A legacy in your will is an excellent way to leave money to a charity. Many people use them as a means of bringing down your overall Inheritance Tax burden.
Please note that what we offer below is not legal advice and you must always take legal advice from a solicitor.
Leave us a legacy?
The Importance of a Will
Even if you have no relatives or friends for whom you might wish to provide, it is important that you leave a will to maintain control over what happens to your estate. If you die without making a will, there are circumstances in which everything you own passes to the State. If you have already made your will, you can amend it at any time but to ensure that it is legally binding, consult your solicitor or other suitably qualified person.
Inheritance Tax at a rate of 40% is payable on any amount you leave over £325,000 (2021) for a single person (double for those married or in Civil Partnerships). Gifts to charities are not taxable and your legacy can be used as a means of reducing your estate to a level below the Inheritance Tax Threshold.
You may also like to know that If you give at least 10% of the taxable portion of your estate (the part exceeding £325,000) to charities (or a single charity) the rate of IHT on the excess is reduced to 36% rather than the standard 40%. That means that the residuary beneficiaries of the estate can, in effect, make substantial charitable donations at a discount, HMRC making, in effect, a contribution to the gift.
Your solicitor, financial advisor or accountant will advise you.
Types of Legacy
There are three types of legacy that may be appropriate: the Residual Legacy, Specific Legacy and Life Interest (which benefits the charity after the death of someone to whom you left a life interest in your property). Before proceeding with any of these you should, of course, consult your solicitor or other suitably qualified person.