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I want to leave my £500,000 estate to charity – what’s the best way?

PUBLISHED: 10:57 28 April 2018 | UPDATED: 10:57 28 April 2018

Carl Lamb, managing director of Almary Green, offers his advice. Picture: Almary Green.

Carl Lamb, managing director of Almary Green, offers his advice. Picture: Almary Green.

Almary Green

I am a widow with no children or close relatives so am thinking about how I can best leave what I own to a number of local good causes when I die.

My estate is worth about £500,000 with the house and a few bits and pieces of investments. I think this means that I will pay inheritance tax on £175,000, doesn’t it? Will I still pay the tax if I leave it all to good causes?

Almary Green response

There are two questions to explore here. Firstly, if your husband left everything to you in his will (and assuming you were married rather than co-habiting) then his unused inheritance tax (IHT) free allowance is transferred to you giving you a total allowance of £650,000 before any IHT is payable – meaning that you would have no IHT to pay if your estate is still worth around £5,000 on your death.

The other point to make is that gifts to registered charities are exempt from IHT so anything left to a registered charity won’t count towards the IHT calculation.

It’s important to make sure that you are clear in your will about who you want the money to go to: include the full charity name and address and their Charity Commission registration number.

Your solicitor will know what clauses to include to make sure that the charity gets the money, even if something changes – if it merges with another charity, for example.

You may want to give legacies to good causes that are not registered charities. If this is the case, your gifts may not be IHT exempt, but provided you give at least 10% of your net estate (ie the amount over and above your IHT-free allowance) to registered charities, any IHT that might be due would be reduced from 40 per cent to 36 per cent. This won’t apply to you, of course, unless your estate exceeds your combined IHT-free allowance when you die.

Finally, please make sure that you make a valid will detailing all of your bequests. If you were to die intestate with no close relatives, your estate would go to the Crown.

• Do you have a question for our expert? Email businessdesk@archant.co.uk with Ask the Expert clearly marked in the subject line.

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