TBI column – Leaving donations to charity in your will
It’s not just your family that you can give to when making a Will. Tilly Bailey & Irvine’s Probate Solicitors in Barnard Castle explain how ‘legacies’ allow you to donate to charity after you die.
Nobody wants to think about death. This therefore makes a very important decision hard to come about for many people – the process of making your final will.
The process of making a will is something that is so often overlooked or put off until it is too late, but has a profound impact when it is not in place. It is done to protect what you have, and make sure it is distributed in a safe and wholesome manner to those that you trust and care for.
It can also be used to support other causes. That could be a local business or, more commonly, a charity or cause close to your heart.
Apart from it being a positive gesture, those who include a ‘legacy’ charity donation in their will can also soften an additional burden that comes following your death.
How does this affect tax?
If you are worried about the Inheritance Tax that might have to be paid when you die, leaving a gift to charity can in fact reduce the bill. Leaving a part or your entire estate to charity can reduce and even cancel out the Inheritance Tax liability, as a donation in your will does not count towards the total taxable value – known as a ‘charitable legacy’.
You can also cut the Inheritance Tax rate on the rest of your estate from 40% to 36% if you leave at least 10% of your ‘net estate’ to a charity.
Of course, what is there to stop you from donating right away? Cash donations or anything you own again are not counted as part of your estate after your death. Again, Inheritance Tax could be cut or even eliminated by this gesture. There could also be some relief from Income Tax when you donate to a charity while you are still alive.
Charity donations growing in popularity
The UK is well known for its generosity. Almost £10 billion was donated to charity last year alone, £2.8 billion of that courtesy of people leaving money to a cause in their Will. Despite this and over 35% of over-40s in the UK saying they would give a small amount of money in their Will, only 6.3% actually go through with that promise.
Talk through your intentions with your family to ensure no heartache occurs in the distant future when everything plays out. If a charity is concerned, this is also the time to explain to them how proud you are of this donation, and explain to others close to you just what they can do to help.
If you want to make a difference, don’t hesitate to contact Tilly Bailey & Irvine’s wills and probate solicitors in Tees Valley by calling 0333 444 4422 or visit their website to make an online enquiry for free.