Do you want to include a charity in your will?
Leaving money behind for a good cause is clearly a great thing to do and allows you to make a valuable contribution to the world around you. Every year, charities are able to help vulnerable people with the funds that people have left to them after passing away. There are also other excellent reasons for including a charity in your will, and one of these is the fact that it can help you reduce the Inheritance Tax burden.
Leaving money for a charity can reduce or even completely eliminate Inheritance Tax liability. Anything you leave for a charity won’t be counted towards the taxable value of the estate. Giving money away to a charity in your will is known as leaving a “charitable legacy”. If you leave a minimum of 10% of your “net estate” to a good cause, you can reduce the IHT rate on the remainder of your estate to 36% from 40%. This can mean being able to pass on more to your friends, family or anyone else you choose.
Pecuniary and Residuary Legacies
You don’t have to wait until you pass away to get IHT relief via charitable donations. Any cash or assets you give to a charity whilst you are still alive won’t be treated as part of your estate after your death. You can also get relief from taxes like Income Tax if you give money to charities prior to your passing. Approximately 15% of all money received by charities comes via charitable legacies.
You can either leave money for charities in your will as “pecuniary” or “residuary” legacies. Fixed amounts of money are called “pecuniary legacies”. If you opt to leave a share of the remainder of your estate after other costs are settled, you will be leaving a “residuary legacy”.
We can help
If you have decided to leave money for a charity in your will, we can help. At Miller Reeves, we know the legislation surrounding wills inside out and can provide all the advice and support you require to ensure the document is legally valid. We can ensure you’re including all the information you need to so the executor knows which steps to take. The document will need to include the charity’s name, it’s registered charity number and address, a receipt clause that allows the trustee or treasurer of the charity to accept the gift and a merger clause that means the payment can be given to a similar charity if the intended organisation ceases to exist.
You can look for charities in England and Wales by searching through the Charities Commission’s register of charities. Some people decide to leave their money to specific local branches of charities. Not all charities permit this, so you will need to check with the charity first.
To find out more about leaving money to charities as part of your will, reducing the Inheritance Tax burden or completing a legally-binding will, contact us on email@example.com, the website or via 0333 300 1882.