Posted on 12.9.16 by Tasoula Addison
In Britain, gifts in wills continue to be the foundation of many charities, contributing more than £2 billion in funding each year, equivalent to 19 Comic Reliefs.
Writing a will is a very important means of ensuring your money and possessions are managed the way you want them to be, and this in turn allows you to provide for your loved ones after you have died. As well as family and friends, charities are also a common beneficiary in many wills.
How to leave something to charity
If you wish a charity to benefit when you die, then you should include the gift (otherwise known as a “legacy”) in your Will. This may mean changing your existing will, or writing a new one.
Once executed, a new Will usually makes any previous Wills void.. To make sure that your will is legally sound and valid you should speak to a solicitor who can make sure that your estate and any gifts you want to leave can be given without any problems. The charity you wish to benefit should not be involved in preparing or witnessing the will, otherwise this would put the validity at risk and leaves the will open to be challenged; for instance it could be argued that the donor was improperly influenced into leaving the donation.
If you would like to leave something in your will to charity you can leave it in three ways:
- A fixed amount of money called a ‘pecuniary legacy’
- A share of the remainder of your estate (once all costs and other legacies are paid out), known as ‘residuary legacy’.
- A particular item such as jewellery, furniture, a painting, stocks, shares or a house, is known as a ‘specific legacy’.
If you would like to leave a legacy to a local branch of a charity instead of a central pot, check with the charity first if this is possible, as some branches are not legally able to accept gifts themselves.
What information to include
When writing the will, it is important that the correct information is included so that the gift to the charity is clear and unambiguous. Your Will should include:
- The name of the charity, it goes without saying spelt correctly to avoid confusion;
- The registered charity number of the charity and its registered address ;
- A receipt clause setting out who can accept the legacy on behalf of the charity ; and
- A merger clause to deal with what happens if the charity has merged or ceased to exist.
Expression of wish
Donors can request or express a wish in their will that a charity use a legacy for a particular purpose. Legally, a charity is not obliged to use it in accordance with the stated wishes of the donor, but morally most charities try to comply if able to do so. The advantage of this type of legacy is that it gives flexibility in case the activities or projects change during the time period of the will being made and the will-makers death, which means the charity can take account of the changing circumstances.
Gifts subject to binding obligations
Donors can leave a legacy to a charity and state within their will that legacy must be used for a particular purpose, for example setting up a scholarship in the donor’s name or a care home provider being left a house which must be used as a care home. This type of legacy must be used for the purpose for which it has been left, but if the intended charity is unable to use the legacy for the intended purpose, it might fail and the charity might not be able to receive the legacy, therefore a binding obligatory gift may not be the best option.
Inheritance tax and charities
Inheritance tax is a complicated subject, in some situations leaving some or all of your estate to charity can reduce and in some situations fully eliminate the Inheritance Tax liability. The value of any gifts to charity in your Will does not count towards the total value of your estate for inheritance tax purposes, due to a special “charity exemption”.
If this is motivation for you to leave some of your estate to a charity, you should consult a will trust and probate solicitor first for advice, because the rules on how to work out what you can leave to charity to lower the tax rate are not always straightforward.