When preparing a Will, most people focus first on making sure their family and loved ones are provided for. However, a Will can also be an opportunity to support a charity or cause that is important to you. Including a charitable legacy in your Will can be a meaningful way to reflect your values and support causes close to your heart and leave a lasting impact beyond your lifetime.
Common misconceptions about leaving a gift to charity
One common misconception is that charitable gifts are only for those with substantial wealth. In reality, anyone can leave a gift to charity in their Will, regardless of the value of what they leave behind.
Another misconception is that leaving a gift to charity will prevent family members from benefiting from the estate of their loved one. A Will can be structured to ensure support for your loved ones while also providing for the charitable cause that matters to you.
Balancing gifts to loved ones and charitable donations
Every individual’s circumstances are different. For some, ensuring financial security for family members will be the main priority. For others, there may be scope to include a charitable gift while still sharing with their loved ones. Others may prefer to leave their whole estate to charity.
When preparing or reviewing a Will, you should consider the overall value of your estate, your family circumstances, and the causes you wish to support. Careful planning can help ensure that your wishes are clearly expressed and your estate is distributed in accordance with your intentions.
Different ways to leave a charitable gift
There are several ways to make a charitable gift in a Will:
- You can leave a fixed sum of money to a charity, which provides certainty about the amount that will be received.
- You can leave a specific item, such as artwork, jewellery, or another valuable asset.
- You can leave a share of what remains in your estate, after debts, taxes, expenses, and any other legacies have been settled (known as “the residue”). Some people prefer this approach, because the value of the gift adjusts in line with the value of their estate.
Whichever approach is chosen, it is important to identify the charity accurately within the Will to avoid uncertainty when the estate is being administered. If the chosen charity changes its name or is no longer in existence at the date of death, wording can be included in the Will to ensure that the executors have power to direct the legacy to another similar cause.
Inheritance tax considerations
In addition to supporting good causes, charitable gifts can also provide inheritance tax advantages.
Where gifts are left to qualifying UK charities, those gifts are generally exempt from inheritance tax. This means that the value of the charitable gift is normally deducted before inheritance tax is calculated on the remainder of the estate.
Charitable gifts can also reduce an estate’s overall inheritance tax liability. Where at least 10% of an individual’s net estate is left to charity, the rate of inheritance tax paid by the estate (if any) may be reduced from 40% to 36%. However, the rules used to calculate 10% threshold are complex and may apply separately to different components of an estate. Professional advice should therefore be obtained before relying on a reduced rate.
This will become increasingly relevant in light of the changes that will bring pensions within the scope of inheritance tax for deaths on or after 6 April 2027. Given the interaction between charitable legacies, pension benefits and the inheritance tax rules, it is important to review both your Will and any pension nomination forms before April 2027 to ensure they remain aligned with your intentions and tax planning objectives.
Why reviewing your Will matters
A Will should not be viewed as a document that is written once and then forgotten. Personal circumstances can change significantly over time through marriage, divorce, the arrival of children or grandchildren, changes in financial circumstances, or a shift in the causes that are important to you.
By reviewing your Will regularly, you can ensure that it continues to reflect your wishes and remains appropriate for your circumstances. Even if your intentions have not changed, periodic reviews can help identify whether legal or tax developments should be considered.
How a solicitor can help
Making a Will provides an opportunity to think carefully about the legacy you wish to leave behind. A solicitor can help ensure that your wishes are clearly documented, that your Will is legally valid, and that any charitable gifts are structured appropriately alongside provisions for family and other beneficiaries, taking into account your particular circumstances.
Whether you are making your first Will or reviewing an existing one, taking specialist advice can provide peace of mind that your estate will be dealt with in accordance with your wishes.
A gift to charity in your Will can be a lasting way to support causes that matter to you, helping to create a positive legacy that continues to make a difference in the years to come.
