Will planning is a deeply personal and sensitive subject, and some people choose to leave estates to charity. But what does this mean in practice? Who stands to benefit? This guide offers tips on supporting good causes.
While it can be a painful subject, most experts on probate agree that it is a good idea to discuss charitable intentions with others in line to inherit your assets. This will help you avoid some of the following pitfalls. Amounts left to charity are technically known as pecuniary bequests, while percentages are referred to as residuary legacies, and the total amount might fluctuate in line with changing valuations of estates, investments and other living costs.
Deciding how much to allocate to charity will require careful thought so as not to cause disputes or impact the interests of more immediate loved ones. There should therefore be no ambiguity in the final document.
It is also worth considering that gifts to charity are exempt from inheritance tax. If more than 10% of an estate is left to good causes that can reduce the bill your beneficiaries pay, with the tax rate on your taxable estate dropping to 36%. With pensions coming into inheritance tax from 2027, this may tempt more people into considering this option, in order to minimise their liability.
Such charity donations have become increasingly popular in recent years, with around 20% of people over 40 now including such acts of benevolence that can often secure an organisation’s future.
This is a complex area of inheritance tax law, so if you are estate planning in Cheshire, call Hartey Wealth Management today to discuss suitable options.
