How do I Leave Money to Charity in My Will?
It’s easy to include a charity in your will, but you should always consult your solicitor before you write or change your will to be sure it reflects your exact intentions and that you understand its implications.
Before you call your adviser, take a few minutes to clear your thoughts and decide exactly what you want to do. Ask yourself…
What have I got to leave?
If you own your home, how much is it worth? Have you any savings or investments? Valuables? Jewellery?
Who do I want to help?
Of course you must make provision for your loved ones first. Make a list of their full names and addresses.
Who else has made a difference to my life?
Has a charity helped you, or someone you love? Which causes have been important to you? Which appeals have really moved you? If you know them, make a note of their official charity name, address and registered number for your adviser.
One potential problem to making a charitable gift is that if the gift is for a set sum (say £20,000) to be paid before the balance of the estate is distributed, this may leave your executor short of cash to pay necessary expenses. In some cases – for example where the main asset is a house which proves difficult to sell – family members may have to lend your estate money so that charitable donations can be made.
On the other hand, if the charity is a ‘remainderman’ (paid out of the residue of the estate after the specific bequests are met), the wording of the will needs to be very careful. Recently, a number of cases have arisen because charities have interpreted the wording of a will to mean something different from the interpretation placed on it by the executors and have gone to court.
Where more than 10 per cent of the value of an estate is left to a UK charity, a reduced rate of IHT of 36% is payable.
Is it the ‘right’ charity?
Many charities are organised on a ‘regional’ basis, rather like franchises. If you will makes a bequest to the charity without specifying the local branch (eg ‘Age UK’, rather than ‘Age UK <your local branch>,’ then the bequest will probably be given to the central organisation, not the local branch.
It is always worth considering the practical side of any arrangements you make under your will.
Lastly, for IHT relief to be given, the charity must be a UK registered charity.- gifts made directly to foreign charities do not qualify.