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Legal News | 1.09.22

Making gifts to charity in your Will

With International Day of Charity approaching on 5 September, you may wish to consider how you might benefit a charity or charities on your death. Charities rely hugely on legacies left to them in Wills as part of their income and one in five donors now include a charitable legacy in their Will.

How to leave money to charity in your Will?
The following are possible ways you can benefit a charity your Will.

  • You can leave a legacy directly to a named charity for a specific amount, just as you might do with an individual, such as a family member or friend. It is worth making sure the registered charity number is noted in your Will in case the charity changes its name.
  • You can leave a share of your residuary estate to one or more charities, so instead of leaving a fixed sum you are giving them a share of whatever is left in your estate at death.
  • Alternatively, you can leave a cash legacy or share of your estate to a discretionary trust which includes charities as potential beneficiaries. The executors/trustees of your Will would then have the discretion as to how much of the gifted sum should pass to charity. They can also decide which charities to benefit. Whilst the executors/trustees will have discretion, you can leave a letter of wishes providing guidance as to which charity or charities you wish to benefit and by how much.

Is tax payable on my legacy to charity?
Any legacies left to UK Charities are free of inheritance tax (‘IHT’) however if the benefit is via a trust under the Will rather than a direct legacy, the appointment to charity must be made within two years of the death to qualify for the charitable exemption from IHT.

How do legacies to charity affect the amount of inheritance tax my estate will pay?
If the amount left to charity under your Will amounts to at least ten percent of your estate, the overall rate of IHT to be applied to the rest of your estate will be reduced from 40 per cent to 36 per cent.

If you are considering making a charitable gift in your Will or would like more information please get in touch with your usual Wansbroughs contact or email wealth@wansbroughs.com.


Posted By Our Wills, Tax, Trusts & Probate Team