If you have a favourite charity and you’d like to leave a bequest to them in your Will then the good news is that not only can you leave money to your chosen cause but it may even reduce your inheritance tax bill.
Leaving money to a charity is simple and whether it is a small gift or a large bequest it can make a big difference to people’s lives in the future.
For very simple gifts such as leaving a fixed amount of cash, it is just a matter of including the value as a clause in your Will.
You may choose to leave a percentage of your estate to a charity and this is often done for inheritance tax purposes (see below) and this can be done as either a percentage of the estate or of what is left after certain items have been deducted.
Or you may have something of value or of use to the charity that you want to bequeath to them.
Another option is to detail all the gifts you want to go to other people and then give what is left to the charity.
If people are involved with a charity as perhaps a volunteer or trustee, they often want to leave a gift to be used for a specific purpose.
Perhaps your chosen charity has a project that they want to complete or you have a particular aspect of their work that you would like to support.
In this case, you can leave a bequest with the specific condition that it is used for that purpose. These are often referred to by charities as ‘restricted funds’ and as the name implies, the money is only allowed to be used for the purpose for which it was intended.
It is important to note that this isn’t always a favoured option as if circumstances change and the charity is no longer able to provide the services or isn’t going to complete the project, then it won’t be able to use the money for any other purpose.
Charities may also choose to refuse the donation if the terms are deemed to be too restrictive or go against their principles so we would suggest that it is a good idea to err on the side of caution and give for general use.
For simple gifts of cash then it is just a matter of including a clause in your Will that states how much you want to give and to whom. You do need to make sure you have identified correctly which charity you want to give to so it’s a good idea to look them up on the charities commission website here and include their charity number in your Will.
If you want to leave a more complex gift, for instance, to be used for a specific purpose or if it is a particular asset such as property then it is always a good idea to talk to the charity first.
Your chosen organisation may not have the ability to sell your house or a classic car for example so they may ask that you stipulate that it is to be sold first and that the value be passed on to the charity.
Any gift you give to a registered charity, registered Community Amateur Sports Club (CASC) or a political party is free of inheritance tax in its entirety.
However, you can reduce the inheritance tax you pay on the rest of your estate by leaving over 10% of the net value of your estate to one or more of these organisations.
If you do this then your inheritance tax rate is reduced to 36% from the normal 40% rate giving your estate a valuable saving.
As we can see if you have a charity that you are very fond of and you want to support their work then leaving them something in your Will is a very simple matter.
By doing this you can be sure that you have contributed to their good works even when you are gone.
Using sensible planning, you can even reduce the amount of tax that is levied on the whole estate meaning that your other beneficiaries get more also.