If you’re writing a will, deciding what to do with your worldly belongings when you pass over can be tricky. For most people, the number one priority will be to leave as much as possible for your family, but leaving money to charity in your will is not only a worthy cause, but can also mean your family are better off too.
A ‘charitable legacy’ is the official term for when someone leaves money to charity in their will. Many people will plan to leave an amount to their favourite charity in their will, and as it is their last wish and legally binding, in most cases it must be carried out.
There are a few different types of charitable legacy including Pecuniary Legacy which is a gift of money and a Residuary Legacy which is where the amount of money isn’t specified but is taken as the amount left over after all legal payments have been made and other beneficiaries have received their inheritance. The other main type is Specific Legacy which is when you leave an asset such as a house to charity, rather than a monetary amount.
In 2009, the media reported on the Gill vs RSPCA case where a rich woman left her entire £2.35 million estate to the RSPCA, much to the distress of her daughter, Christine Gill. Christine subsequently took the RSPCA to court and had the will overturned on the basis that it looked like her mother had been coerced into leaving the family estate to charity.
While this is an unusual case, it highlights the importance of making sure that your will is legally airtight and can’t be challenged.
To ensure that your charitable legacy isn’t overturned after your death, you should make sure to use your own solicitor, not one that the charity uses or recommends, and make sure that the charity or any individuals working with the charity are not involved in any aspect of creating the will, such as acting as witness. This will reduce the risk of family members or others legally challenging your charitable wishes.
Unlike the Gills, you may want to leave only a portion of your estate to charity, and this can also benefit your family or the other benefactors of the will as well as the charity itself.
The government states that if you decide to leave 10% or more of the value of your estate to charity, this will reduce the inheritance tax your family has to pay on the amount above the £325,000 ‘nil band rate’ from 40% to only 36%.
While this may not sound a lot, in the case of an estate worth £350,000, if you were to leave £25,000 to charity that would bring the estate value down to the nil band rate and mean that your family pays no inheritance tax instead of £10,000, and that tiny 4% on a £1 million property works out at a whopping £40,000 saving.
Whether you’re leaving money to charity out of the kindness of your heart or to find a legal way around that pesky inheritance tax for your family, Best Value Probate can help.
Give us a call on 0207 406 5875 and our expert team will help you with any aspect of your charitable legacy.
Ellie is a resident writer for Best Value Probate, covering topics such as Probate, wills and other legal proceedings.