Leaving a gift in a Will and what to consider

Every year in the UK, people leave approximately £2.8 billion in charitable donations within their Wills. Donations such as these are the largest single source of voluntary income to the charity sector and are therefore incredibly important, many charities would not survive without people leaving a gift in their Will. Despite this, only 6% of people actually leave a charity gift in their Will.

 

There are two ways you can leave money to a charity in a Will:
  • You specify a named charity or charities that you wish to benefit
  • You make it clear the the trustees of the Will can decide.

 

If you chose a specific charity then, in your Will, it is advisable to include their registered charity numbers to avoid confusion as names can often change. If you decides to let the trustees choose the charity, it is essential to leave a clear record of your wishes to help them make a decision.

A charitable gift can be:

  • A cash sum or a pecuniary legacy, is the most common method
  • A particular property or asset
  • A residual legacy – this is a share, or the whole, of the residuary estate (what’s left after other specified gifts, costs, and tax).

 

Can family members contest donations in a Will?

There is the Inheritance Act in the UK which states that a Will must provide reasonably for any financial dependents you may have, such as children. If the Will does not do this, then there  is the possibility that a family member may be able to contest a charitable gift to get the financial provision they’re entitled to.

Family members may also claim you were under undue influence or were not of sound mind when making the gift, to avoid this circumstance, you may wish to consider creating a Lasting Power of Attorney

If successful, family can contest the gift or have the entire Will declared invalid.

 

The impact on Inheritance tax

As well as being tax-free, charitable gifts can also reduce the amount of inheritance tax that the rest of the estate will pay.

If 10% of a taxable estate is left to charity, the inheritance tax rate for the rest of the estate will decrease from 40% to 36%. Essentially, this means that:

Every £100 that is given to charity costs the estate £24. So if you are planning on leaving 5% of your  estate to charity, actually by increasing it to 10% means, that not only does the charity receive more, but beneficiaries have less tax to pay than that for a 5% donation.

 

Update the Will

If you have a Will and later decide you wish to leave a charitable gift, then it’s simply a case of updating your Will and adding in the relevant details. Updating a Will essentially creates a new Will in replacement of the previous version.

Another option is to create a codicil. This is a document used to make changes to an existing Will. It’s used as a way to make simple amendments like adding a charity, changing a gift amount or adding an executor. This is all quite straightforward but problems can possibly occur if you wish to create a new Will in the future.

When a Will is updated with a new Will the codicil does not automatically get cancelled, so the new Will could create inconsistencies and potential legal problems. It’s very important the new Will states that all previous Wills and codicils are revoked.

 

Remember a Charity

Make Me a Will supports Remember a Charity, who collaborate with more than 200 charities in the UK to encourage people to leave a gift in their Will.

40 per cent of people over 40 say they would be happy to leave money to charity in their Will, up from 35 per cent a decade ago, according to research by the Remember A Charity campaign in 2018. Legacy gifts account for more than 50 per cent of the British Heart Foundation’s income, 10 per cent of the single parent family charity Gingerbread’s income, 11 per cent of mental health charity Mind’s income and two out of three guide dogs are sponsored through legacy gifts.

 

The impact of leaving a gift can be huge and far reaching!

 

If you wish to make a Will or amend your Will, or you just wan to better understand any tax implications then just get in touch and we will help.

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