When there is a charity appeal, there is no doubt that the Scots are generous! The wish to “give back” has grown over the years, and never more so in gifting to charities through a Will. Recent consumer research conducted by Remember a Charity concluded that the number of people deciding to make a charitable donation through a legacy in their Will has increased by 43% in the last 10 years. But how do you go about leaving a legacy in your Will?
Major charities have been asking people for years to leave them donations in their Wills. Most people do this by including a legacy when they make their Will. You can, of course, leave different parts or shares in your estate to different charities. This means that when you die, your executor will ensure that the part of your estate you have decided to donate will be made over to the charity or charities you choose.
When you leave a gift to a UK registered charity through a legacy in your Will, the value of that legacy will be deducted from the value of your estate for Inheritance Tax (IHT) purposes. This can be particularly important when your estate is sizeable, as IHT is usually charged at 40%. When considering your estate planning, it can often make sense to think about gifting to charity and whether by doing so you can effectively mitigate the IHT that will be payable on your death.
It is also important to note that when you leave more than 10% of your taxable estate to charity, the rate of IHT charged on the remaining value of your estate is reduced from 40% to 36%. This is, therefore, a serious consideration when you have a very large estate.
The process of leaving a gift to charity is straightforward. First, select the charity or charities you would like to benefit under your Will. Then you must determine what you wish to bequeath to that charity or charities. This can be a fixed amount of money, a percentage of your estate, or an item (you might consider shares in a company or the proceeds of a particular insurance policy, for example). You then include a legacy for each charitable gift you intend to make in your Will.
To ensure that your preferred charity receives your gift, it is important to make sure that you properly identify it. The best way of doing this is to include its registered charity number as well as its full name and address. This information can be found on the online Charity Register for the Office of the Scottish Charity Regular (OSCR) in Scotland (LINK: OSCR | Register Search), or the Charity Commission for England and Wales (LINK: About the register of charities (charitycommission.gov.uk)). In addition, you must consider whether your executor has any discretion should your nominated charity no longer exist. You can shape your discretion to allow your executor to either find an alternative charity with similar aims or to redirect your legacy to a charity of your executor’s choice.
Adam Swayne is a solicitor within our Asset Protection Group and specialises in Estate Planning, Wills and Powers of Attorney. If you would like to discuss charitable giving and leaving a legacy in your Will, please complete our contact form or call us on 0131 225 1200.
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