Leaving a Charitable Donation in Your Will
Making a gift to charity in your Will is a great way of leaving a positive legacy and reducing your Inheritance Tax (IHT). In this article, we’ll explain how you can donate in this way and how it may help increase your family’s inheritance.
How Do I Leave a Charitable Donation in My Will?
It’s possible to write your Will in a way which lets you support charities after you’ve passed away. As long as each charity has a valid Charity Reference Number from HMRC, any gift will be exempt from IHT too. There is no limit to the number of charities you can leave a gift to.
There are two ways to do this. You can name a specific organisation in your Will, or let the Trustees of your Will decide for you. If you choose to name a charity, we recommend that you include their registered charity number to avoid any confusion. If you decide to let your Trustees choose, it’s important to leave a clear record of your wishes to help them.
You also have a choice of what sort of gift you leave. There are three different types of legacies:
- Pecuniary: Where you state an exact cash amount in your Will. This is the simplest and most common method.
- Specific: This is when you leave an item, such as property or shares.
- Residuary: When you leave a share or the whole of your estate to charity, once everything else has been paid (such as gifts, debts and taxes).
Can My Donation Be Contested?
Under the Inheritance (Provision for Family and Dependants) Act 1975, your Will must reasonably provide for any financial dependents you may have. If your Will doesn’t meet this criteria, a family member could contest a gift left to charity. A claim could also be made if it can be proven that you were under undue influence or not sound of mind when you made it.
You should also discuss your wishes with the charity if you want to specify how your gift is to be used. If they can’t comply with the conditions, the donation may be refused. And, if you want to leave money to a particular branch of a charity, you should check that it’s possible first.
How Does a Charitable Donation Affect Inheritance Tax?
As well as being exempt from IHT, charitable gifts can reduce the tax that will need to be paid on the rest of your estate. If you give at least 10% of your taxable estate to charity, the IHT rate for the remaining portion will drop from 40% to 36%.
If you want to leave a legacy to a charity outside of the UK, the rules surrounding tax are more complex. Contact us for more information about this.
Get in touch today if you want advice on leaving a charitable donation in your Will. Our experienced consultants can help to ensure that your final wishes are carried out. Email firstname.lastname@example.org or ring 01743 387990 now.