Leaving a charitable legacy in your Will not only creates a positive legacy for generations to come but can also reduce the amount of Inheritance Tax due on your estate. And, while many people do leave philanthropic legacies, £3billion was left in Wills to charities in 2019, there is a £10billion funding gap between the amount people say they want to donate and the amount they actually pledge.
Part of this shortfall is down to the fact that one tenth of the UK population are still unaware that they can include a charitable donation as part of their final wishes. According to Farewill, another 27% are only aware of larger charities who accept legacy donations.
In fact, you can leave a legacy to any charity that you like, from small, community-based charities to large international ones. Alternatively, you can leave instructions for the trustees of your Will to decide where to donate on your behalf.
Donating as a legacy is really straightforward and you can choose to leave as much or as little of your Estate as you wish. This can be done in the form of a fixed amount, a percentage of your Estate, an item, or what’s left after other gifts have been distributed. There is also the additional benefit that a charitable donation could result in some Inheritance Tax relief. The donation is either taken off the value of your Estate before Inheritance Tax is calculated or, if the legacy equates to more than 10% of the value of your Estate, the Inheritance Tax rate is reduced.
In real terms every £100 that is left to charity will cost your Estate around £24. However, because of the Inheritance Tax reduction for larger donations, if you leave 10% of your Estate to charity your other beneficiaries may receive more. Either way, leaving a legacy can make a lasting difference for generations both near and far.
If you would like to discuss Estate Planning with one of our team of specialist solicitors, get in touch to make an appointment.