Leaving money to Charity in your Will

Having a Will in place is an important step to ensuring that your wishes are met when you die. You may be considering leaving money to charity in your Will, or wondering whether you should gift money to a charity while you are still alive. There are many things to consider when making a Will and we would advise that you talk to a trusted professional Will advisor about all your options.

Find out more about why and when you should make a Will.

Benefits of gifting to charity in your Will

Leaving a gift to charity in your Will is an extremely generous thought and goes a long way. But what are the consequences of doing this once you have passed away, or even gifting to a charity when you are alive?

You may have heard of the seven-year rule – this rule relates to making a gift to someone, for example a one-off gift of £10,000 to a child. If you were to make a gift of this nature, then you will need to survive seven years from the date of the gift, for it to be completely out of your estate for inheritance tax purposes (subject to any available allowances).

If you make a gift to charity during your lifetime (a lifetime gift) then the seven-year rule is not applicable as all gifts to charity are exempt from inheritance tax. It also means that the charity does not pay tax on your gift and it will receive 100% of the gift. If you are also a taxpayer, the charity will also get the added bonus of gift aid on top of your donation.

Some people include charities in the residue of their estate. Once all debts, gifts and funeral expenses have been paid, everything leftover is legally known as the ‘residue’. A percentage of the residue can be left to one or more charities.

Not many people know that if you leave a minimum of 10% of your estate to a charity or several charities, you can reduce your inheritance tax liability from 40% (charged on assets over available allowances) to 36%.  This may not seem a lot but that extra 4% of your estate could go to family members, tax free.

So why not use this year’s festive period to review your Will and include a charity close to your heart?

Giving gifts on behalf of someone else

More and more people are being named as a financial attorney for a family member. A financial attorney is a named person, who can act on behalf of someone else, if they need assistance or they cannot make decisions themselves. As an attorney, you can give gifts to another, on customary occasions and of reasonable expense. A customary occasion can be anything from Christmas, birthdays or anniversaries, however, it is important that the attorney considers various other factors when considering making a gift.

If the attorney wishes to make a larger gift, then they may need this to be authorised and sanctioned by the Court of Protection, subject to certain set circumstances, who will take a fair approach and view on matters.

If you are a financial attorney and would like more information on giving a gift to someone, on behalf of someone that cannot make the gift themselves, please contact our Gifting Applications team who will be happy to help.

Find out more about leaving money to charity in your Will

If you are considering making a Will or updating an existing Will and would like to consider the best way to leave money to a charity then get in touch with our Will Writing Solicitors today and we can advise on your options.

This content is correct at time of publication