Your generosity to Magen David Adom will enable us to continue to provide vital lifesaving services for many years to come. You can include a bequest to MDA when making a new will or add one to a will you have already made in a supplementary document or codicil.
If, after reading this guidance, you have any further questions please feel free to contact us. We strongly recommend that you always obtain competent professional advice.
Why should I make a will?
It’s the best way of ensuring that your property goes to those individuals and causes you really intend to benefit. If there is no valid will the property you leave behind will be dealt with in accordance with the rules of intestacy. This could well be contrary to your wishes and not in the best interests of your family and dependants. In addition, the Chancellor of the Exchequer could become one of your principal beneficiaries.
Are there any steps I can take to minimise the potential tax liability?
Property given or left to your spouse or civil partner or to a UK charity such as Magen David Adom UK will be exempt. You can give away up to £3,000 each year free of inheritance tax, and spouses and civil partners each have their own £3,000 annual allowance. Gifts made on the marriage of a child of up to £5,000 or to a grandchild of up to £2,500 are also exempt. Making other gifts of any amount in your lifetime can also avoid the tax charge provided you survive for 7 years after making them.
What are the benefits of including a charitable bequest in my will?
Bequests to MDA are tax-efficient, as the charity receives the entire amount without having to pay any inheritance tax. Your other beneficiaries benefit indirectly too as the charitable legacy effectively reduces the overall value of your estate for tax purposes.
Your gift to charity could bring your whole estate below or much closer to the tax-free threshold.
For example, when the threshold is £325,000 an estate of £350,000 would be subject to inheritance tax on the excess at 40% , amounting to £10,000. If you had opted to give £25,000 to charity the tax liability would have been avoided entirely, meaning that the whole £350,000 estate would go to your chosen beneficiaries.
Do I have to specify the precise amount I wish to give to charity?
No, giving a fixed sum of cash in a pecuniary legacy is just one way of providing the benefit. Circumstances might change after you have made your will and you could decide to increase the charitable component by means of a codicil or a completely updated will. Alternatively you could decide at the outset to give a proportion of your estate to charity without specifying the actual amount. Many people choose to give part or the whole of the residue of their estate to charity. The residue or residuary estate is the amount remaining after all liabilities and other legacies have been paid.
Another type of legacy involves making a gift of a particular asset. This could be shares, a painting or a property that you own and is called a specific legacy. So long as you still owned the same asset on your death your executors would either sell it and pay the proceeds, or transfer it, to the charity. The charitable benefit could be lost, however, if you had sold this asset or given it away during your lifetime without changing your will.
All charitable bequests benefit from the tax concessions mentioned above. MDA would be happy to provide you and your professional advisers with specimen bequest clauses for inclusion in a will or codicil. Also, if you have an alternatively secured pension but no dependants you can nominate a charity to receive your pension fund free of inheritance tax.
So, is it necessary to change a will once it has been made?
Inevitably your circumstances and those of your family and loved ones can change. You may decide to vary the list of beneficiaries or you might wish to take account of inflation, relevant tax changes and other factors having an impact on the value of the gifts you originally intended. It is good practice to review the provisions of your will regularly, certainly at least once in every 5 years.
Magen David Adom is receiving a growing proportion of its income through the generosity of its valued supporters who have chosen to complement donations made during their lifetime by leaving a bequest to MDA. Whatever the size of your estate you can be sure that your legacy will touch the lives of thousands, the many beneficiaries of MDA’s lifesaving and humanitarian services.
We appreciate that these are sensitive matters requiring much thought and deliberation. We for our part give you our assurance that we respect fully the confidentiality of your intended legacy arrangements. We hope that this guidance will help you make the right decisions.
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