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Why not include a charity in your Will?

Many charities rely heavily on funding from legacies left in Wills. Sometimes these legacies are disputed by family members or loved ones (often after the death of the person who made the Will, also known as the ‘testator’), upset that their ‘share’ of the estate has been diminished or even extinguished.  This is becoming increasingly common, and we have a team dedicated to contentious probate matters who all too frequently deal with these types of disputes.

Some of the main reasons we come across as to why charities are not left legacies in Wills include :

  • The testator wants to leave something to charity, but doesn’t want their family missing out.
  • The testator thinks it would be too much hassle to amend their existing Will.
  • The person wishing to leave a legacy to charity no longer has sufficient mental capacity to make or amend a Will.

Each of these are addressed below, and the other benefits of leaving a charitable legacy highlighted.

You want to include a charity but don’t want your family missing out

A properly drafted Will specifies who gets what and in what circumstances.

You might therefore consider the following:

  • That while your family will inherit most of your estate, a relatively small legacy will be left to a charity.
  • That your family will inherit a certain amount, and if there is anything left over this will go to charity .
  • That where you are not survived by your named beneficiaries, your estate will pass to charity (the ‘disaster scenario’).

Last year we reported on a tragic case where the main beneficiaries under a Will died with the testator. The Will provided that where this happened, their shares went to charity.  Without this provision, that share of the estate would have passed under the rules of intestacy to the testator’s surviving wider family.

Adding such a ‘disaster scenario’ clause to your Will is something that can easily be done and worth considering, as your estate could potentially otherwise pass to people you wouldn’t want to benefit.

It would be too much hassle to amend your existing Will

Clearly if you are creating a new Will, a charitable legacy can be drafted into it; however if you already have a Will, a document called a Codicil (which effectively amends a Will) can be entered into without the need to re-draft the Will itself.

A loved one would have wanted to leave a charitable legacy but they no longer have sufficient mental capacity to make or amend a Will

A person cannot make a Will if they have lost mental capacity.

A Will can be amended following the death of a testator by a beneficiary or beneficiaries. In order to do this, all the beneficiaries entitled to that share of the estate must agree to the variation by what is called a Deed of Variation.

There are strict rules about this, including but not limited to the Deed of Variation being in writing and entered into within two years of the death in question.

An additional advantage of doing this is that if the variation results in a gift to a ‘qualifying charity’ there could potentially be a rebate of Inheritance Tax (“IHT”) – see below.

Further tax advantages of leaving to a charity

Where a deceased’s estate exceeds the Nil-Rate Band (currently £325k), IHT is generally payable at 40%; where a gift is left to a ‘qualifying’ charity there are two potential benefits:

  • IHT is not payable on the gifted amount; and
  • Where 10% of the estate is left to charity, IHT may be reduced to 36% across the whole estate.

A qualifying charity in simple terms is a registered charity in the UK, the EU, and some other countries (including Norway and Iceland) – this should be confirmed when leaving a charitable legacy where the intention is for the estate to benefit from the tax advantage. The UK’s potential departure from the EU will not affect the above, as the exemption for EU registered charities is written into UK law.

Finally

Given the potential tax advantages of charitable giving, and being able to help the many worthy charities continue with their valuable work, you should all at least be thinking about gifting to charity.

If you would like to discuss leaving something to a charity or charities please do get in contact with Richard Woods (020 7288 4795) or someone else from our Wills and Probate team

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