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Charitable legacies - how to leave money to charity in your Will

James Watkins - Law on the Web

  1. 06 November 2015
  2. Wills and Probate
  3. 0 comments
Walking into the distance

When considering what should be done with your earthly leavings when you pass away, your primary concern is probably to make sure your family are taken care of.

However, more and more people are choosing to give gifts to charity through their Will, helping a worthy cause and avoiding a bit of tax in one fell swoop.

You don’t have to be as generous as Bill Gates or Warren Buffet in leaving money to a good cause in your Will, but you could still really help a charity (or multiple charities) by leaving them a legacy.

What are the benefits of leaving a charitable legacy?

Besides the obvious benefits of helping a charitable cause, leaving a gift to charity in your Will can have tax benefits.

Inheritance tax for an individual is usually levied at 40% on the net worth of the estate above the “nil rate band” of £325,000 – however, if you leave 10% or more of your estate as a legacy, your inheritance tax rate will be reduced to 36%.

Even if you donate less than 10%, you can still gain some tax advantages – your legacy donation will be deducted from the value of your estate before the inheritance tax is calculated.

For example, if your estate was worth £350,000, inheritance tax would usually need to be paid on the £25,000 above the tax-free threshold.

However, if you left £25,000 as a gift to charity, inheritance tax would only be calculated as though your estate was worth £325,000. As this is not above the nil rate band, no inheritance tax would be due.

What types of charitable legacy are there?

There are a few different ways to leave a legacy to charity – these are a few of the most common.

Pecuniary legacy

This is a gift of a specified amount of money – for example, a specific pledge to leave £2,000 to a particular charity.

Residuary legacy

This is also a monetary gift, but rather than specifying how much you want to be left, you can leave whatever money is left over once the rest of your estate has been bequeathed.

For example, you could specify what you want to be left to your partner and your children, and then leave whatever is left over to a charity.

Specific legacy

This sort of legacy would be used if you wanted to leave a specific asset to a charity – for example, you could leave a property you own to a charity. 

Could a charitable legacy in my Will be challenged?

Yes it could – just recently, there was a very significant case in which a disinherited daughter successfully appealed against her mother’s Will, receiving a sizable chunk of her estate.

One of the key factors in the ruling was the fact that the mother had left all of her estate to three charities that she had no clear involvement with during her lifetime.

This landmark ruling could have significant implications for any legacy you might leave.

How to keep your legacy safe

The best way to avoid any wranglings after your death is to make your wishes as clear as possible before you pass away – as well as laying out your intentions in your Will, you should also convey them to your family members.

If your decision to leave a legacy to a charity comes as a shock to your children, your partner or anyone else, they might feel more inclined to challenge it, maybe because they think you were coerced into it, or simply because they feel it was unfair of you to snub them in favour of a charity.

If you make your wishes clear to your loved ones beforehand, you can discuss and address any grievances they might have with your decision before it is too late.

Your legacy will also be more secure if you leave it to charities that you have volunteered with or donated to during your lifetime, or if they are involved in causes that you are known to be passionate about – for example, if you leave a legacy to an animal charity because of your love for animals.

If you are ready to make your Will, start today with our affordable and helpful Will writing service.

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