Charitable Legacy

Whether to make a gift to charity in lifetime or through a legacy in your Will depends on your own preferences and individual circumstances. If the money will only be available after your death, a charitable legacy in your Will is more suitable.

Some people wish to gift regular small amounts to charity in their lifetime so that they can see the benefit of this while they are alive. Lifetime gifting also allows the charity to claim ‘gift aid’ on the Income Tax you have already paid. Aside from the Income Tax benefits, any gifts to charities during your lifetime are also exempt from Inheritance Tax as well, unlike larger gifts to children or friends, and these can be helpful when estate planning.

The best way to proceed if you are considering leaving a legacy to a charity in your Will is to consult your Solicitor to discuss matters. In order to ensure that your chosen charity or charities will receive the legacy on your death, a professionally drafted Will is essential. Your Solicitor can guide you through the options you have, for example whether you wish to leave the chosen charity or charities a set amount of money, a percentage of your overall estate or a specific item like a property. 

If your Will is professionally drafted, your Solicitor will ensure that a clause is included to cater for any change in the charity’s name or structure. This will also include the power for your Executor of your Will to send the money to a new charity if the one you have chosen has merged with another existing charity.

There is no difference between a bequest and a legacy, they are interchangeable terms. They both mean that on your death the charity you have nominated will benefit from the stated amount, percentage or item that you have left in your Will to them.

All your gifts to charity in your lifetime or through legacies in your Will are exempt from any type of tax.

If you leave more than 10% of your estate to charity and your estate is subject to Inheritance Tax, this will be at a reduced rate of 36% instead of the standard 40%. If it is your intention to structure your Will so that your estate is entitled to this reduced Inheritance Tax rate, you should seek professional advice to ensure that your estate will qualify.

If you are planning to gift a substantial amount of money to charity during your lifetime, or through a legacy in your Will, a Charitable Trust is worth considering.

A Charitable Trust has to meet a number of requirements set out by the Office of the Scottish Charity Regulator, and our specialist Trust Solicitors can guide you through the whole process of setting up and running such a trust. 

Whether to make a gift to charity in your lifetime or through a legacy in your Will depends on your own individual circumstances and preferences. If you are leaving more than 10% of your estate to charity, it is essential you take professional advice. Otherwise, your estate may lose out on the chance to pay a lower rate of Inheritance Tax if you do this in your lifetime by a gift, rather than in your Will as a legacy.