Planning your legacy through charitable giving in your will

There are many reasons why someone might choose to leave money to charity in their will. Tax planning may be a key incentive, or it could be that a person does not have any close family members, and some may simply have strong feelings about a certain cause.     

‘Last year, Fisherman’s Friend heiress, Doreen Lofthouse hit the headlines when she left £41.4 million from her family’s fortune to the Lofthouse Foundation.’ Susan Owens, Solicitor explains ‘Doreen contributed generously to causes close to her heart throughout her lifetime and leaving such a significant sum on her death was designed to allow the foundation to continue her philanthropic work.’

Susan explores the key motivations for charitable legacies and highlights the benefits.

Charitable gifts are a great option for those without close family

If you no longer have any close family or friends, you might not want your money to end up with distant relatives you never speak to or see. If you find yourself in this situation, a gift to charity could have more meaning to you.

 Making a will in which you clearly set out your wishes is the only way to ensure that any charities can benefit from your estate. If you die without a will then the predetermined intestacy rules apply, and these never provide for money to pass to charity. Even if you leave no distant relatives, intestacy will mean all your assets end up being left to the Crown.  

Creating a lasting personal legacy with charitable gifts

Leaving any sum to charity under your will allows you to ensure that you are remembered for the causes that mean the most to you.

In Doreen Lofthouse’s case, her sizeable donation was made to allow the Lofthouse Foundation to use the funds for revitalising her hometown of Fleetwood in Lancashire. Not only will the donation benefit those in the area, but locals have also called for a memorial to be erected in Doreen’s honour. 

Whilst not everyone who leaves money to charity ends up with a permanent memorial, charities are grateful for any sums they receive and your legacy will live on in the meaningful work they are able to provide because of your gift, whatever size it may be. 

The effect of charitable giving on inheritance tax

For many, tax saving is not the key consideration for leaving sums to charity, but it is usually a welcome side effect.

Any gifts you leave to charity in your will pass free of inheritance tax. This reduces the value of your estate by the amount of the gift, leaving a smaller pot to fall subject to inheritance tax.

In addition, if you leave 10 per cent or more of your estate to charity the remainder benefits from a reduced inheritance tax rate. Inheritance tax calculations and tax-planning is complex, and it is advisable to seek advice before finalising decisions based on tax.

 How can we help?

If you wish for any of your assets to pass to a charity close to your heart, the only way of ensuring this happens is to include clear instructions in your will. Making a will allows you to control how your estate passes when you die, including specifying charitable gifts, whilst making sure everything passes in the most tax efficient way. 

For further information, please contact Susan Owens on 01536 423434  or                    email susan.owens@bmtclaw.co.uk www.bmtclaw.co.uk

Borneo Martell Turner Coulston have Wills and Probate specialists in both Northampton and Kettering offices.