Wills and trusts

Leaving money to charity in your will

Leaving money to charity in your will has multiple benefits, but whatever the size of your gift, it’s best to seek legal advice first.

27 September 2021

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What are the benefits of gifting a charity in your will?

Leaving a gift in your will to charity is something many charities rely on to continue their important work. A recent joint report from Remember A Charity, Legacy Foresight, the Institute of Legacy Management, and Smee & Ford showed that a staggering £3.4 billion is generated each year for UK charities through legacy funding.

In fact, Cancer Research UK says that donations in wills make up over a third of its funding, whilst the British Heart Foundation says that over 50% of its funding is generated as a result of people leaving a gift in their will.

Not only will donating to charity in your will benefit the cause you choose to support, but it could also reduce the amount of inheritance tax you pay, so you may want to consider leaving money to charity in your will as part of your wider inheritance tax planning.

How will donating to a charity affect inheritance tax?

The inheritance tax percentage is usually 40% of anything above the £325,000 threshold (also known as the Nil Rate Band).

But if you’re leaving a gift in your will to charity, the tax on inherited money is lowered to 36% when at least 10% of the overall estate is being donated to charity. So, depending on the amount you wish to donate over the 10%, this may work in your favour.

There may be options for you to maximise the amount you donate to charity in your will, whilst simultaneously decreasing the amount of inheritance tax paid. This is where the expertise of your will writing solicitor comes in. They’ll be able to advise you on this as you go through the will writing process.

How do you leave money to a charity in your will?

First, you’ll need to name a charity that you’d like to benefit. You can either do this in advance, or you can state that you wish for your trustees to decide which charity to support.

If you’re selecting a cause in advance, it’s always a good idea to include the registered charity number, to avoid any confusion should the charity change its name. The gift can be:

  • A cash sum
  • A property or asset
  • A share of any estate left over after tax, costs, and any other gifts. This is also known as your residuary estate.

You may also wish to specify exactly how you want your donation to be used by the charity. However, it’s always best to discuss this with the charity representatives beforehand to ensure that they can comply with your wishes and use the money in the way you intended. If they can’t, then they may refuse the gift, so it’s always best to check first. Your solicitor can help with this.

Do you need to inform a solicitor when leaving a charitable gift in your will?

A solicitor can simplify the process of leaving a legacy to charity in your will, making sure all your wishes are consolidated into one place in a hassle-free and legally legitimate way, as well as helping you plan the most tax-efficient way to process your donation.

Gifts to charities outside of the UK can be a little more complex, so it’s always best to speak to a solicitor first.

We have a range of will writing services available, dependant on your circumstances.

For more information, and to find out how our team of experts can support you, simply call us on 0330 041 5869. Or, if you prefer, you can contact us via our online form or web chat.

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