In 2019, people in the UK left more than £3 billion to good causes in their Wills. Bequests like these are essential to many charities’ survival, making up on average one-third of their voluntary income. Yet while 40 per cent of people over the age of 40 say they would be happy to leave money to charity, research shows that 54 per cent of adults don’t even have a Will. If everyone made a Will, charities’ income would be much higher, allowing them to undertake so much more valuable work.
If these figures inspire you to leave money to one or more of your favourite causes, you many be wondering how you go about it. This article helps you to answer some of the most frequently asked questions about leaving money to charity in your Will.
How do leave money to charity in my Will?
If you know which charity or charities you would like to leave money to, you can specify them in your Will. If you do this, it’s a good idea to include their registered charity numbers. This will mean your wishes remain clear even if a charity changes its name.
Another way of leaving money to charity is to specify your chosen organisations in a separate ‘Letter of Wishes’. This document is normally kept with your Will and is designed to guide your executors or trustees to ensure your personal wishes are carried out. The advantage of doing this is that it can allow you to update the Letter of Wishes without having to get your Will changed. However, it’s worth noting that a Letter of Wishes is not a legally binding document, so we recommend you seek legal advice before drafting one.
What can I leave to charity in my Will?
There are three main types of bequest you can make to charity in your Will. These are:
• A cash sum (pecuniary gift)
• Property or assets, such as paintings, jewellery, cars or other items (specific gifts)
• A share (or the whole) of your estate after other gifts, costs and tax have been deducted (residuary gifts)
Can I really leave my whole estate to charity?
Yes, you can leave your estate to whoever you like. This is known as ‘testamentary freedom’.
However, be warned! If you fail to leave ‘reasonable financial provision’ for people who are financially dependent on you, they can make a claim under the Inheritance Act 1975. When this happens, a court will decide whether to award them part or all of your estate. To help avoid a situation like this, it’s important to get professional help when drafting your Will.
Can I set conditions on how a charity uses my gift?
Yes, you can, but always discuss your wishes with the charity in question. Sometimes charities have to refuse bequests because they can’t comply with the specified conditions.
Does giving to charity affect inheritance tax?
Yes, it can. Any gift you make to a UK charity is free of inheritance tax (IHT). It’s also worth noting that there is no capital gains tax (CGT) on land, property or shares that you give to charity.
In addition, giving to charity in your Will can potentially lower the amount of IHT payable on your estate. The current IHT threshold is £325,000 per person (£650,000 for couples), and anything over these amounts is charged at 40 per cent. This means that, if you gave 10 per cent of your estate to charity, the overall IHT bill on the estate would fall to 36 per cent. In some cases, giving to charity can even bring the remainder of the estate below the IHT threshold – so it’s a wise idea to seek expert advice.
I want to leave money to charity in my Will. What do I do next?
Get in touch with our Wills, Trusts and Probate team. Our specialist solicitors can not only prepare your Will on your behalf, but they can provide you with detailed and efficient advice on lifetime planning, paying particular attention to inheritance tax. With their help, you can ensure that your estate is passed on to family, friends or charity, according to your wishes.