I am often asked to include gifts to charities of all shapes and sizes in Wills for clients. There is no real pattern to giving save for the fact that most people have a long-term, personal or other connection with the chosen charity or organisation.
Some however use charitable giving to take advantage of the tax breaks available. For example, a person leaving 10% or more of their net estate to charity receive a reduction from 40% to a 36% rate of Inheritance Tax (“IHT”).
In order to establish if an estate will, at the time or executing the Will, benefit from the reduction the lawyer drafting the Will needs to be able to establish the Baseline Amount. This is effectively the estate less the nil rate band available, exemptions to IHT and any reliefs, less charitable relief, applicable. It is therefore essential that the person drafting the Will has knowledge of the application not only of the law when drafting but also how it is then applied when the Will is required, i.e. after the testator has died.
There are also other ways you can give to charity to reduce or remove IHT liability including allowances for in life giving for example. It is also essential if your Will includes business or agricultural assets that these are factored into your Will as specific reliefs, as mentioned briefly above, may be applicable.
I have advised clients on this area of tax planning. There are also cases where a testator’s intentions in a Will have not been realised due to poor drafting or simply due to a change of circumstances which was then not reflected in a revised Will.
If you wish to discussed estate planning, in life gifting, trusts or the estate of a deceased testator where inheritance tax is an issue, please contact me.
James Trescothick-Martin is an Associate Solicitor in our Private Client team.
Image by Lucas Hayas under a creative commons licence.