Legacy Giving Guide

What is Legacy Giving?

Your Will says what happens to your money, property and possessions after you die. Legacy Giving is a planned donation that designates a part of an individual’s estate to a chosen charity. Legacy gifts are most often made through wills and trusts, by denoting the organisation that should receive the gift.

The Tax Benefits of Charitable Giving in Your Will

One of the key advantages of including charitable gifts in your Will is the potential to reduce your estate’s inheritance tax (IHT) liability. Broadly speaking, IHT is charged at a rate of 40% on the value of an estate that exceeds the nil-rate band (excluding any other exemptions that may be available such as the residence nil-rate band). The current nil-rate band is set at £325,000. Gifts to UK-registered charities are exempt from IHT, meaning they are deducted from your estate before the tax is calculated.

Importantly, if you leave 10% or more of your estate to charity, your estate could benefit from a reduced IHT rate of 36%. This can be a valuable strategy for reducing the overall tax liability on your estate while supporting the causes you care about.

Types of Charitable Gifts in Wills:

Some people use certain financial instruments, such as pooled income funds and annuities. The individual needs to list the particular charity as the beneficiary of a bank statement or a pension account. The donation is made once the Will is enacted, allowing the donor to create a lasting philanthropic legacy – hence the name.

There are several ways to include charitable gifts in your Will, depending on your financial situation and the impact you want to make:

  1. Pecuniary Legacy: Also known as a ‘cash gift’, this is a specific sum of money that you leave to a charity. It’s a straight forward option but the value of a pecuniary gift may decrease over time due to inflation so it is good to review your Will regularly.

  2. Specific Legacy: You may wish to leave a specific item or asset to charity, such as property, shares, or valuable personal items like artwork or jewellery. Charities may sell these items to raise funds for their cause.

  3. Residuary Legacy: A residuary legacy involves leaving a percentage of your estate to charity after all debts, taxes, and other bequests have been paid. This is often seen as a more flexible option because the value of the gift adjusts in line with the value of your estate at the time of your death. For example, you could leave 10% of your residuary estate to your chosen charity.

  4. Gift in Trust: A gift for someone to use over a specified period of time. Once that period has ended, the gift can be passed on to someone else, or even a charity.

Important: these notes are for general guidance, individuals should check with their Financial Adviser, Accountant and/or Solicitor to ensure that their personal circumstances are relevant.

Giving to Reseed guidance – If you are including Reseed in your Will, the wording you need to include will vary depending on the type of gift you are leaving:

Residuary legacy

I give all (or a ___ share of) the residue of my estate to Reseed, 20 Stanley Avenue, Beckenham, BR3 6PX, registered charity number 1197149, to be used for its general purposes and I declare that the receipt of their Treasurer or other proper officer shall be a full and sufficient discharge.

Pecuniary legacy

I give the sum of £ (words and figures) to Reseed, 20 Stanley Avenue, Beckenham, BR3 6PX, registered charity number 1197149, to be used for its general purposes and I declare that the receipt of their Treasurer or other proper officer shall be a full and sufficient discharge.

Specific legacy

I give my ______ (describe the gift you want to leave, eg my book collection) to Reseed, 20 Stanley Avenue, Beckenham, BR3 6PX, registered charity number 1197149,, to be used for its general purposes and I declare that the receipt of their Treasurer or other proper officer shall be a full and sufficient discharge

 

If you’re interested in making a gift in trust, please talk to your solicitor about the right wording for your individual needs.

 

Gifts in Wills jargon buster

Here’s a glossary of some of the legal terms you might come across when planning your Will. If you need help, don’t hesitate to contact Reseed admin@reseed.org.uk or +44742 4842 420

 Beneficiary: A person or organisation, such as Greenpeace, to whom you leave a gift in your Will.

Codicil: A document, separate to your Will, that changes the provisions of your Will.

Contingent bequest: A gift in your Will that depends on an event which may or may not happen. For example, it could be a bequest that applies only if other named beneficiaries die before the person who made the Will.

Deed of Variation: A legal document that allows beneficiaries to change the terms of a Will, even after the person who made the Will has died.

Estate: Everything you own at the time of your death including your house or flat, your possessions such as jewellery and furniture, money and investments such as stocks and shares. All debts such as your mortgage and loans will be paid out of the value of your estate.

Executor: The person you appoint to distribute your estate according to the instructions in your Will.

Intestate: If you die without having made a Will, you are known as intestate.

Legacy: A gift left in your Will, also known as a bequest.

Life interest: The right of a beneficiary to benefit from part or all of an estate during their lifetime.

Residue: What’s left of an estate after funeral expenses, debts, legacies and taxes have all been paid.

Trust: A legal arrangement where assets are handed over to trustees for the benefit of other people known as
beneficiaries.

Trustee: Someone who holds property or assets on behalf of another person, and who is responsible for administering those assets.

Will: A legal document which sets out who you want to receive your estate when you die.