Leaving A Legacy To Charity Five Things To Consider When Leaving A Legacy To Charity Leaving a legacy to charity has never been more important but – like so many other aspects of making a will – it pays to plan ahead where possible. This is especially true in the pandemic. Some families built up savings during lockdown; not a bad problem to have, you might think. But this extra money can have an impact on your Inheritance Tax (IHT) liabilities… 1. Has Your Estate Grown Under Lockdown? As I wrote in a previous article, if you donate 10% (or more) of your net estate to charity, the IHT liability on what remains drops from 40% to 36%. But here’s the issue: while the bequest is fixed, the value of your estate may have grown during lockdown because you had fewer opportunities to spend money. So it pays to review your will to ensure your charity bequests still represent at least 10% of your estate. You may need to increase them to ensure they will still trigger the IHT reduction.
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2. Potentially Exempt Transfer (PET) Time Limits Don’t Apply To Charity Bequests Using Potentially Exempt Transfers, you can make gifts to people at any time: those gifts will be free of IHT (usually 40%) if you survive another seven years. But gifts to charities are exempt from this seven-year rule. No IHT is due – even if, sadly, you do not survive seven years after making the gift. 3. Dying Without A Will – The Intestacy Rules If you die without a will, the Intestacy Rules will govern what happens to your estate. They set out which surviving relatives can legally benefit from the estate (and by how much). So if you wish to leave a bequest to charity – even a small amount – you must have a will in place to ensure your final wishes are carried out.
