Whether you’re looking for ways to redistribute your assets, give thanks to a cause that’s close to your heart, or perhaps do both, the decision to leave money to charity is something to consider when writing your will.
Why leave money to charity in your will?
Many charities invite supporters to make a gift or ‘remember them’ in their will. While this is of obvious benefit to the chosen charities – and a rewarding way for benefactors to leave a meaningful legacy – it also has tax relief benefits when it comes to planning your estate. Here at Omni Lifetime Planning we offer advice on all aspects of estate planning and can help you make the best use of any tax benefits that might be available to you when writing your will.
Charitable donations and IHT
Making a charitable donation in your will is one way to reduce the amount of Inheritance Tax (IHT) that’s due on your estate. This is because any donations bequest to charities in your will are tax free and deducted from the net value of the estate before IHT is applied.
This is particularly useful in cases where the net value exceeds the nil rate band (NRB) threshold, which is currently set at £325,000, and the estate qualifies for the residence nil rate band.
Furthermore, gifts left to charities can reduce the percentage of IHT due on estates exceeding the NRB from 40% to 36% if the donation equates to 10% or more of the estate’s total value.
If you are unsure whether your estate qualifies, contact us and we can advise you.
How to leave money to charity in your will
There are several ways to leave money to charities in your will. One is to specify the charities you would like to benefit by citing the name of the charity and its registered charity number in the will. This way, there can be no confusion should the charity change its name.
Another is to let your executors decide which charities will benefit. In this case, it’s important to specify your exact wishes as to what portion of your estate is to go to charity so your executors can make a clear and informed decision.
Charitable donations can be made in your will as a cash sum, a percentage of your estate, or in the form of an asset or property. You could also opt to leave the residuary of your will – either whole or in part. This is whatever is left of the estate once all other gifts, costs, and taxes are taken care of.
Other things to consider
If you have any special wishes as to how you would like your chosen charity to make use of your gift, it is best to discuss this directly with the charity prior to making it an inclusion your will.
While you are free to leave any sum or assets to charity in your will, the Inheritance Act states that you must provide reasonably for any surviving dependants you may have. If your will doesn’t satisfy this criterion, a family member may be able to contest your charitable donation to get the financial provision entitled to them by the Inheritance Act.
There is also the possibility that a family member could contest your charitable donation on the grounds that you were under due influence or not of sound mind when writing the will. If they prove successful, the gift could be revoked or your whole will declared invalid.
Making charitable gifts in your will is a wonderful way to leave a lasting legacy and can also help with planning your estate. For advice on remembering charities and other aspects of writing your will, contact us today.