An awareness-raising week has been encouraging more people to remember good causes in their will.
Although only six per cent leave a charitable gift in their will, good causes benefited by almost £2 billion in legacy income in 2012 so even a small increase in the numbers of people making a charitable bequest could potentially raise billions for good causes.
Remember a Charity Week, which ran from 8-14 September, aimed to inspire more people to leave money to charity in their wills, which could also have useful inheritance tax (IHT) benefits.
Inheritance tax is levied at a rate of 40 per cent on estates valued at above £325,000 but when an amount equal to 10 per cent of the ‘net value’ of an estate is left to charity, IHT is payable at a reduced rate of 36 per cent on the remainder of the estate. It should be noted that the value of the ‘net estate’ for these purposes, is reached via a somewhat complex calculation which produces a lower figure than might be expected.
Even if charitable gifts total less than the required proportion of an IHT-liable estate, they can reduce the overall value of the estate subject to inheritance tax as every £100 left to charity effectively reduces the IHT due by £40.
Tim Steele, a partner in Palmers’ Wills, Trusts and Probate department, said: “Quite apart from the inheritance tax mitigation opportunities that a will offers, making a will means that you can be sure your estate goes to who you want it to, rather than being distributed under the very strict laws of intestacy, which exclude cohabiting partners, for example.
“Making a will is not as expensive as you might think and represents a wise investment in future peace of mind for yourself and your loved ones. For more information, please contact our Wills, Trusts and Probate team.”