Giving to charity in your will
Making a will essentially means that you can choose who you wish to benefit from your estate in the event of your death. Your chosen beneficiaries may be close family members such as your spouse, children or siblings and for some people their beneficiaries also include charitable organisations.
A lot of charities rely heavily on money left to them in wills as a vital part of their income, and yet whilst lifetime charitable giving by regular donations is popular, less than five per cent of people currently leave money to charities in their wills.
Reduce inheritance tax
Apart from the obvious financial benefits to that charity, there can be advantageous tax consequences for your estate if it is valued at more than the inheritance tax (IHT) threshold at the date of your death. The value of your charitable gift – which could be a fixed sum or a proportion of your estate when other gifts have been distributed – will be deducted from your estate before IHT is calculated. Charitable gifts made before your death might also qualify for exemption from IHT.
To make your charitable legacy absolutely clear and unequivocal in your will, ensure that you make it clear which charity is to receive the gift, including its address and their unique registered charity number.
An alternative is to set up a trust to favour your chosen charity. If you opt to do this, some of your assets would be transferred to trustees who will have the legal and administrative responsibility to ensure that the charity benefits from the trust. The benefit of setting up a trust over leaving a charitable gift in a will is that the trust can benefit the charity straightaway. In addition, you can personally be a trustee – thus retaining some control over what are, effectively, your assets.
If you choose to leave a gift to charity in your will, you should take particular care where, for example, your chosen charity is relatively small, has not been in existence for long, or is struggling to survive financially. This is because by the time of your death the charity may no longer be in existence. In this case, your gift may fail and the money will either pass to the person or persons inheriting your residuary estate or pass to another charity with similar aims.
In a recent case, a lady left nearly half a million pounds to a church which effectively closed when she died. The court held that, as the church did not exist on her death, the funds be passed to those entitled under the statutory intestacy rules.
If you wish to benefit a charity, either when you die or though a trust, speak to an expert wills and probate lawyer for advice as to how best to arrange this.
*Kings v Bultitude [2010] EWHC 1795 (Ch)
Online wills are a great way to manage your wills and on all information related to making a will, get in touch with a legal advisor who will be able to help you draw one up and ensure it’s a legal document.
Processing your request, Please wait....
