Remember a Charity Week – How You Can Have Your Cake and Eat It

8 September 2021 | Article by Matthew Nester

September 6-12 is Remember a Charity Week and in celebration of this, solicitor, Matthew Nester, explains how you can use a legacy in your will to support the causes closest to your heart.

According to joint report, commissioned in part by Remember a Charity[1], legacies raise around £3.4 billion every year which amounts to 16% of all fundraised income1. Despite this, only 6% of people currently leave a gift to charity in their will. If this increased to just 10%, it could generate another £1 billion for good causes each year.[2] Many charities see legacies as a top priority and the funds they receive from these generous gifts are vital to keep many charities running. Setting up a legacy in your will is a meaningful way to benefit many worthy causes.

Writing Your Will

It order for you to ensure your assets are dealt with according to your wishes after your death, it is important to have a will. Without a valid will your estate will pass according to what are known as the “intestacy rules” which are fixed rules set by statute, regardless of your wishes. If you are considering remembering a charity after your death you must have a valid will and should ensure that the gift to the charity is appropriate and properly drafted. A qualified solicitor or will-writer can help ensure your will is written and executed correctly.

Updating or Changing your Will

If you have a will and want to change it to include a charity, you can do so either by amending it with a codicil or by writing a new will. A codicil is a simple way to make minor changes or additions to a will. Provided it’s prepared correctly, it would sit alongside, rather than override, your original will. The original codicil should be kept with the original will and copies of the codicil should be sent to anyone who has a copy of the will.

If you need to make significant changes to an existing will it’s often better to replace it with a new will entirely. Writing a new will is like writing your earlier will, except that you should, if appropriate, ensure that your new will revokes any previous wills and codicils so that it is clear which will is the correct one. 

For either option, it is important to seek professional advice when making changes to a will to ensure that everything is set out correctly. This often helps avoid confusion and disputes that can arise when a will is not written or executed correctly and can prevent needless litigation following your death.

Designating a Charity

To ensure that the right charity benefits from your legacy it is important to identify it properly in your will. Many charities have similar names so including a charity’s full name, address and registered charity number helps avoid confusion after your death. The registered number is particularly important in case a charity changes its name after your will is written. The Charity Commission, the organisation which oversees the registration and regulation of charities in the UK, has a convenient search feature on their website which allows you to look up a charity. You can access this at https://www.gov.uk/find-charity-information.

Ways to Remember a Charity

It is possible to designate a specific gift to one or more charities under the terms of a will, or to instruct that some or all of the residue of your estate (the assets left over after all the specific gifts are made) are left to charity. These gifts can be cash, property or any other assets in an estate. Many charities will only accept specific types of assets, however, so before deciding how to remember a charity in a will it is best to find out if your chosen charity has any restrictions on donations. 

If the estate is large and a person wishes to establish a gradual or long-term benefit for a charity, it is possible to establish a charitable trust under the terms of a will. Here, the trustees are given directions on how the assets are to be applied to the charity or charities. Rather than a specific charity, a charitable cause or causes can be named instead. This way the trustees are bound to support the specific cause or causes but the ultimate choice of charity is left up to the trustees themselves.

Tax Benefits

An important benefit of remembering a qualifying charity in your will is that such gifts are free of inheritance tax. In addition, if at least 10% of the net value of an estate is left to charity, it can decrease the inheritance tax rate on the remainder of the estate otherwise subject to inheritance tax from 40% to 36%. Not only can this be an effective way to reduce inheritance tax for your heirs but, if done correctly, can even result in them receiving a larger benefit from the estate so it often pays to see proper advice.

Take a look at our recent blog which sets out the potential inheritance tax advantages in more detail.

Whether you need assistance in including a charity in your will or if you wish to help a charitable cause during your lifetime, Hugh James provides expert specialist advice to help you achieve your goals. Contact us to set up a consultation and we will help ensure your charitable wishes are fulfilled.

Remember a Charity

Remember A Charity is part of the Chartered Institute of Fundraising, which is incorporated by Royal Charter (RC000910) and is a charity registered in England and Wales (No. 1188764) and Scotland (No. SC050060).  They help 200 charities who rely on gifts in wills to continue their vital work.  To learn more visit www.rememberacharity.org.uk.

 

[1] Remember a Charity, Legacy Foresight, Institute of Legacy Management, and Smee & Ford, 2020. Strengthening Charities’ Resilience with Legacies.

[2] Remember a charity, 'About Us' (Remember a Charity, n.d.) <https://www.rememberacharity.org.uk/about-us/> accessed 8 September 2021

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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