This September, Bates Wells is joining charities, professional advisers, and other organisations across the UK to mark Remember A Charity Week (7-13 September 2026). Gifts left to charities in Wills are an important source of income for many organisations, helping to fund charitable work and services. In fact, around £3 in every £10 donated to charity comes through gifts in Wills.
To coincide with the week, we’ve produced a resource for charities to help demystify restricted legacies. Understanding what is and what isn’t a restricted fund can help charities make better use of legacy income while ensuring funds continue to be used appropriately. We hope it helps to clarify an area that can often seem complex or uncertain. Please feel free to share with colleagues or get in touch with Hugo Walford or Alice Faure Walker if you have any questions.
Understanding and unlocking restricted legacies
Legacies to charities usually fall into one of the categories below:
- legacies that can be used by the charity for anything falling within the charity’s purposes (unrestricted legacies);
- legacies that are subject to legal restrictions, most commonly in relation to the purposes or activities which they can be used for, but sometimes also, or alternatively, in relation to how capital can be spent; or
- legacies that come with recommendations, intentions, wishes, desires or hopes about how they should be used.
Legacies falling into the second category are ‘restricted legacies’. What does this mean for your charity? Can those restrictions be lifted? And how should legacies in category 3 be treated?
What is a restricted legacy?
A restricted legacy is subject to binding legal restrictions which affect:
- the purpose for which the legacy can be used; and/or
- (less commonly) the scope to access capital (known as endowment restrictions).
This creates what is sometimes referred to as a special trust, held on the terms set out in its governing document (almost always the Will). It is accounted for as a “restricted fund” in the charity’s accounts.
What is not a restricted legacy?
A legacy that contains an expression of desire, hope or wishes, or an intention or recommendation, for a particular use is not a restricted legacy.
An example of such a legacy would be: “I give £10,000 to [Charity X] in the hope that [Charity X] will use this gift to support its initiatives in [Y geographical area]”.
There are no formal restrictions on how these legacies can be used, so they can be applied towards any of the charity’s general purposes.
Identifying restricted legacies – is it worth checking whether historic recording/accounting has been correct?
Yes. It is not always straightforward to differentiate between a restricted legacy and a legacy that contains an expression of wishes. And sometimes misunderstandings creep in. We are aware of situations in which legacies containing an expression of wishes have been recorded by a charity as restricted legacies, sometimes for many years.
Just because legacies have historically appeared in a charity’s accounts as restricted legacies is not, in and of itself, evidence. A thorough review of the terms of the legacy is the only way to confirm the true position. Legal advice can be obtained if the wording is ambiguous.
Charities that have restricted legacy funds, particularly ones that they’ve held for many years, may well benefit from a review. If a restricted legacy has been incorrectly recorded/accounted for, it is generally possible for the trustees to resolve to rationalise the position – making it clear that the legacy fund is in fact unrestricted (whether designated or un-designated, as mentioned below).
Must or should an expression of wishes be followed?
The charity is under no legal obligation to use the legacy in the way desired or recommended by the testator.
Care, however, should be taken in disregarding the clear wishes of a legacy donor, not least because of the reputational risks this could give rise to. If such legacies are commonly received, trustees may wish to consider adopting a policy about how they should normally be held.
While it’s not possible to impose a formally binding restriction to ensure that an expression of wishes is honoured, sometimes charities decide to formally designate these legacies for use in line with the testator’s wishes.
“Designate” means trustees formally earmarking for a particular purpose. The trustees can decide to lift the designation at any time in future if they wish. Designated funds are not the same thing as restricted funds.
Can you lift the restrictions on a restricted legacy?
Possibly. When a charity has received a restricted legacy, but subsequently realises that the restrictions are too inflexible, there are some potentially relevant statutory powers:
- There’s power under the Charities Act 2011 for the charity – with the prior consent of the Charity Commission – to amend the purposes of a restricted legacy, for example to match the purposes of the charity. The new purposes need to be similar to the existing purposes.
- There are also powers in the Charities Act 2011 which allow restrictions to be lifted on the spending of capital of a legacy that’s been left as an endowment, if the charity considers that the purposes of the legacy could be carried out more effectively if the capital could be spent. Prior consent from the Charity Commission is needed for endowment funds that are larger in value than £25,000.
Applying to the Charity Commission for consent to the lifting of restrictions is not always straightforward or fast. It can sometimes be helpful for charities to obtain advice on the process and the resolutions needed. But the good news is that there is scope to unlock restricted legacies to make sure that your supporters’ generosity can be used most effectively to help your charity’s beneficiaries.
Interested in diving into this topic further? Catch our webinar in partnership with the Institute of Legacy Management on 15 September 2026, available to ILM members. Find out more here.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further advice or information about management training which we offer.