Lowes Inheritance Guide

LOWES INHERITANCE GUIDE

6 Leaving a legacy

In addition to leaving money to family or friends, inheritance planning is an excellent prompt to consider whether you would like to leave a legacy to charity, political party, or good cause.

As well as doing something positive for a cause you feel passionately about, leaving money in your will to a charity can help reduce an inheritance tax bill, or even wipe out the tax bill entirely. When you leave money to a UK registered charity in your will, the value of the gift doesn’t count towards the value of your IHT chargeable ‘net estate’ estate for inheritance tax purposes. By leaving a charitable legacy of at least 10% of your ‘net estate’ value, you effectively reduce your inheritance tax bill on the remaining amount of your estate from 40% to 36%. By leaving money in your will to a charity means your other beneficiaries receive slightly less money when you die. It’s possible to leave money to specific, named charities in your will. When doing this, always include their charity registration numbers, to avoid the risk of any confusion.

Alternatively, instead of naming specific charities, you can leave it to the executors of your will to allocate the money to charity, but make sure you give them clear instructions to help them make the right decision. Your charitable legacy can take several forms; it might be a specific cash amount, a particular asset you own, or a proportion of the value of what’s left in your estate after taxes and charges have been paid. Keep in mind that The Inheritance Tax Act 1975 says you need to make suitable provision for any financial dependents in your will, before giving money away to charities. If this happens, your family could contest any charitable gift made in your will, so they can obtain the financial provision to which they are entitled. It’s essential to seek professional advice when deciding whether to leave a charitable legacy and how this fits into your overall inheritance planning.

Lowes.co.uk

Personal Finances Cared for Personally