Have you ever considered what kind of impact you want to have on the world beyond your lifetime? Leaving a legacy is something that many people think about, and one way to create a positive impact is through charitable giving. By including charitable donations in your estate plan, you can ensure that your values and beliefs are carried on, and make a lasting difference in the lives of others. However, navigating the ins and outs of estate planning can be daunting, especially when it comes to charitable giving. That’s why we’ve put together this comprehensive guide to help you make informed decisions and create a legacy that truly reflects your wishes. From understanding the various ways to donate to charity to selecting the right organisation, and even exploring tax benefits, we’ve got you covered. Let’s dive in!
Methods of Leaving a Charitable Gift
There are two main ways to leave a charitable gift in your estate plan: by including a gift in your will or by setting up a charitable trust. Both methods can effectively support a cause or organisation you care about, but there are key differences between them. We advise consulting with an estate planning professional, like the RRK Legal team, to determine which option is the best fit for your goals. Let’s take a closer look at each method.
Leaving a Gift in Your Will
The most straightforward approach is to specify a certain amount of cash, a valuable item, or even property or land to be given to the charity of your choice within your will, naming them as a beneficiary. In addition, you could choose to leave a portion of your entire estate to the charity of your choosing, such as 10% – or even 100%!
- Flexibility: Leaving a donation in your will allows you to retain control of your assets during your lifetime. You can change your will at any time, so you have the flexibility to adjust your giving based on your changing circumstances or priorities.
- Simplicity: Leaving a donation in your will is a simple and straightforward way to support a charitable cause. You don’t need to set up a trust or take any other complex legal steps, and it doesn’t require any ongoing management or administration.
- No upfront costs: Unlike setting up a charitable trust, leaving a donation in your will doesn’t require any upfront costs or ongoing maintenance. You can make a gift through your will without any immediate financial impact. However, because you won’t be around to provide guidance on how the funds should be used, there is a risk that your donation may not be used in the way you intended, or that your will may be contested by other beneficiaries.
Setting up a Charitable Trust
Alternatively, you can create a Charitable Trust, where your chosen trustees can decide how, and when, to utilise the funds for charitable purposes.
- Immediate impact: A charitable trust can provide immediate support to the causes you care about, as the funds are available immediately after the trust is established, avoiding the often time-consuming process of probate. In contrast, a donation made through a will can take months or even years to be distributed.
- Greater control: By setting up a charitable trust, you have greater control over how your donation is used. You can specify the purpose of the trust, the type of organisations it can support, and how the funds should be distributed.
- Lasting legacy: A charitable trust can be a way to leave a lasting legacy, as it can continue to support your chosen cause long after you’re gone, unlike a donation in your will which is typically a finite amount of money that will eventually be depleted. You can set up a trust to provide ongoing support for a particular organisation or cause, or you can establish a scholarship fund or endowment that will benefit future generations.
Choosing a Charity to Support
When considering which charity to support through estate planning, it’s important to do your research to ensure that your donations will be put to good use and make a positive impact. We’ve put together some key points to help you to find the right charity for you:
- Identify a cause you care about: A good starting point is to think about the issues and causes that you are most passionate about and how you want your donation to make a difference. For example, if you have lost a loved one to an illness or injury, you may choose to support a charity that funds research or raises awareness about that cause. Or, perhaps you feel strongly about animal welfare, and want to support a charity that rescues and cares for animals in need.
- Local, national or global impact: You may wish for your donation to make a difference to your own community, because you feel that your money will make more of an impact. In this case, you might want to look at charities in your local area – from animal shelters to hospices and hospitals. Alternatively, if you want to support a cause that has a broader impact, you may want to consider charities that operate on a national or international level.
- Research the charity’s reputation and impact: It’s important to research a charity before making a donation to ensure that it is reputable and that your donation will make a real difference. Look for information on the charity’s financial transparency, track record of success, and the impact they have made in their community or field. You can find this information on the charity’s website or through the government’s Charity Commission register.
Tax Benefits of Charitable Giving
In addition to supporting causes you care about, it’s important to note that charitable giving can also have financial benefits for you and your family through different forms of tax relief:
- Inheritance Tax exemption: Gifts made to charity during your lifetime or after your passing are exempt from Inheritance Tax.
- Reduced Inheritance Tax rate: If your will meets certain conditions, the remaining value of your estate may be taxed at a reduced rate, increasing the inheritance received by your other beneficiaries.
- Income Tax and Capital Gains Tax relief: Donating assets such as property, land, or shares to charity may qualify you for tax relief on both Income Tax and Capital Gains Tax.
Whilst it’s important to consult with a financial professional or tax advisor to understand the tax implications that apply to your unique situation, knowing the potential financial benefits of charitable giving can motivate you to donate with a purpose and make a positive impact on the causes you care about.
Start Building Your Charitable Legacy Today
In summary, estate planning is not just about dividing your assets or passing on your wealth to your heirs. It’s also about creating a meaningful legacy by supporting causes that you care about through charitable giving. Whether it’s a favourite charity or a cause that is close to your heart, there are several ways to incorporate charitable giving into your estate planning – and lots to think about!
By working with a trusted estate planning professional, you can explore different options for charitable giving and choose the best approach that aligns with your goals and values, and easily navigate the complex financial laws to help you maximise your impact while minimising your tax liability. At RRK Legal, we understand the importance of creating a legacy through charitable giving, and we are committed to helping our clients achieve their goals. Contact us today to learn more about how we can help you leave a lasting impact on the causes that matter most to you.
Website: www.rrklegal.co.uk
Email: info@rrklegal.co.uk
Telephone: 01215460771
