Ensure your charitable wishes come true

24 August 2016

This year marks the 400th anniversary of William Shakespeare’s death. Of course, Shakespeare’s legacy to literature was remarkable, but perhaps we are all not so familiar with his charitable legacies.

Shakespeare’s Will is one of the most infamous in history due to the fact that he bequeathed, inter alia, his “second best bed” to his surviving wife, Anne Hathaway. This is, on the face of it and to a modern reader, perhaps not the most generous of legacies. This much-debated bequest often means that Shakespeare’s charitable gifts in his Will are often overlooked.

A year’s wages

In his Will, drafted by lawyers a month before his death, Shakespeare bequeaths “unto the poor of Stratford [upon Avon] ten pounds”. This would have been the equivalent of a year’s wages for a skilled worker in London and would have gone a long way towards helping those in need in Shakespeare’s home town.

Unfortunately, we can’t all be gifted playwrights and make our fortunes in the theatre, but every charitable legacy – no matter how modest – will ensure that charity work can continue to thrive.

Ways to remember a charity

There are three ways you can leave a charitable gift in your Will:

1) A pecuniary legacy (a fixed sum of money)

2) A specific legacy (a gift of a possession)

3) A gift of the residue of your estate (a specified percentage of your estate)

Surveys have shown that around half of those asked would be happy to leave a charitable gift in their Will – but only a handful get round to making the arrangements. Writing our Will or updating it to include a charity is sadly very low on the priorities list for many of us, but I would urge you to plan now if you do wish to do so.

Illott v Mitson

We are, as a society, becoming more and more litigious and this has been evidenced in the number of claims made against Wills. Of particular note is the recent case of Illott v Mitson (2015) wherein the testator left her whole estate to three animal charities to the exclusion of her impoverished adult daughter.

The Supreme Court ruled that “reasonable provision” should be made for the claimant out of the estate thereby reducing the charitable legacies, to which it was said she had no connection during her lifetime.

As a result of this ruling, if you are considering leaving a bequest to charity in your Will, it is important to establish strong personal ties with your chosen charity/charities. For example, frequent donations throughout your lifetime or evidence of charity work will act as sound evidence of your intentions, should a claim be brought against the estate.

Not so taxing

As well as the positive feelings associated with leaving a legacy, there are also potential tax benefits.

Charitable gifts are taken off the value of your estate before inheritance tax is calculated. Inheritance tax is generally charged at 40% on the value of the estate that exceed the nil-rate band, currently £325,000.

If, for example, your net estate is valued at £330,000 and you bequeath £6,000 to charity, there will be no inheritance tax to pay. What’s more, an estate can pay inheritance tax at a reduced rate of 36% if you leave 10% or more of the ‘net value’ of your estate to charity.

Shakespeare wrote that “fortune reigns in gifts of the world”. Take inspiration from both his words and actions, and consider leaving a gift in your Will.

Find a charity you care about to leave a gift to.

Blake Morgan is supporting Remember A Charity Week, which runs from 12-18 September 2016.

Alison Craggs, Associate at Blake Morgan