Leaving a Legacy
June 26, 2023 3:04 pm - Categorised in: EFN-News
Leaving a Legacy (a gift) in your Will to a loved one or a charity close to your heart is a very important decision. Legally, you are free to distribute your estate (everything you own) however you wish. This can include leaving Legacies to certain people, organisations, or charities.
Wills & Probate Director Grace Steele has over 30 years’ experience as a Private Client Solicitor helping families plan for the future. Grace is also a Chartered Tax Advisor specialising in Inheritance Tax Planning.
How do I leave a Legacy?
If you wish to leave a Legacy, it must be set out clearly in a Will. This makes it legally binding and will ensure your wishes are followed. Often, people do not specify Legacies in their Will, or indeed do not write a Will at all. When this happens there is unfortunately no guarantee that the people or organisations you had hoped would benefit from your estate will receive anything from you.
You can leave as many Legacies as you like in your Will. We would advise that you start by thinking about how much you wish to leave and to whom. Furthermore, there is no limit to the number of Legacies you can make. You can also leave different amounts to different people or organisations. A Legacy doesn’t have to be a cash gift, for example it could be a property or some land.
Choosing a charity
If you wish to leave a Legacy to a charity or organisation, consider the impact you would like to make. Are you happy for your Legacy to go into the general ‘pot’ of a large organisation? Or would you would prefer to make a difference to a smaller charity in your local area?
You should also consider whether you would like the charity to use your Legacy to fund a specific project or area of work. If so, you need to outline this clearly in your Will. We do recommend that you allow some flexibility in your gift. It is a good idea to enable the organisation to maximise the potential of your gift. You could contact the organisation directly to speak about the best way your gift could help them.
Rosie Woodward is a Chartered Legal Executive experienced in Wills & Probate matters. Rosie is based at our Belper office.
If you wish to leave multiple Legacies to charity, but you are unsure which, you can leave an amount of money or a property in a Trust for your Trustees to distribute in line with your wishes. You can leave your Trustees a letter of wishes outlining any preferred beneficiaries and the amount they should receive. This letter can be updated over the years at any time without having to amend your Will.
Changing circumstances
Everyone’s financial circumstances change over time, and so may your personal views or connections with certain organisations. Therefore we recommended you regularly review your Legacies to ensure they are up to date and reflect your current wishes. You could do this at the same time as your Will, which we advise you do every 3-5 years.
Any Legacies left to individuals may be subject to inheritance tax depending on your circumstances. Currently inheritance tax is charged at 40%. However, Legacies made to a registered charity are not subject to inheritance tax at all. This means that if you have a high value estate and you leave the entire estate to charity, no inheritance tax will be charged.
Many people are also unaware that if you leave 10% of your estate to a registered charity, then doing so will reduce the rate of inheritance tax from 40% to 36%. This will benefit any individuals who are inheriting from your Will.
If you are unsure whether your intended Legacy is subject to inheritance tax, our specialist team of lawyers can help advise you.
Leaving a Legacy is a special way of making a positive and genuine impact on a charity or in the life of a loved one. If you would like to discuss leaving a Legacy in more detail, please get in touch with our specialist Private Client team who will be happy to advise you.
Contact our Wills & Probate team
Wills & Probate Director Grace Steele has over 30 years’ experience as a Private Client Solicitor helping families plan for the future. Grace is also a Chartered Tax Advisor specialising in Inheritance Tax Planning. Rosie Woodward is a Chartered Legal Executive experienced in Wills & Probate matters.
A version of this article was published in Derbyshire Life.
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