There are a number of different ways in which you can support local charities in your Will. Working in partnership with local charities, Aaron and Partners’ Wills, Trusts and Tax team have produced this guide.
To ensure that you choose the most effective way for you and your family, it is essential that you obtain specialist legal advice from a qualified Solicitor who specialises in the drafting of Wills. We also recommend that you choose a Solicitor who is also a qualified “Trusts and Estate Practitioner” (Known as a “STEP member”), meaning that the Solicitor has undertaken extra training and examinations in the field of Wills and Trusts. A number of the solicitors at Aaron and Partners Solicitors are also Trusts and Estate Practitioners and their contact details are below.
The most common ways to help out a named charity in your Will are described below:-
Pecuniary Legacy
A pecuniary legacy is a gift of a fixed sum of money in your Will, for example:-
“I give free of tax the sum of One Thousand Pounds (£1,000) to [Name of charity] (RCN: [charity number]) of [registered address of charity] with freedom to spend it as income and for its general charitable purposes”
It is worth bearing in mind that the value of a pecuniary legacy will decrease the longer you live, as the cost of living increases. For example, £1,000 today can buy far less than it could buy 10 years ago. It is likely that £1,000 in 10 years’ time will be able to buy you even less that it could today.
It is possible to link the value of a pecuniary legacy with the “Retail Price Index” to ensure that your gift keeps pace with inflation. Again, whilst it is possible to do this, it is advisable to seek specialist legal advice to ensure that this provision is correctly included in your Will.
Specific Legacy
A specific legacy is a gift of a particular named item in your Will, for example:-
“I give free of tax my Rolex watch to [Name of charity] (RCN: [charity number]) of [registered address of charity]”
You must still possess the specific named item at your death for this type of legacy to be effective. It is also essential that the item you wish to leave is clearly defined. What if you have more than one Rolex watch? In those cases, there is a chance that your gift to the named charity would fail. That is why specialist legal advice in these cases is essential.
Entire residuary estate to a named charity
After you have died, your “executors” named in your Will have the task of gathering in all of your assets. They then pay any legacies, Inheritance Tax, funeral expenses and other debts. The remainder of your estate is then known as “the residuary estate”.
You may wish to give the whole of your residuary estate to a named charity, for example:-
“My Trustees shall hold my residuary estate UPON TRUST for [Name of charity] (RCN: [charity number]) of [registered address of charity]”
A gift of the whole of your residuary estate to a charity would usually be Inheritance Tax free. However, if you are making other tax free gifts within your Will, it is worth taking professional advice to ensure that a named charity will receive what you expected them to receive under your Will.
Share of residue to a charity
As an alternative, you may wish to give your residuary estate to a number of people and / or charities, for example:-
“My Trustees shall hold my residuary estate UPON TRUST to divide it or treat it as being divided into [number of shares] shares of equal value and to hold them on the following trusts and subject to the following provisions:
a) as to one share for [Name of charity] (RCN: [charity number]) of [registered address of charity]
b) as to one share for [name of recipient of other share]”
This type of gift can be very difficult to get right. What should happen if one of the other recipients of a share of the estate has died before you? Should their share pass to someone else, or should it be added to the other gifts that have not failed? Unless you think about this and ensure that it is addressed within your Will, it can become very complicated to resolve after your death.
What else do I need to do?
If you leave a legacy in your Will to a named charity, you will want your money to actually reach them.
The illustrations above try to help you achieve that, by including the charity’s full name and registered address along with their registered charity number, but there are other pitfalls to watch out for.
Charities do change their names from time to time. Charities merge and amalgamate and alter their addresses. Ideally your Will should contain clauses to deal with this. A properly drafted Will ensures that the charity you have chosen to benefit will receive the gift that you intended. By making sure your Will is clear, you are removing any doubt and making sure the administration of your estate runs smoothly. This saves time, money and upset for your family at an already difficult time.
By taking specialist legal advice, you will be able to ensure that these important clauses are incorporated into your Will.
If you would like to learn more about leaving a gift to charities in your Will, please contact head of department, Clive Pointon, whose details are featured below:
Clive Pointon
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5-7 Grosvenor Court
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CH1 1HG
t: 01244 405555
f: 01244 405566