Your Will and charitable donations
As we progress through life, many of us find causes that are close to our hearts. Perhaps a loved one is on the autism spectrum, or there’s a local hospice you choose to support. Whatever the charity, making a donation in your Will is a great way to give back to them. Let’s take a look at how you can leave money to an organisation, and what the unexpected benefits are to your beneficiaries.
How to leave a charitable donation in your Will
We make Wills to ensure our wealth is distributed to our nearest and dearest when we pass away. Not only can property and possessions be included, but cash can be given to any charities of our choice.
All you need to do when making your Will is to state that you would like to donate a fixed sum or a percentage of the estate to your chosen charitable organisation(s). You could also donate shares, a property or an asset. A Kent tax advisor can help you determine which option is right for you, as well as assist with your overall estate planning needs before you visit a solicitor to make your Will.
You can also specify how you would like the donation to be used by the charity. This is most pertinent in the case of a property or asset donation, but it’s always best to liaise with representatives for the charity before making this specification. If the charity can’t comply with your wishes they may refuse the gift.
Does the charity really benefit from a legacy donation?
In short, yes. A report issued jointly by Remember A Charity, Legacy Foresight, the Institute of Legacy Management, and Smee & Ford showed that some £3.4 billion is generated each year by charitable donations left in Wills. For charities such as Cancer Research and British Heart Foundation, legacy donations constitute a large percentage of their overall funding.
Charitable donations and tax
Did you know that by donating money to charity in your Will, you can reduce your Inheritance Tax liability? Gifting to charity means your net estate is reduced by the amount of the gift, meaning there is less Inheritance Tax to pay.
As an example, if your estate is worth £329,000 and you have chosen to make a gift of £5,000 to a charity, it brings the total estate down to £324,000. The threshold for Inheritance Tax payment is £325,000, meaning Inheritance Tax is only paid on amounts that exceed this sum. By making the charitable gift, your estate value falls below the threshold and there is no Inheritance tax payable.
If you need advice on estate planning, or you need help with administering an estate, you can engage the help of a Kent accountant for probate services. They can assist with gathering all the necessary information for a probate application, and with distributing funds according to the instructions in the Will.