The time is now
WE ARE all familiar with Benjamin Franklin’s famous phrase “…in this world nothing can be said to be certain, except death and taxes”. But are you as familiar with the adaptation of his words in Gone with the Wind? “Death, taxes and childbirth! There’s never any convenient time for any of them.”
The financial consequences of dying without having made a will can be serious — and stressful at an alreadydifficult time for your family and friends. Your estate may be shared out according to legal rules that do not reflect your wishes. Thousands of pounds can be lost if a will is not properly drawn up and validly witnessed. Most disputes about wills relate to those made without the benefit of legal advice.
Making a will with proper advice and having it reviewed whenever circumstances change guarantees your chosen beneficiaries receive what is due to them. With property prices at record levels, particularly in London, inheritance tax is more relevant today than ever before. Owning a property in London means the taxman will more than likely benefit from your estate at the expense of your family and friends. Tax planning and including a legacy to charity in your will could reduce the amount going to HMRC.
Against a background of cuts in funding to the charitable sector, the Government is encouraging charitable giving through more and higher-value legacies. It is encouraging not only the principle of giving to charity by will, but providing a tangible incentive to do so, through the reduced tax rate on the remainder of the estate. Leaving a charitable bequest in your will is now not only a moral choice but also a financial one. Not only will the value of the charity legacy reduce your taxable estate but, if its value exceeds the critical 10 per cent threshold, the tax rate applied on the remainder of your estate passing to your family will reduce from 40 per cent to 36 per
Below left: Carolyn Addleman
cent. Therefore, the cost of a legacy to charity will now be borne by the Government in saved inheritance tax.
And if you have already included charity legacies, but they fall just below the 10 per cent threshold, increasing the legacies beyond that tipping point could result not only in a larger gift to the charities but also an increase in the amount passing to your family. That is because the increase in the charity legacies triggers the lower rate of tax, so the cost of both comes wholly from the taxman.
This is a welcome move on the part of the Government. Never has the climate for giving to charities, through a legacy in your will, been so favourable.
This incentive does more than ever before to both benefit charity and, at the same time minimise the cost to your family of doing so.
Carolyn Addleman is director of legacies at KKL Executor & Trustee Company Ltd, a subsidiary of JNF UK, 020 8732 6126, carolyn@kkl.org.uk