Leaving a legacy to charity in your Will
As we have touched on earlier in this guide, when you die intestate i.e., without making a Will your assets are shared out according to a strict set of inheritance rules, which may not reflect your wishes, more information about these rules can be found at www.gov.uk/make-will It is worth noting that the law differs if you die intestate in Scotland (please see the Scottish edition of this guide for more information). You may decide to leave a legacy in your Will to charity.
Currently a quarter of Wills now leave a gift to charity in their Will. Charities rely on donations to support their work and for most charities they wouldn’t be able to survive if it wasn’t for help from donations. Across the UK, people donate roughly £3.9bn a year in their wills. Even a small amount can help make a big difference to charities. After you have taken care of your loved ones and family members why not consider leaving a gift in your Will to your favourite charity. Leaving a gift to charities can reduce the amount of Inheritance Tax you pay.
Any gift left to a qualifying charity (an organisation that is recognised as a charity for tax purpose with HMRC) will be except from Inheritance Tax, also the rate of inheritance tax can be reduced from 40% to 36% if you leave at least at 10% of your ‘net estate’ to charity. You can even give money to charity whilst still alive as this won’t be counted as part of the ‘estate’ when you die. As your Will is a legally binding document, and the subject of charitable legacies can be complex, it’s sensible to seek professional help when making a legacy in your Will.
What is a Trust?
A Trust is a vehicle whereby assets are held in the names of trustees for the use or benefit of a person or persons (beneficiaries). The type of benefit which the beneficiaries receive under the trust is determined by the trust document. For example, a beneficiary may be entitled to income only or income and capital but only with the trustees' approval, or some other interest. Usually the beneficiaries will not have outright control of the assets. Trusts can be very useful in the event that a beneficiary is incapable of managing his or her affairs (because of age or disability) or simply because they are vulnerable in some other way, such as being easily influenced or not very good with money. Depending on the type of trust the beneficiaries do not need to be treated equally. A trust may be the best way to secure the interests of dependent children, particularly if they have no living parent.
If you feel that setting up a trust might be appropriate for your circumstances, then professional advice is essential as a poorly drafted trust document may not do what you need it to and can often only be changed by the courts.
When setting up a trust, you should also seek advice on the tax consequences. The creation of a trust usually has to be notified to the tax office as income arising is taxed differently to that of an individual. There may also be inheritance tax due on the creation of larger trusts which exceed the nil rate band, and when assets leave these trusts.
Challenging a Will
If a widow/widower or dependent child (and, in some circumstances, a cohabiting partner) considers that he or she has not received 'reasonable provision' under your Will, then he or she may make an application to the Court under the Inheritance (Provision for Family and Dependants) Act 1975.
A spouse may be able to claim the full estate and children may be able to claim maintenance. If you were living with a partner but were not married or in a civil partnership, your partner will have to show that they were 'maintained either wholly or partly' by you, the deceased. This may be extremely difficult for them if you have always shared your living costs.
Your dependents will need to claim that there has not been reasonable financial provision made for them within six months of the date of the Grant of Probate. This is quite a complicated area and claims often don't succeed, which is another reason for leaving a properly drawn-up Will.
Executors and Guardians
Financial Considerations When Making a Will
Glossary
How to make a Will?
Inheritance Tax
Lasting Power of Attorney
Organ Donations, End of Life and Hospice Care
Planning Your Funeral
Special Types of Wills
Useful Contacts/Organisations
What happens if I die Intestate?
Where Should I Keep my Will?
Why make a Will?