Leaving money in your will to charity

Leaving money to charity in your will, is a great way to leave a positive legacy. In doing this, it also provides tax relief on the rest of your estate, meaning your family can get more out of their inheritance.

How do you leave money to charity in your will? 

If you do make the decision to gift some of your estate, there are two ways in which to proceed:

• Specify a name of a charity or multiple charities that will receive a donation

• Allow the trustees of your will to decide.

In choosing specific charities, you will ideally need to include information such as the registered charity number. This allows the correct charity to benefit, in case of a name change over the years.

If the trustees will be deciding on the charity, it will be beneficial to leave a record of your exact wishes.

Your donation could be:

• A cash sum

• A property or asset

• A portion or all of your estate (minus gifts, fees and tax).

Can family contest donations? 

According to the Inheritance Act, your will must allow for financial provisions for your dependents. If your will does not provide this, a charitable gift can be contested by the family in order to gain the financial provisions they are entitled to.

Gifts can also be contested due to family claiming you were under undue influence, or were not of sound mind when making decisions to donate. This can also lead to an entire will being declared invalid.

Paying tax on donations. 

If you choose to donate to a charity within the UK, this is free of Inheritance tax.

Charitable gifts and Inheritance Tax on the estate.

The gift you choose to make to charity is tax-free. Charitable gifts can also reduce the amount of Inheritance Tax that you are liable to pay on the rest of your estate. If you are donating a minimum of 10% of taxable estate to charity, this reduces the tax on the rest of the estate by 4%, from 40% to 36%.