Leaving a gift in your will to charity is a very personal decision, but making this commitment could make a huge difference to a cause that is particularly important to you.
Charities rely on our support to help them fund the vital services they provide, whether that involves medical research, providing aid to war-torn areas, or raising awareness of a certain issue. So if you are considering leaving a gift in your will, no matter what the sum, you can be sure it’s likely to have a positive impact.
Here, we explain how you can leave a legacy, and how doing so can not only benefit charity, but may also have financial benefits for your loved ones.
What types of gifts can I leave?
When you choose to leave a gift to help a charity, you have a range of different options available to you.
The three main types of gift you can leave to charitable causes in your will are:
1) A residuary legacy
This type of legacy allows you to give a percentage of whatever remains in your estate after debts, funeral expenses, and other gifts have been paid out, to the charity of your choice. A residuary legacy may see your gift grow over time as the value of your estate increases as its value tends to adjust in line with inflation, meaning the charity receives the level of support you intended.
2) A pecuniary legacy
This is a fixed amount of money that you leave in your will. Bear in mind that its value may reduce over time thanks to the impact of inflation, so you might want to review it from time to time.
3) A specific item
A legacy doesn’t have to be a monetary amount, you can leave a specific item, such as an antique, a painting, or a piece of jewellery.
No matter what kind of gift you choose, your hard-earned money will be put to good use, helping important causes for many years to come.
Why leave a gift to charity in your will?
Given that living costs have soared in recent years, most of us simply don’t have much disposable income left at the end of every month to be able to afford to make regular gifts to charity.
This can be even more of a challenge when we retire, as our incomes often reduce at this stage.
If you find yourself in a position where you are asset rich but cash poor, leaving a gift to charity in your will can be the perfect way to show your support without it affecting your financial position whilst you’re alive.
Your gift could be used for a wide range of purposes, depending on which charity you leave it to, potentially changing lives for generations to come.
Why gifts in wills are so important
By keeping an up-to-date will, you set out what happens to your money, property and possessions after your death. This is the best way to make sure the people dearest to you are provided for. After that’s done, many people consider leaving a gift to a cause they’re passionate about. You can find out more about why outlining your wishes in a will is crucial in our guide The importance of writing a will.
Not only does a legacy make a difference to the charity you leave it to, but it could also help reduce the amount of inheritance tax that needs to be paid on your estate, at no cost to any other beneficiary. That’s because registered charities are exempt from inheritance tax. This means that gifts to charity are usually paid free of tax and are deducted from the estate before the tax is calculated.
If you’re planning to leave a substantial charitable gift in your will, which is equivalent to 10% or more of your estate, this will reduce how much inheritance tax is charged on the remainder of your estate, as it reduces your payable rate from 40% to 36%.
Please bear in mind that inheritance tax planning can be a complex area, so it’s worth seeking professional financial advice if you’re unsure.
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