Gifts to Charities in Wills

Have you ever considered donating to a charity under your Will? Donating to a charity under your Will is a great way of showing support to a worthwhile cause. It can also be an effective way of reducing your inheritance tax liability so that your loved ones can get the most out of their inheritance.

Inheritance Tax Benefits of donating to charities in your Will

Assets gifted to charities under your Will are exempt from inheritance tax which means it does not count towards the total value of your Estate for inheritance tax purposes. This can help to reduce the amount of inheritance tax payable or even eliminate it altogether if the charitable bequests place the value of the Estate below your tax-free threshold (currently £325,000 or more for married couples or those who leave property to lineal descendant such as children).

Moreover, if 10% or more of the net value of your Estate is given to charity then your Estate might be eligible to pay a reduced rate of inheritance tax of 36% rather than the usual 40%.

How to leave a gift to charity in your Will?

There are various ways to leave a gift to charity in your Will and you may wish to consider the following:

• Pecuniary Legacy – a gift of a sum of money;
• Specific Legacy – a gift of specified property i.e. your house, jewellery or other personal property; and
• Residuary Legacy – a gift of the whole or a share of your estate after all debts, expenses and other legacies.

In order to make use of the tax benefits, the gift must be made to a Charity registered in the UK and has a HMRC registration charity number. To avoid uncertainty, you must ensure that the full name of the Charity, the charity number and its registered address are all mentioned.

It will also be beneficial to include a merger clause in case the original charity merges with another charity along with a clause ensuring that the gift can be passed on to another charity carrying out similar work if that charity ceases to exist.

Why should you get your Will reviewed?

It is important to review your Will every three to five years or when major changes happen in your life for example, payment of care fees. When this happens, it is important to seek legal advice at the earliest opportunity to ensure your wishes are properly recorded.

If you have any other questions about leaving gifts to charity in your Will, our specialist Will, Trusts and Estates team at Anthony Gold can help.