Remember a Charity Week: Including a charitable donation in your will

When you’re planning what will happen to your wealth, making provisions for your family and friends will likely be at the top of your priority list. But it’s important to think what other people and organisations you would like to benefit from your generosity too. For many thinking about their will, leaving a charitable legacy can be appealing.

With September marking Remember a Charity Week, it’s the perfect time to think about whether you’d like to leave a donation to a charity in your will and how to go about it.

According to Remember a Charity, a consortium of 200 UK charities, charities currently receive £3.1 billion a year in legacy income (money left in wills). These generous donations allow charities to continue doing the good work that’s important to them. Legacy income is vital in ensuring charities continue to have an impact. For example, it’s estimated that two out of three guide dogs and six out of 10 lifeboats are paid for by gifts left in wills, as well as funding around a third of the work that Cancer Research UK undertakes.

A survey conducted by the Remember a Charity found that over a third (35%) of people in the UK would be happy to leave a gift to charity in their will. However, just 6% do so. Remember a Charity Week aims to bring attention to this gap.

This year to mark the week Remember a Charity launched Human, a search engine focused on finding the right charity to support your passion.

At Hunter, Aitkenhead & Walker, we believe in helping the local and wider community, and in giving as much as possible to those causes that need it. For example, we recently raised money for charity after Alasdair Walker completed the Great North Run.

We want to pass that message on to our clients. So, we are taking this opportunity to show you why you might want to consider giving to a charity in your will and the steps to do so efficiently; as well as reminding you to review and update your will.

Why include a charity in your will?

There’s more than one reason to support the charities that mean something to you in your will. Here, we’ve got just four of them for you to think about:

1. Continue supporting lifelong causes: Throughout your life, there have probably been a few charities that you’ve supported along the way. It’s likely they’ll have a personal meaning to you. That support doesn’t have to stop when you pass away. Leaving a charitable legacy means you can continue supporting those causes that are close to your heart.

2. Doing good: Knowing that you’ve made provisions for a charity can give you that ‘feel good’ feeling. If you want to have a positive impact on the world around you and your community, it’s a step that you should definitely consider. You’ll know that your wealth is going to do good when it’s passed on.

3. Set an example for future generations: If you’ll be passing on some of your wealth and advice on to future generations, why not set an example for charitable giving too? Adding a charity to your will is one way of showing that supporting causes can be a part of life.

4. Inheritance Tax (IHT) efficiency: Giving to a charity can make sense for IHT purposes too. There are two ways that a charitable legacy can be used to reduce the amount of tax your loved ones will need to pay. Firstly, the amount donated to charity will be removed from your estate, so, for example, it can be beneficial to gift the amount that takes your entire estate over the nil-rate band, meaning no IHT will be due. The other option is to gift 10% or more of your estate to charity, which will reduce your IHT rate from 40% to 36%.

Six tips for giving to a charity effectively

If you’ve decided that you do want to use some of your wealth to benefit charities, there are six ways you can make sure you’re doing this effectively:

  • Use Gift Aid: Whenever you give to a charity, including in your will, Gift Aid can benefit the organisation. It allows the charity to reclaim any tax they would otherwise pay on your donation. It means your legacy donation can have a greater impact and a larger portion will go to tackling the issues that are important to you.
  • Gifting: You don’t have to wait until you pass away to support the causes you’re passionate about. If, after assessing your current wealth and income, gifting is an option, it can be a fantastic way to see the positive influence your money can have for yourself. It’s also worth noting that gifting to charities falls outside the gifting allowance, so you don’t have to worry about IHT possibly being added on at a later date.
  • Make sure it fits within your plans: A charitable legacy can often fit into your existing financial plans but there may be some cases where it’s at odds with other things you want to achieve with your wealth. It may be the case that these issues can be remedied with small changes so assess what your other plans are too. The support of a financial planner can help you here.
  • Make a will: The most important step to take when planning your legacy is to write a will; this is true whether you plan to leave money to a charity or not. A charitable legacy can come in two main forms; as a fixed amount, known as a pecuniary legacy, or a residuary legacy, where the charity receives what is left after other gifts have been taken out. Your will should include the charity name, registered charity number, receipt clause, and a merger clause. A merger clause will define what should happen should your chosen charity merge with another or cease to exist.
  • Make your family aware: Your will should define clearly what you want to happen with your wealth, including which portion you want to support charitable causes. But letting your loved ones know what your intentions are is always a good idea. This allows them to effectively plan their own finances and gives you added peace of mind that your wishes will be carried out.
  • Talk to a financial planner: A financial planner can help you understand how your existing financial situation would be affected if you chose to gift wealth or your legacy if you add a donation to your will. A financial planner will help you align your support for good causes with your overall plans.

Talk to us for more guidance on how to include a charitable legacy in you will, which will benefit good causes, you, and your family.