Who are you going to leave money to in your Will? Your spouse or partner is probably first in line, any children or extended members of the family may pop up here and there too.
But what about charity?
Thousands of people every year choose to leave a gift to charity in their Will, whether it’s a fixed amount, a fixed percentage of their estate or even just what’s left after other gifts have been handed out to your surviving loved ones.
Any registered charity
It doesn’t have to be a charity that you have been particularly involved with during your life either – you can leave money to any registered charity.
There is another bonus to doing so, besides simply helping a good cause. Legacy giving – where you leave money to a charity – can also reduce your inheritance tax bill.
With inheritance tax, you – or rather your estate – is charged a rate of 40% on every £1 that the estate is valued above the nil rate threshold, which currently stands at £325,000 (though couples essentially enjoy a £650,000 threshold).
However, when you leave money to charity, it won’t count towards working out the value of the rest of your estate, giving you the opportunity to reduce the value of your estate below that threshold, ensuring no further tax is payable.
Reduce your tax bill
Even if your estate is still valued about the threshold, charitable giving can help reduce your tax bill. If you leave 10% of your net estate to charity, then the inheritance tax charged on the remainder of your estate falls from 40% to 36%, a reduction which could see the estate save thousands of pounds in tax.
Jim Emsley from E.L.M Legal Services said: “Many of us regularly give to charitable causes, and would like to do so after we die too. Not only can you help support good causes with some of your estate, but there are tax benefits that come with it, though this should be discussed carefully with your loved ones and your Will writer when drafting the Will.”
For advice on drafting your Will and planning your legacy, contact ELM Legal Services on 0800 019 4557 or email firstname.lastname@example.org.