George Hay Chartered Accountants were one of the first accountancy firms in the country to obtain a licence to carry out non-contentious probate work. In our monthly column, we give you an insight into the process and provide an update on what is happening in the world of probate and estates.
Over time, we have noticed that more of our clients are leaving money to charity in their Wills. Whilst this is obviously good from a philanthropic point of view, it is also very tax efficient from an Inheritance Tax (IHT) point of view.
The reason for this is that assets left to charity are exempt from IHT. Broadly, IHT is payable on the value of your estate at death plus lifetime gifts made in the previous seven years.
Assets left to your spouse are exempt from this valuation, as are funds left to charity, so ensuring the Government does not benefit from your generosity.
Additionally, if you choose to leave 10% or more of your estate to a charity, then the rate of IHT charged on the entirety of the estate is reduced from 40% to 36%.
I have seen a case where, in the Will, 8% of the Estate was being left to charity; however, a Deed of Variation was entered into to rewrite the Will and by increasing the amount payable to the charity, the rest of the family gained as the amount of IHT payable was reduced. A clear win for both parties.
Unfortunately, there can sometimes be challenges associated with leaving money to a charity – for example, if the organisation adopts a particularly assertive approach to pursuing a legacy. My probate team have encountered a couple of charities that have been particularly aggressive in their dealings which, considering we are supporting bereaved families, is most unwelcome.
This is generally not a problem if you have left a fixed amount, say £5,000, but tends to crop up if an organisation is left part of the ‘residuary’ estate i.e., after specific gifts have been made to friends or relatives. Where this is the case, estate accounts can be subject to scrutiny and interim payments may be requested.
It is of course important for charities to ensure they receive the legacies bequeathed to them, and we respect their need to be thorough, however we also strongly advocate the need to be sensitive to the circumstances surrounding the receipt of such a donation and to co-operate fairly with the professional advisers handling the estate.
To discuss our Probate & Estates services in more detail, contact Huntingdon-based Barry Jefferd on 01462 708810, or you can email us at firstname.lastname@example.org where your enquiry will be dealt with by one of the team.
Authored by Director of GH Probate Ltd., Barry Jefferd.
Our Probate service is provided through GH Probate Limited. GH Probate is the trading style of GH Probate Limited. Registered in England and Wales number 9630102. Registered Office: St George’s House, George Street, Huntingdon, Cambridgeshire PE29 3GH.
Authorised to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England & Wales