Charitable giving - making sure it works for you
There has been much coverage in the press recently about people – usually the elderly and more vulnerable, who have been bombarded by charitable requests by phone and email. Many people have charities that are close to their hearts and they choose to support them by either volunteering their time and/or by making regular financial donations.
No one should feel pressurised into giving to any charity or into giving more than they currently do. If your financial circumstances change or if you want to change the way you give to charity then that is your decision alone to make and you must decide what is best for you at that time.
It is often therefore a good idea to review your charitable giving and whether giving during your lifetime or leaving a legacy in your Will is the best option for you.
If you choose to leave a donation to a charity or several charities in your Will, then it will be taken off the value of your estate before inheritance tax is calculated. It can also help to reduce your Inheritance Tax rate if more than 10% of your estate is left to charity. You can donate in your Will in a number of ways:
• By leaving a fixed amount or a percentage of the value of your estate
• By leaving an item of value
• By leaving what is left of your estate once other gifts have been made
If you are planning to donate land, property or shares to a charity or to make a gift of the net sale proceeds, then it is worth taking professional advice (both legal and tax planning) regarding the timing of your donation, as you may pay less Income Tax in the tax year you make the gift or sale. There is also likely to be Capital Gains Tax Relief and advice should be sought before you make any sale or transfer of ownership.
It is important to be clear about which charity you intend to leave the donation to for example if you just said “to the local hospice or dogs home”, that isn’t sufficiently clear. Use the charity’s full name and address and registered charity number and then if it should change over time it can be easily traced.
Finally, it is important to communicate your wishes regarding charitable giving to other beneficiaries in your Will, which can be done via a letter to try to avoid subsequent arguments. That said, in a recent ruling, a judge has overturned a decision that had seen a woman excluded from her mother’s Will. Despite the mother stating clearly that she didn’t want her estranged daughter to receive anything from her Will, the Judge ruled her actions “unreasonable, capricious and harsh” and awarded the daughter a third of the value of the estate.
Whether this ruling has any further repercussions we in the legal profession will have to wait and see. In the meantime, reviewing your own circumstances on a regular basis is always advisable.