Giving money to charity in your Will is a great way to leave a positive legacy for the future. It can also reduce the amount of tax paid by the rest of your estate so your family can get the most out of their inheritance.
Read on for more information about the law surrounding charitable gifts and bequests.
How Do You Leave Money To Charity In Your Will?
There are two ways to leave money to a charity in your Will. You can:
- Specify a named charity or charities that will benefit
- Let the trustees of your Will decide.
If you choose specific charities, it is best to include their registered charity numbers to avoid confusion because their names often change.
If you decide to let the trustees choose the charities, it is essential to leave a clear record of your wishes to help them make a decision.
Your gift can be:
- A cash sum
- A particular property or asset
- A share, or the whole, of your residuary estate (what’s left after other specified gifts, costs, and tax).
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Can Family Members Contest Donations In My Will?
The Inheritance Act means that your Will must provide reasonably for any financial dependents you may have. If your Will doesn’t do this, a family member may be able to contest a charitable gift to get the financial provision they’re entitled to.
A family member could also claim that you were under undue influence or were not of sound mind when making the gift. If successful, they could contest the gift or have your entire Will declared invalid.
If you’re concerned about your charitable gift being contested, our lawyers can help. Call us today on 0370 1500 100 for more information.
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Is Tax Payable On My Donation?
Any gift you make to UK Charities is free of inheritance tax.
Gifts to charities outside the UK are more complicated – contact us for more information if this is something you’re interested in.
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How Do Charitable Gifts Affect The Amount Of Inheritance Tax My Estate Will Pay?
As well as the gift itself being tax-free, charitable gifts can also reduce the amount of inheritance tax that the rest of your estate will pay.
If you give at least 10% of your taxable estate to charity, the inheritance tax rate for the rest of your estate drops from 40% to 36%. If you increase the gift to 10%, this means that:
- Every £100 you give to charity only ‘costs’ your estate £24
- If you already plan to give at least 4% of your estate to charity, increasing the gift to 10% means that both the charity and your taxable beneficiaries receive more.
Our solicitors can help you plan tax-efficient charitable gifts and get the most out of your estate – see our Estate Planning page to learn more.
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Can I Specify How A Charity Should Use My Money?
You can specify how a charity should use your gift but it is best to discuss your wishes with the charity rather than simply leaving instructions in your Will.
We have seen cases where charities had to refuse a gift because they couldn’t comply with the conditions attached. Discussing the gift with the charity can help you avoid these situations.
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Are There Any Rules About Leaving Money To Charity In Your Will?
You are free to leave money to whoever you want – including any charities – as long as you make reasonable provision for any financial dependents as well.
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If you have any other questions about leaving money to charity in your Will, our highly-experienced Tax, Trust & Estate solicitors are here to help. Speak to us on 0370 1500 100 or contact us online to find out more.
