger bequests — typically ₹2 crore and above — testators sometimes prefer to create their own charitable trust rather than give to an existing one. The advantages: the testator can specify the purposes precisely, can name trustees of their choosing, and can ensure the funds are dedicated to causes important to them.
Setting up a charitable trust requires a trust deed, registration under the relevant state's Public Trusts Act, registration under Section 12AB of the Income Tax Act for exempt status, and ongoing compliance.
Where the testator wishes to settle a trust by Will, the trust comes into existence after death. The Will sets out the trust deed (or refers to a deed prepared during life), names the trustees, and directs the executor to transfer specified assets to the trust. This is testamentary trust drafting, and we routinely structure such bequests.
Pattern 1: a fixed sum or asset to an established, trusted charity, with clean identification and minimal restrictions. This is the easiest pattern, lowest risk, and works well for bequests up to ₹50 lakh.
Pattern 2: a percentage of the residue to a basket of charities. This pattern is good for testators with a broad philanthropic intent but no single dominant cause.
Pattern 3: settlement of a substantial sum into a newly-created charitable trust with named trustees from the testator's family and a defined purpose. This works for larger bequests and where the testator wants the family's name attached to ongoing giving.
Pattern 4: a hybrid — a fixed sum to one or two principal charities, plus a residuary clause that catches further giving once the estate is valued.
Pitfall 1: bequest to a charity that has changed its name or been merged. Address the registered name as on the date of the Will, and consider adding a clause: 'or such successor charity as carries on its work.'
Pitfall 2: restrictions that become impossible. Build in a cy-près-style backup: 'or, if such purpose becomes impossible, the trustees may apply the funds to such other charitable purpose as is closest in spirit.'
Pitfall 3: forgetting the executor's role. The executor effects the bequest — they need clear instructions, identification of the charity, and (if the charity is unfamiliar to them) a way to verify the recipient. A short paragraph addressed to the executor explaining the testator's intent can help.
Pitfall 4: not telling the charity. A bequest that arrives unexpectedly may be celebrated, but the charity could have planned its programmes better had it known. Consider informing the charity (in confidence) during your lifetime so they can plan.
Charitable bequests are one of our favourite kinds of drafting. They reflect a generosity that goes beyond the testator's immediate family — a willingness to think about the kind of society the testator wants to leave behind.
Done well, they are also among the cleanest bequests in legal terms. The recipient is identified, the sum or proportion is set, the use (if restricted) is specified. There is no contested family member with a competing claim. The probate court generally has no difficulty with them.
If you have a cause you care about and the means to leave it something meaningful, we would be glad to walk you through the structuring options. Whether the right answer is a ₹50,000 bequest to a local trust or a ₹50 crore endowment that bears your name, the same principles apply: identify precisely, draft cleanly, vet thoroughly, and update periodically.
Bequests to religious institutions are a venerable Indian tradition and are fully recognised in law. The recipient — the temple trust, the gurudwara committee, the wakf board, the church administration — should be precisely identified by its registered name and address.
Tax treatment depends on the institution's registration. Many temples and religious trusts are registered under Section 12A and enjoy exempt status. Some are also registered under Section 80G, though this is less common for purely religious institutions (which qualify for narrower deductions under different sub-clauses).
Where the bequest is for a specific purpose — building a community hall, supporting a religious school, contributing to renovations — the purpose should be clearly stated. Religious institutions can absorb open-ended bequests, but directed bequests have more lasting impact when the purpose is clearly defined.
For testators wishing to attach their family name to their giving, an endowment-style bequest is the classic vehicle. A defined sum is bequeathed to a charity with the direction that it be held as a corpus, and that the income (or a specified portion) be applied for a stated purpose under a name chosen by the testator.
The 'Sharma Family Scholarship for Daughters' or the 'Mehta Endowment for Cancer Research' are examples. The charity holds the corpus, applies the income each year for the named purpose, and acknowledges the donor in its annual report.
These arrangements are typically formalised through a Memorandum of Understanding between the executor and the charity at the time of bequest delivery. The MoU records the donor's name, the purpose, the calculation method for the annual income, and the reporting obligation. This is a small additional step but produces a meaningful legacy.
Many testators with substantial philanthropic intentions are already giving during life — through donations, advisory roles, board positions on charities, or even running their own charitable trusts. Coordinating the testamentary bequest with the lifetime giving pattern produces a cleaner, more impactful overall legacy.
Where you already give regularly to a particular charity, naming that charity in your Will is the natural continuation. The charity benefits from the predictability of long-term support and can plan accordingly.
Where you have set up your own charitable trust during life, your Will can settle additional assets into that trust on death — augmenting the corpus and continuing the work you initiated. This is particularly powerful for testators who have built a clear philanthropic identity over decades.
Where you have not yet identified specific charities but wish to make significant philanthropic provision, your Will can name a trusted family member or advisor as the donor-advisor — empowered to direct the bequest to appropriate charities aligned with your stated values. This requires careful drafting but produces a flexible and durable structure.