Donating to Charity Through the Use of Wills

Donating to Charity Through the Use of Wills

Many of us hold the work of charities and charitable organisations close to our hearts. It might be the case that we have directly benefited from the services they provide or simply acknowledge and admire the work they perform.

Leaving or donating money and other gifts to a charity in the event of death is a very popular option which many people choose to take advantage of. There are also several financial benefits to doing so which may make the decision easier.

The Process of Donating to Charity

If you don’t already have a will, this is great opportunity to communicate your wishes and to nominate the charity that you wish to benefit on your death. In the event that you already have a will, you will need to request an amendment with the entity who helped you to write it originally.

Depending on your charity of choice, they will usually recommend that you use a specific statement to express your desires to donate any assets to them in your will. This information is usually readily available on their website but if it isn’t, we would suggest contacting them personally or requesting your will writer to do so on your behalf.

It will also help to include the following information;

  • The full name of the charity to benefit from your donation.
  • The charity registration number of the charity in question as well as their registered address.
  • A merger clause in the event the charity you wish to donate to ceases to exist or has merged with another charity. In these instances, you can elect that a charity with similar values benefits instead.

Setting up Charitable Trusts

Another option is to establish a Trust in your name which is dedicated to carrying out charitable work on your behalf. As part of this process, you can directly gift assets to a charity of your choice or use the Trust as a vehicle for donations to a series of good causes.

Another option could involve appointing powers of attorney who can preside over your financial affairs and donate to charitable causes on your behalf.

The Tax Benefits of Donating to Charity

Donating money to a charity has the ability to reduce the overall inheritance tax liability of your estate, sometimes even eliminating it entirely. This works by;

  • Reducing the total taxable amount of your estate by ringfencing some of it as a donation. This donation will be tax free and will ensure that whatever is left over will incur less inheritance tax.
  • In addition, the rate of overall taxation can be reduced from 40% to 36% if you were to donate 10% of your net estate.

Once probate has begun and provided there are sufficient assets after debts and liabilities are paid, your donation will be made before the rest of the estate is divided up.

Further Advice on Nominating a Charity in Your Will

Tax law can be complicated so we would suggest seeking further advice on donating to charities through your will. To discuss this matter further, speak to Heritage Wills by calling us on 01603 894500 so that we can offer more personalised advice.