Sophie Mazzier details the benefits, to both charities and givers, of posthumous philanthropy.
You will all be familiar with the idiom that ‘Charity begins at home’ but with the amazing feats currently being performed and achieved by the Paralympic athletes in Rio, I would suggest that while charity may have begun at home, the results of philanthropic giving are certainly being witnessed in Brazil. And what a superb backdrop for Remember a Charity Week which runs from 12th to 18thSeptember.
A charity itself, the organisation, Remember A Charity, was launched in 2000 and is formed of over 160 other UK charities. Its raison d’etre is to encourage more people to consider leaving a charitable gift in their will, once they’ve looked after their family and friends. Charities have suffered bad press recently in relation to fundraising methods after being linked in the press to the tragic death of the Royal British Legion poppy seller and the aim of Remember A Charity is to approach philanthropy from another, less direct, but hopefully more effective direction, which will have greater impact – to make legacy giving a social norm.
Lawyers and other private wealth advisers are well aware of the disconnect between people’s good intentions in their wills and the reality of actually getting the final will signed. But statistics prove that it is worth it. Remember A Charity’s website suggests that income from gifts in wills is worth more than £2 billion a year to charities in the UK, which rely on these gifts to help them carry out their vital work.
There are clear advantages for individual donors too, and not just the generous tax breaks afforded to the donors for giving on death. In an age when people are living longer and care costs are sky-high, some will be reluctant to make substantial gifts to charity during their lifetimes and risk ‘running out of money’.
A gift on death addresses that issue. Alternatively, some parents dislike leaving the full extent of their wealth to a child or children for fear it will discourage a strong work ethic or financially responsible behaviour. A will is often the right place to split the wealth between family and philanthropic beneficiaries.
So what should those with philanthropic intent consider when making gifts to charity under their will? It is vital that the charities are clearly defined and identifiable, and provision is made for replacement/substitute charities if a charity has ceased to exist (e.g. following a merger with another charity).
Advice is needed for donors wishing to maximise the inheritance tax benefits of giving away 10 per cent of their estate as the rules are not user-friendly. Finally, if the will includes discretion for the will trustees to make decisions about gifts to charity, a letter of wishes is vital to assist them in understanding the charities and causes favoured by the deceased. For grieving families, working together to make decisions about charitable gifts and seeing the good work that will be done with their deceased relative’s wealth can add a positive focus at a difficult time.
Sophie Mazzier is counsel at boutique private wealth law firm Maurice Turnor Gardner, winner of Philanthropy Team of the Year 2017 at the STEP Private Client Awards.