Writing your Will is an opportunity to think about how you would like people to remember you when you are gone. For lots of families, that means choosing a guardian and providing for children. Another way to keep your legacy alive is to donate to charity.
Whether you call it a bequest, an endowment, a legacy, simply a gift, money, or assets you leave to charity can be a meaningful part of your final plans. No matter how large or minuscule your estate is, there is always a way to leave a legacy to a cause you care about.
What are the different types of gift legacy? Pecuniary legacy Specific legacy Residuary legacy What to include in your Will to make your donation valid? Changing your Will to make a charitable donation Benefits of Leaving Money to Charity How Leaving Money to Charity Affects Your Taxes
What are the different types of gift legacy?
There are three types of gift legacy, depending on what is left is a physical item or a cash gift.
In a pecuniary legacy you can leave a one-off cash gift to a charity. To do this, you need to state in your Will that you wish to leave a specific sum of money to a particular charity. For instance, you can create a simple instructional clause that gives $500 to a specific Stroke association.
Creating a specific legacy means you leave a particular item to a charity, such as property or shares. You can leave a certain amount of individual shares or your favourite armchair to a charity, and this will be considered a specific legacy.
A residuary legacy consists of your remaining estate after debts and expenses, such as inheritance tax and funeral costs, have been taken away, and all other inheritances dished out. You can then leave the whole or a share of what is left to a charity.
What to include in your Will to make your donation valid?
When leaving a donation to a charity in your Will, as with all other aspects of Will writing, you need to make sure it is written in a way that makes it valid.
Jot down in the Will all the information the executor needs to understand clearly where you want your money to go. This should include:
the name of the charity, spelled correctly;
the registered charity number of the charity, if any, and its registered address;
a receipt clause so the charity’s trustee or treasurer can accept the donation;
a merger clause so if the charity has merged or ceases to exist your executor can pay the legacy to the new charity or a similar charity.
It is important to clearly identify your charity of choice – rather than simply writing ‘cancer research’ – to make the process as smooth as possible for all those involved.
Changing your Will to make a charitable donation
You do not need to write a new Will if you realise that you want to leave a donation after you die. Instead, you can write a codicil to change an existing Will. This is a straightforward legal document used to make simple additions and changes, such as amending an executor or increasing a gift’s worth.
Benefits of Leaving Money to Charity
Here are a few of the emotional benefits of leaving money to charity:
Care for others. Part of your estate can provide food, shelter, medicine or other critical resources for people or animals in need.
Support a cause you believe in. Many arts institutions, environmental organizations and medical research charities rely on donations as an important source of funding.
Choose a beneficiary you feel connected to. If you do not have close family, you might feel that it would be more meaningful to leave money to an organization you care about, rather than a distant cousin you barely know.
Leave a legacy for your name. Even if you have close family and friends, you might feel that leaving a gift with a broad reach is just as important to you. If you want your family to start a memorial scholarship fund in your name, for example, you may want to designate part of your estate for this purpose.
How Leaving Money to Charity Affects Your Taxes
Your gift to a charity might be exempt, at least partly, from inheritance tax. To qualify for such exemption, the charity will likely need to be registered officially with the revenue service.
Additionally, in certain states or countries, the overall value of your estate or your taxable income might be reduced by the amount of charitable donations. It might be worth considering whether or not to make those donations while you are still alive.
At the end of the day, a Will is a legal and financial document, but it can also serve as a form of personal expression. Leaving gifts for charity can benefit others at the same time give you one more chance to take action for causes that are important to you.
Writing your Will is the very first step, and it’s an important one. But that’s not enough. In the digital age, the next step is to store your Will online. Otherwise, what happens if your person of confidence is not able to find your Will in a timely manner? liteWill is the only Will registration platform that is available globally and that provides the option to store your Will online. ‘A Will that is not online is like a Will that does not exist’.
This portion of the website is for information only. The statements and opinions are the expression of their author, not of liteWill, and have not been evaluated for accuracy, completeness or changes in the law. Information contained in this article is not a substitute for tax or legal advice.
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