14 minute read
Legacies
Leaving money to a charity in a Will is a great way for people to leave a lasting legacy for a charity particularly close to their hearts, and to save inheritance tax at the same time.
Types of charitable giving in Wills
Pecuniary legacy Leaving a pecuniary legacy is the simplest way of leaving a gift to charity. However, this can be problematic in that the testator is unlikely to be able to predict how a pecuniary legacy will compare with the size of their estate on their death. On the one hand, inflation may mean that the legacy makes up a smaller proportion of the estate than intended (although this can be countered by linking the legacy to RPI or CPI). On the other hand, if the estate is substantially diminished compared with when the testator made his/her Will (for example, due to paying care costs) it may make up a larger proportion than intended. The latter can be countered by leaving a matching legacy to the residuary beneficiaries, so that if the estate is insufficient to pay all of the legacies in full, the legacies can then abate proportionately.
Residuary legacy Alternatively, by leaving a fixed percentage of the estate to a charity, this ensures the testator gives the proportion they intend, whether larger or smaller than the sum they have in mind at the time they are making their Will. A minimum and maximum sum can be specified, to keep the legacy within the parameters intended by the testator.
Tax Considerations
Inheritance Tax in Will drafting Gifts to UK registered charities (and ‘community amateur sport groups’) are exempt from inheritance tax. When drafting Wills it is therefore particularly important to make sure that the full charity name and registered charity number is stated. It is also important to consider what the testator’s intention is if their chosen charity has amalgamated or ceases to exist at the time of their death. Both in Will drafting and estate administration, also consider that grossing (single or double) may apply where there is a mix of exempt (e.g. charitable) and non-exempt beneficiaries, which means that the non-exempt entitlements may need grossing before the inheritance tax is calculated. Particular care should be given where there is a gift to unincorporated associations which might seem on the face of it to operate for charitable purposes, but are not in fact registered charities. This can also be problematic in satisfying the certainty of object principle, as well as for inheritance tax purposes.
Capital Gains Tax and Income Tax in Estate Administration UK registered charities are also exempt from capital gains tax
and income tax. When dealing with the sale of assets in the course of an estate administration, it is therefore important to consider appropriating assets to charities ahead of the sale to maximise the benefits here. Providing the charities with a R185 certificate allows them to reclaim any income tax paid during the course of the administration.
Reduced Rate of Inheritance Tax
It is generally thought that by giving 10% of an estate to charity, it will qualify for a reduced rate of inheritance tax at 36% compared with 40%. This is a more generous provision that it first seems, as in order to qualify for the reduced rate, it is 10% of the baseline amount rather than 10% of the entire estate.
Estate Administration This baseline amount is calculated, in simple terms, by deducting the nil rate band (original and transferable) from the net estate at date of death. This means that an estate worth £1,000,000 with one nil rate band of £325,000 available would have a baseline of £675,000, and therefore the 10% would be satisfied if at least £67,500 is passing to charity. Particular care should be given if there are beneficial entitlements which are to be grossed-up, as this will affect the baseline amount. This can mean that even a comparatively small legacy can mean the estate qualifies for the reduced rate of inheritance tax. It can also be worth considering a variation with the beneficiaries, if the sum passing to charity under the Will is close to allowing the estate to qualify for the reduced rate. For example, if between 6-10% of the baseline amount is passing to charity, increasing this sum to 10% can mean the beneficiaries themselves receive the same amount, if not more, because of the reduced rate.
Will drafting Formula legacies can be included to calculate the amount required to qualify for the reduced rate of tax. However, in view of the above, in some cases this may lead to less passing to the charity than the testator intends, and therefore it is worth considering with the client whether they wish to include a minimum amount (as above, this can be index-linked).
Conclusion
Consider: ■ the merits of a percentage of the estate passing to charity as opposed to a pecuniary legacy ■ the issue of ‘Certainty of Object’ in the context of unincorporated associations ■ appropriating assets to charitable beneficiaries in the course of an estate administration ■ the possibility of claiming the reduced rate even where the 10% entitlement is not expressly stated as such in the Will. HMRC have a helpful calculator for calculating the required sum ■ the possibility of variations with beneficiaries ■ a formula legacy to ensure the reduced rate is secured, in Will drafting
Just imagine giving a gift now to help families in the future
When your clients leave a gift in their will to Shooting Star Children’s Hospices they are helping to ensure that babies, children and young people with life-limiting conditions, and their families, have the chance to make every moment count. Today, tomorrow and for years to come.
Shooting Star Children’s Hospices supports families from diagnosis to end of life and throughout bereavement with a range of nursing, practical, emotional and medical care. The charity provides a lifeline to families facing unimaginable circumstances – families just like Jake’s.
Jake was diagnosed with a rare metabolic condition when he was just two and a half years old. Jake and his family have been supported by Shooting Star Children’s Hospices ever since.
“Shooting Star Children’s Hospices gives Jake a reason to live – he loves being at the hospice so much and he especially loves the sensory room. The support and care they give to Jake and our whole family is indescribable. Without them we just wouldn’t get by.” It costs £10 million a year for Shooting Star Children’s Hospices to maintain their current level of care and just 10% of that income comes from government funding, so the charity relies on the generosity of the community to keep the service running. What’s more, as children with life-limiting conditions continue to live longer thanks to medical advances, the demand for the charity’s hospice service will grow.
Leaving a gift is a big decision to make, but even the smallest gift could make a huge difference to the vital work of Surrey’s only children’s hospice.
It takes so little to give so much. Call Katie on 01932 823109 to request a free legacy pack or visit shootingstar.org.uk/ legacies to find out more. ■
Just imagine mornings made easier for Summer’s family
Imagine the difference you could make to families like Summer’s. Even the smallest gift in your will could help us provide Hospice at Home care giving parents of life-limited children some muchneeded respite.
Make mornings easier today for families with a life-limited child – leave a gift in your will to Shooting Star Children’s Hospices.
Angus...
At 16 years old, Angus the Jack Russell Terrier was the oldest resident at Dogs Trust Ilfracombe when he arrived after his owner sadly passed away. Thankfully his owner had signed up to Dog’s Trust’s Canine Care Card, a free service that aims to give owners peace of mind, knowing that Dogs Trust will look after their dog if the worst should happen. He has now been rehomed to the perfect family where he will spend his golden years!
Elise Watson, Rehoming Centre Manager at Dogs Trust Ilfracombe, said:
“Many dog owners worry what might happen to their dog if they were to pass away first, leaving their beloved four-legged friend without an owner. However, the Canine Care Card scheme offers reassurance to dog owners, and also helps to ease the minds of friends and family during what is already a distressing time. But it means you can rest in the knowledge that your dog will be cared for after you die and just like Angus, will go on to find loving homes that are right for them.”
Canine Care Card holders receive a wallet-sized card which acts in a similar way to an organ donor card and notifies people of their wishes for their dogs, should anything happen to them. Dogs Trust works hard to match every dog with a responsible, loving home. If for any reason a dog takes a while to be rehomed, owners can rest assured that Dogs Trust never puts a healthy dog to sleep and will care for them for the rest of their lives. If you would like to request Canine Care Card forms that you can give out to your clients please call 020 7837 0006 or email ccc@dogstrust.org.uk and quote code 334414. ■
Who’ll keep him happy when your
client’s gone?
We will – as long as your client has a Canine Care Card. It’s a FREE service from Dogs Trust that guarantees a bereaved dog a home for life. At Dogs Trust, we never put down a healthy dog. We’ll care for them at one of our 20 rehoming centres, located around the UK. One in every four of your clients has a canine companion. Naturally they’ll want to make provision for their faithful friend. And now you can help them at absolutely no cost. So contact us today for your FREE pack of Canine Care Card leaflets - and make a dog-lover happy.
Or write to: Freepost RTJA-SRXG-AZUL, Dogs Trust, Clarissa Baldwin House, 17 Wakley Street, London EC1V 7RQ (no stamp required) Please quote “334362”. All information will be treated as strictly confidential. This service is currently only available for residents of the UK, Ireland, Channel Islands & the Isle of Man
Making Surgery their Legacy
Choosing to leave the Royal College of Surgeons a legacy in your will can have direct impact on the future of surgery and the patients it saves. Past legacies have enabled us to purchase essential equipment and support a range of projects in surgical education and research.
One of our residuary legacies has allowed us to fund multiple one-year research fellowships that all cost in the region of £65,000. The most recent fellowship awarded with this generous bequest was to a trauma & orthopaedic surgeon whose research project is looking at using augmented-reality gaming to optimise surgical performance.
Delivering expert levels of surgery is a team skill, combining knowledge, technical and non-technical ability. Yet better understanding is needed about how, together, the surgeon, their assistant and the scrub nurse acquire and integrate these skills.
The developed Augmented Reality (AR) headsets allow multiple wearers to overlap 3D digital information onto the real world, tracking hands and surgical instruments. Using AR gamification, the project investigates how surgical teams learn, and if enhancing their abilities during simulated and real surgery can accelerate learning, deliver expert-level skill, and thus improve patient care.
The number of excellent surgical fellowship applications we receive has doubled since the scheme was introduced in 1993 and we are unable to support 80% of applicants. We are always in need of more funding to enable projects that address the health challenges of modern society, supporting the development of pioneering ideas across the NHS. With each small success we take another step towards the next big breakthrough. ■
Registered charity no 212808
The lives of tens of thousands of people throughout the UK are saved and transformed daily by surgery. Almost 5 million surgical patients are admitted to hospital every year in England alone for procedures ranging from straightforward gall bladder removal and joint replacements to complex transplants and emergency trauma repair.
The Royal College of Surgeons of England safeguards the experience, treatment and outcomes of the UK’s surgical patients through our ongoing state-of-the-art training of surgeons and pioneering research.
Making a will is a significant personal responsibility and, just as a will brings security to those closest to you, a legacy to the RCS plays a crucial role in supporting the improvement of surgical care for patients. Please contact us to find out how leaving a gift to the RCS in your will could play a crucial role in our work.
MAKE SURGERY YOUR LEGACY
The Oxford Handbook of Fiduciary Law
‘A LAW UNTO ITSELF’: A SINGLE SOURCE OF GUIDANCE ON FIDUCIARY PRINCIPLES
An appreciation by Elizabeth Robson Taylor of Richmond Green Chambers and Phillip Taylor MBE, Head of Chambers, Reviews Editor, ‘The Barrister’, and Mediator.
Over an extremely wide spectrum of law – almost endless in fact you will encounter matters to which principles of fiduciary law must inevitably apply. The very word ‘fiduciary’ refers of course to – if you’ll pardon the expression – money! It’s obvious then, that fiduciary principles operate across both public and private law, from the highest levels of government and corporate activity, to everyday business matters and personal relationships in which financial issues loom large.
As pointed out by the erudite editors of this stunning new Handbook from the Oxford University Press, ‘fiduciary principles have become the subject of front-page news, high stakes litigation and vigorous political debate.’ Indeed, such principles ‘govern the workaday relationships that shape our daily lives.’
But should fiduciary law, which spans all legal disciplines, be regarded as a discipline in itself? The answer, as many might agree, should be a resounding ‘yes’, hence the timely publication of ‘The Oxford Handbook of Fiduciary Law.’
The idea for such a handbook apparently sprang from a conference at Harvard Law School in November 2017 at which the Handbook’s fifty-three contributors foregathered to discuss the theme of ‘Fiduciary Law: Charting the Field.’ Tribute here has been duly paid by Professor Tamara Frankel who introduced the notion that ‘fiduciary law should be understood as a cohesive field of study.’
The Handbook ‘arrives at an opportune moment,’ say the editors, ‘for the study and practice of fiduciary law’ having as its purpose, the provision of ‘a single source to which readers can turn for guidance on fiduciary principles across a host of substantive fields, jurisdictions and epochs.’
It’s further stressed that in its ‘breadth and depth of coverage’ produced by ‘a community of scholars,’ the Handbook ‘stands alone as ‘a uniquely authoritative guide to the current state of the law and scholarship in (this) field.’ Charting fiduciary law as a field, however, does require an understanding of why the law designates certain relationships as ‘fiduciary’, whether factbased (i.e. standards) or status-based (i.e. rules).
The Handbook’s forty-eight articles cover an amazingly broad range of topics. Coverage, for example, includes such areas as principles and duties, including duty of loyalty and duty of care. Part III of the Handbook examines fiduciary law across history and across legal systems, including English Common Law, Canon law, Roman Law, Classical Islamic Law, Classical Jewish Law, Chinese, Indian and Japanese law and a lot more. There’s much to contemplate here.
Of particular interest to practitioners (on either side of the Atlantic) is the Handbook’s Part IV in which the focus shifts to the future of fiduciary law and theory, including the economics of fiduciary law, its philosophy, its social and moral norms and ultimately, ‘new frontiers in both private and public fiduciary law.’ Clearly, the transatlantic orientation of this Handbook effectively broadens its scope and there can scarcely be a lawyer or legal scholar anywhere who wouldn’t benefit by acquiring it.
The date of publication of this hardback edition is cited as at 27th May 2019. ■
Edited By Evan J Criddle, Paul B. Miller & Robert H Sitkoff ISBN: 978 0 19063 410 0 Oxford University Press www.oup.com
By Elizabeth Taylor & Phillip Taylor MBE of Richmond Green Chambers
2020 Legacies
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