Making a will may not be the most joyous of tasks on your list, but it is an extremely important one and absolutely vital if you want total control of how your estate is divided up and distributed when you pass. How you decide to structure your will is up to you, these are decisions you will need to consider thoroughly, although it must not be forgotten that it is possible to amend your will in the future if circumstances were to change. Generally, the majority of wills will leave finances and assets to partners and close family, but many people also opt to leave a sum of money to a charity or organisation they feel a personal connection to. In 2017, Brits left a staggering £2.8 billion to charity in their wills, and this money is what keeps many charities in operation. You don’t need to leave tens of thousands of pounds to make a difference, every little helps and will enable many brilliant organisations to ensure that their work can continue.
Not only is leaving a financial gift to a charity a wonderful gesture and great news to said charity, it can also benefit your family too. Inheritance tax payments can soon gobble up a large chunk of your assets, but there are ways in which you can minimise this, leaving money to charity is one of them. Currently, the inheritance tax threshold is at £325,000 and £650,000 if you have a partner. Any money that you decide to leave to charity will reduce the total amount payable to the HMRC. If you do the calculations (or seek help from a professional) you could cut the tax you pay by a good amount. If you leave at least 10% of your estate after any various exemptions, this will effectively reduce the rate of any inheritance tax due from 40% to 36% which can save thousands. It’s cost-effective and it benefits both a charity and your loved ones, providing a potential win-win situation.
Choosing a charity can be difficult, and it’s not a decision that should be rushed. Think about the causes you care most about, and how you want your legacy to be remembered when you’re gone. There are also different types of legacies which you can leave, these include; pecuniary, specific and residuary. A pecuniary legacy is the simplest form of legacy you can leave to your selected charity. This is a cash amount that you will leave to your chosen organisation which the executor of your estate will oversee. A specific legacy is when you leave something other than cash, for example property or shares. Finally, a residuary legacy is where you will leave the whole, or a share of what is left once everything else has been paid such as debts, costs, and taxes.
Remember, it’s important to include as many details as possible surrounding your chosen charity as to avoid any future disputes and discrepancies. You will need to make sure you include the registered charity number and address. In the case where the charity you select isn’t entitled to receive legacies, you will need to seek their tax-exempt reference number. If you feel unsure or confused regarding any aspect of writing your will, don’t be afraid to reach out for help from will-writing experts.