According to research from Remember a Charity, leaving a legacy gift in a Will has now reached a new high with 19% of people choosing to leave something to charity when they die. 3 in 10 donors with a Will included a charity and that increases amongst the more wealthiest, and those who are aware of the tax incentives.<\/p>\n\n\n\n
Estate Planners, Will Writers and legal advisers play a critical role in making clients aware of the option of including a gift in their Will. With six in 10 of the giving public saying they have used or would use a Will-writer or solicitor to set out their final wishes.<\/p>\n\n\n\n
Legacy giving is the largest source of voluntary income to UK charities, raising \u00a33.4 billion annually, so let\u2019s look at how you can highlight the option to clients and support their wishes.<\/p>\n\n\n\n
There are two ways to leave money to a charity in a Will:<\/p>\n\n\n\n
i) Specify a named charity or charities that will benefit
ii) Let the trustees of the Will decide.<\/p>\n\n\n\n
If specific charities are chosen, it is best to include their registered charity numbers to avoid confusion because their names often change. If it is decided to let the trustees choose the charities. It is essential for your client to leave a clear record of any wishes to help the trustees make a decision. A gift can be:<\/p>\n\n\n\n
i) A cash sum
ii) A particular property or asset
iii) A share, or the whole, of the residuary estate (what\u2019s left after other specified gifts, costs, and tax).<\/p>\n\n\n\n
The Inheritance Act means that a Will must provide reasonably for any financial dependents. If the Will doesn\u2019t do this, a family member may be able to contest a charitable gift to get the financial provision they\u2019re entitled to. A family member could also claim that the testator was under undue influence or was not of sound mind when making the gift. If successful, they could contest the gift or have the entire Will declared invalid.<\/p>\n\n\n\n
Any gift made to UK Charities is free of inheritance tax. Gifts to charities outside the UK are more complicated.<\/p>\n\n\n\n
As well as the gift itself being tax-free, charitable gifts can also reduce the amount of inheritance tax that the rest of the estate will pay. If the testator gives at least 10% of their taxable estate to charity, the inheritance tax rate for the rest of their estate drops from 40% to 36%. This means that:<\/p>\n\n\n\n
Every \u00a3100 given to charity only \u2018costs\u2019 the estate \u00a324!<\/p>\n\n\n\n
It can be specified how a charity should use any gift but it is best to discuss wishes with the charity rather than simply leaving instructions in a Will. There have seen cases where charities had to refuse a gift because they couldn\u2019t comply with the conditions attached. Discussing the gift with the charity can help avoid these situations.<\/p>\n\n\n\n
Anyone is free to leave money to whoever they want \u2013 including any charities \u2013 as long as reasonable provision for any financial dependents is made as well.<\/p>\n\n\n\n
Contact us for more information or to book an appointment<\/p>\n\n\n\n