Leaving gifts to charity in your will
The International Day of Charity takes place annually on 5 September, but did you know that one of the best ways to support a charity is to leave them a gift in your will? Many charities in the UK rely on donations left behind by their supporters, and any gift you leave could make a vital difference to the work of the organisation. There are many benefits to leaving money to a charity for your estate too, including tax relief. In this article, we look at some of the most common questions people have about leaving money to charity in their will.
How can I leave money to charity in my will?
Generally speaking, there are two ways to leave money to charity in your will.
The first option is to very simply, specify any charities you wish to benefit from your will. Alternatively, you can leave money or property in a trust and leave it up to your trustees to decide.
Where you choose to name a specific charity, it is always best to include the charity number. Many charities have quite similar names, or the name of the charity may change, and you want to be sure your gift goes to where it was intended.
If you choose to let the trustees decide where your money goes, you may wish to leave instructions to help guide them.
What can I leave to charity in my will?
You have several options for what to leave a charity in your will, and you may wish to consider what might benefit them the most. Your gift may be:
- A cash amount
- A specific property or asset
- Your residuary estate or a share in your residuary estate (your residuary estate is what is left after other specified gifts, costs, and tax).
Is it possible for family members to object to a gift left to charity in my will?
Under the Inheritance Act, you must make reasonable provision in your will for any dependants that you have. If your will fails to provide, a family member can contest any charitable gift in order to obtain the financial provision they are entitled to under the law.
Alternatively, it is possible for a family member to contest the will on the grounds that you were under undue influence or not of sound mind when you made the gift.
Do I need to pay tax on charitable gifts in my will?
Any gift left to a UK charity is free of inheritance tax liability. However, if you wish to make a gift to a charity outside the UK, the situation is more complex. Not only are charitable gifts tax-free but leaving gifts to charity in your will could mitigate your tax liability overall. When you leave at least 10% of your estate to charity, the inheritance tax liability of the rest of your estate falls to 36%.
Manzurul Islam, Head of Wills and Probate at Mullis & Peake LLP, said:
“Leaving something for charitable purposes is a great option to consider when preparing a will. You can help to benefit a cause close to your heart long after you have gone as well as reduce or even eliminate any potential inheritance tax liability your estate might otherwise have had.
“The main consideration to be aware of is ensuring that your family and dependants have been properly provided for first, otherwise it could lead to both upset and litigation; something everyone wants to avoid.
“However, providing it is drafted properly there are few downsides to leaving a charitable legacy if you can afford to do so”.