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Considering giving to charity in your Will...?

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How can you gift to charity in your Will?

There are various ways you can leave money or assets to charity when you die. The main way is by making a valid Will during your lifetime. The Will typically would then contain one or more of the following most common clauses:

Why leave a gift to charity in your Will?

The main reasons we hear that people wish to leave money to charity in their Wills are:

Factors to take into consideration

The following are some of the basic considerations to think about before you decide whether to leave money or assets to charity in your Will:

Options if you wish to leave 10% of your estate to charity to qualify for the lower rate of inheritance tax

  1. Firstly, take advice to ensure your estate definitely will be subject to inheritance tax! There are many new alternative inheritance tax reliefs, which if applicable, could mean there is no inheritance tax to pay anyway!
  2. Leave a carefully drafted clause in your Will, specifying that you wish to leave 10% of your estate to charity as per the definitions in the relevant legislation.
  3. Include a discretionary trust within your Will, with an accompanying letter of wishes expressing the wish for your trustees to exercise their discretion to leave that 10% of your estate to charity. This provides greater flexibility as the letter of wishes can be changed at any time to vary the charities you wish to benefit. The disadvantage, however, is that the trustees may want to appoint assets out to family members or friends rather than charities (you cannot compel them to) and there will be the ongoing cost of running the trust.
  4. Leave a cash legacy within your Will which is likely (but not guaranteed) to meet the 10% test. The advantage is that the charity will definitely receive the gift of that specific amount. The disadvantage is that it may not meet the 10% test (if your estate increased in size), or it may be more than would otherwise have been needed to meet the 10% test (if your estate decreased in size). There may be some complex calculations as to where the burden of inheritance tax falls.
  5. Prepare a Will leaving everything to family or friends who may chose to vary your estate within two years of your death (via a deed of variation) if they want to claim the reduced rate at that time. The advantage is that you are leaving it to your beneficiaries to decide whether a charitable legacy to gain inheritance tax benefits is most appropriate at the time of your death. The disadvantage is that it is not always guaranteed that a deed of variation can be done, depending on many factors at the time of your death, such as the age and capacity of the beneficiaries who would be varying.

If you would like to discuss benefiting a charity in your Will further, please do not hesitate to contact a member of our Private Client Team on 0113 336 3427.

 

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.