Leaving money to charity in your Will is a great way to make a positive impact. It is something that Chuck Feeney was a big proponent of. But how best do you go about doing this in the UK to avoid legal challenges and ensure your wishes are carried out? This is something that we explore in this article.
Granting this wealth to good causes has been a rich source of joy and satisfaction for me and family.
The above is a quote from Chuck Feeney, an Irish Entrepreneur and Philanthropist, who died at age 92 last month. Feeney transferred virtually all of his personal assets to the Atlantic Foundation during his lifetime. He was a fervent supporter of Giving While Living, encouraging other billionaires to give big while they are alive to see the impact. Feeney helped inspire Bill Gates and Warren Buffet to launch the Giving Pledge in 2010 which aims to persuade the wealthiest individuals in the world to give away majority of their fortunes in their lifetime or in their Wills.
Most of us probably don’t wish to give away majority of our fortunes, but if you are considering making a philanthropic gesture in your lifetime or in your Will, you have the power to make an extraordinary impact to those less fortunate. It is important to seek specialist advice to safeguard against unforeseen legal action by your family following your death.
How to do philanthropic giving
Your Will can be utilised in a number of ways in order to implement your charitable wishes. These can include a specific sum of money to a charity; leaving the entire estate or a percentage of your estate, or the creation of a charitable trust.
If you choose to create the charitable trust in your Will, you should be careful to ensure that the trust will comply with the requirements to be a valid charitable trust. If it fails to do so, it will be too late to take any remedial action and the gift would likely lapse. The alternative is to set up a charitable trust during your lifetime with a small sum of money registered with HMRC to ensure it is accepted as a charitable trust. You can then leave a more sizeable gift in your Will.
Appointment of trustees
If you decided to pursue the option to set up a charitable trust, it is important to appoint appropriate trustees. A good trustee will need to understand their administrative and legal role in carrying out your wishes, and also complying with the various duties they have as charity trustees. The role is more complex than a trustee of a private trust.
You can appoint individuals as trustees, or alternatively you might wish to consider your solicitor as a professional trustee. A professional trustee will have the requisite skills and knowledge to act impartially and to comply with the necessary regulations.
Inheritance tax liability
There is a specific exemption from Inheritance Tax where a gift is made to qualifying charities. This exemption applies both to lifetime giving and gifts on death.
There is a reduced rate of Inheritance Tax where the individual leaves 10% or more of their net estate (the value after the nil rate band and any other reliefs and exemptions have been applied) is left to qualifying charities. If the relevant criteria are satisfied, Inheritance Tax would currently be calculated at 36% rather than the current rate of 40%.
One of the most common causes of an inheritance dispute is a child not receiving adequate provision under a Will. It is important to be aware of this risk if you are leaving a substantial portion of your estate to a charity. Courts are increasingly willing to allow inheritance claims by adult children, and you should reflect on any legal obligation to provide for them. This is applicable to any dependants that you may have at the time of your passing.
How can Blake Morgan help?
Our specialist Succession & Tax team at Blake Morgan are here to help you make the right decision. We can guide you through the process of making a Will and provide bespoke advice on estate planning and about how best to leave money to charity in your Will in the UK. By leaving a gift in your Will, you are making an impact on causes that matter to you.
Finally, by considering leaving a gift to charity in your Will, planning and reviewing your will at least every five years or following a change within your family (for example, marriage, divorce, birth or death of a loved one) you can ensure the terms of your will are up to date and benefit those close to you, be it family and friends or good causes.
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