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Leaving a gift to charity in your Will

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We encourage everyone over the age of 18 draw up a Will and keep it up to date as it’s the only way to ensure your wishes are carried out when you die. A valid Will also lessens the burden on loved ones who may otherwise face significant financial and legal complications.

As well as leaving assets to loved ones and friends, you may also leave a donation to one or more charities. These are known as legacy gifts or legacies. They are an excellent way of ensuring causes close to your heart can continue their good work after you’ve gone.

Legacy gifts can be:

  • A residuary gift – a percentage of your estate after debts have been paid and specific gifts have been distributed
  • A pecuniary gift – a fixed sum of money
  • A specific gift – assets or items you wish to donate

You can include how you would like your donation to be used in your Will to support a specific area of your chosen charity’s work.

Why leave a legacy in your Will?

As well as helping your chosen charity or charities, leaving a legacy gift may reduce inheritance tax as the donation is taken off the value of your estate before tax is calculated.

Inheritance tax is a complicated area but, generally speaking, 40% of your estate over the threshold of £325,000 is payable. Charitable donations over 10% of the net value of your estate may reduce inheritance tax to 36% on some assets, although the rules are complex so this might not apply to everyone.

Although donating to a charity this way can reduce the amount inheritance tax paid, it does of course mean that other beneficiaries (such as children or siblings) will inherit less even when you consider the reduction in inheritance tax. This can cause arguments with those who want to maximise their entitlement, so it’s crucial that your wishes are set out in your Will.

How much money is left to charities in Wills?

A major amount of vital charity income comes from legacy gifts. Legacies have continued to be resilient when other income streams are performing less well due to the pandemic and cost-of-living crisis.

According to Legacy Foresight’s Legacy Market Review 2023, charity legacy income in the year 2022/23 was estimated to be up to £4bn. That’s an annual income growth of 6.5%.

Long-term, legacy income is predicted to grow, but Legacy Forecast predicts that the next few months may see average legacy values falling due to the housing market being less buoyant.

How do I go about leaving a legacy gift?

To leave a legacy, simply provide details at the time of your Will-writing appointment. You will need to take the charity’s name, address and registered charity number with you and have decided, or be prepared to discuss, the amount you’re pledging or the item(s) you’re donating. If you have a specific activity or area of the charity you’d like to support this can be stipulated, or the Will can state ‘for general charitable purposes.’

Most charities love to connect with their pledgers so they can thank them properly, keep them up to date with their news and demonstrate the impact their gift will make.  Some charities also have a legacy team or person in place to answer any questions, so take a look online.

What else needs to go into a Will?

Our blog ‘Five essential things to include in your Will’ is a great starting point if you need to write your first Will.

How can AGR Law help?

Our experienced team can draw up a legally binding joint or individual Wills which sets out your wishes for your estate after you’ve died. Contact us to find out more on 0116 340 0094 or email hello@agrlaw.co.uk

What does the executor of a Will do?

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If you read our September blog ‘five essential things to include in your Will’ you’ll know that choosing the right executors is crucial. In this blog, we explain the role of an executor to help you decide which of your friends or family will be most suitable.

Will executor duties

An executor is a person who is legally responsible for ensuring the possessions and assets of a person who has died are distributed as per their wishes.

Responsibility starts when the person dies. Unless an estate is small and straightforward, or if it’s held jointly with a surviving person, executors need to apply to the court for the Grant of Probate. This permits them to claim, transfer, sell or distribute the estate. Responsibility ends when everything has been passed onto the beneficiaries. This is known as the probate (or administration) period.

Up to four executors can be stipulated in a Will. When the Will is made, your solicitor may offer you extra copies to give to them, or you can give them your solicitor’s details so they know who to contact when you die. If nobody is named, responsibility falls to the deceased’s next of kin.

The executors are responsible for:

  • Calculating the assets
  • Calculating debts (mortgages, credit cards etc.) and selling assets to pay them off if needed
  • Valuing the estate
  • Sorting out the tax on any income generated by the estate, and dealing with HM Revenue and Customs (HMRC)
  • Ensuring remaining assets are then distributed to beneficiaries who may be family, friends or charities
  • Keeping accounts to show how the estate has been administered

The probate period can take between six months and one year.

If there are several executors, they will need to agree where to hold money (this could be in a new, separate account), how withdrawals or payments are made from this account and what assets they need to sell.

Debts and taxes

Executors are responsible for paying any bills and unpaid taxes, applying for tax refunds, filling in a self-assessment form if needed and repaying any overpaid benefits.

They may also have to deal with people making a claim. By placing a notice in The Gazette anyone with an interest in the estate has two months to come forward. If the estate is distributed before this time and a claim is successful, the executors may have to pay it themselves. Placing notices in local newspapers can also help protect you from unexpected claims.

Executor of a Will HMRC responsibilities

Inheritance tax may need to be paid to HMRC. To do this, the executors need to identify assets and debts to estimate the estate’s value. This can take a long time, especially if the deceased had trusts or there’s tax to pay, so you need to be aware that there may be deadlines for payment and penalties if you don’t meet them.

How long do you need to keep the records of a deceased person?

HMRC can ask to see a deceased person’s records up to 20 years after inheritance tax has been paid, so it’s crucial that you keep:

  • A copy of the Will
  • Inheritance tax forms and supporting documents, including any unused inheritance tax threshold that can be transferred to a spouse or civil partner
  • Records showing how you calculated the value of the estate
  • Final accounts which show how money, property and personal belongings were distributed. Beneficiaries may need a copy of the final accounts too

How can AGR Law help?

An executor’s duties can be daunting, time-consuming, and complicated. Under the supervision of our director, Gina Samuel-Richards, we work with Satwinder Sidhu (a Private Client and Estate Planning Consultant) and Faizal Essat (a Legal Executive Advocate) to handle the probate process for you.

Find out more about probate or contact us on 0116 340 0094 or hello@agrlaw.co.uk

Five essential things to include in your Will

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We’ve talked previously about the need to have a legally recognised and up-to-date Will, and the consequences of dying intestate, but we know drawing up a Will is daunting and easy to put off.

In this blog, we outline the top five essential things to put in your Will. Each point also includes tips to help you prepare for a Will-writing appointment. Next month, we’ll tell you all about executors and their roles, so look out for that.

Our top five things to include in your Will are:

  • Who do you want to benefit from your assets and property?
  • Do you have any debts?
  • Who will look after your children or pets?
  • Do you have any requests for your funeral?
  • Would you like any charities and good causes to benefit?

Who do you want to benefit from your assets and property?

In your Will, you need to state who you want to receive your assets and property when you die. Assets can include money in accounts, savings, pensions, shares, insurance policies, etc. Property can be valuable items such as houses and cars, or sentimental items such as wedding rings or things which have been passed down through the family.

It’s important to go into detail and ensure everything is covered, and that your Will is updated as your circumstances change. Even the closest families can argue over who gets what, so you need to put everything in writing to minimise disputes.

To prepare for your Will-writing appointment, you need to gather some documents. These include property deeds, insurance policies, share certificates, bank account details and other information relating to your assets. Also, list specific items that you want people to inherit. Remember, promising someone verbally they can have an item isn’t a legally recognised way of distributing your estate, so others may contest your wishes if they’re not specified in your Will.

Do you have any debts?

Debts, including mortgages and car finance, are paid off using money in your estate when you die. In the UK, debts aren’t passed onto surviving family members unless they’ve acted as a guarantor or co-signatory of the debt. If your estate can’t cover the outstanding money owed, debts will be paid in priority order and any remaining will be written off. If your estate is more than the total amount of money you owe, it will be distributed as per the instructions in your Will.

To prepare for your Will-writing appointment, gather documents relating to the above, list how much is owed and to whom, and how and when you are paying them off.

Who will look after your children or pets?

You need to specify who will have parental responsibility for children under 18 (who are classed as minors) in case there is ever a scenario where there are no surviving parents. Your named person or people, known as testamentary guardians, will have the same rights and responsibilities as a parent.

To prepare for your Will-writing appointment, think carefully about who you would like to be responsible for your child or children’s upbringing. You can prepare a Letter of Wishes which is not legally binding but can be placed with your Will to help guide your testamentary guardians. You can include your hopes for living arrangements, education and more.

You should also include pets in your Will in a similar way as above to help ensure they find a loving home and are looked after when you die. You can name someone to rehome them and allocate money for their care from your estate.

Do you have any requests for your funeral?

We know how hard it is to think about your funeral but, if you have specific wishes, it’s essential to include them in your Will. For example, you can state whether you want to be buried or cremated, have a ceremony or wake in a particular place, include some of your favourite music or ask everyone to dress in bright colours. Some people opt not to have a funeral at all.

To prepare for your Will-writing appointment, consider what you would like your funeral to be like. You may need to research costs (keeping in mind that they are likely to rise) and consider how they will be met.

Would you like any charities and good causes to benefit?

There are so many UK charities in need of financial support, and leaving a gift in your Will is an excellent way of giving to a cause you care about. Leaving a legacy gift may also have tax benefits, as inheritance tax is calculated after gifts have been deducted from your estate.

To prepare for your Will-writing appointment, think about the good causes you’d like to benefit. It could be a charity that has helped you or a family member, such as a hospice or care provider, or one who fights for a cause you care about, such as animal welfare or the eradication of domestic abuse.

Look out for our next blog

Another crucial element of your Will is who you appoint as executors. Look out for next month’s blog covering their role and responsibilities.

How can AGR Law help?

A Will is a legally binding document. Any errors can invalidate it, meaning you die intestate, and your estate may not be divided up as per your wishes. Any omissions can make resolving disputes longer, more complicated, and more expensive.

Having your Will drawn up by us will mean:

  • We won’t miss any elements that make a Will legally binding
  • We won’t miss off any of your money or property assets
  • We will help you plan for scenarios where one or both partners die
  • We can keep on top of alterations, such as marriages, divorces/dissolutions, deaths, house moves etc.
  • Your Will will be drawn up to consider the circumstances in which dependants can claim if they feel they’re not provided for

For more information, please get in touch with our experienced team by calling 0116 340 0094 or emailing hello@agrlaw.co.uk.

Probate: Why making a Will matters

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Dealing with the death of a loved one is never easy and managing their financial affairs and assets after they’ve passed can be difficult, especially when emotions are high or if there are conflicts in the family.

We wrote a blog in June about the need to have a valid Will, but we only briefly touched on how they help with the probate process.

Here, we explain more about probate so that you can better understand what happens when a person dies without a valid Will in place.

What is probate?

Probate is the name given to the legal process that happens when someone dies.

If the deceased person made a Will, a solicitor would first determine whether it is valid. If it is, the nominated executors apply for Grant of Probate. This gives them authority to pay any taxes and debts before distributing the deceased’s estate as per the instructions set out in the Will.

If the person died without making a Will, or with an invalid Will, this is known as dying intestate. This means assets are divided up as stated by the law, not necessarily as the deceased would have liked. It also makes probate longer, more complicated and more costly.

What happens when someone dies intestate?

If someone dies without a valid Will, their estate is distributed as per the rules of intestacy. This means that someone who expected to inherit may not, and someone who the deceased or their family feels should not benefit, may be entitled to a share.

Rather than an executor applying for Grant of Probate, a probate court issues a Grant of Letters of Administration to people who apply for authority to deal with the estate. These are usually beneficiaries and there is an order in which applications are considered, beginning with the spouse or civil partner then the children of the deceased. A Grant of Letters of Administration essentially gives the same rights as a Grant of Probate but adds unnecessary expense, time and complication.

Even with a Grant of Letters of Administration in place, the estate must still be divided up as per the rules of intestacy, so we’ve covered that below.

What are the rules of intestacy?

The rules of intestacy currently state that the person’s spouse or civil partner (even if they’re estranged) inherits all of their possessions and the first £270,000 of their estate. If the estate is valued at more than £270,000, the remaining inheritance is divided with the spouse or civil partner inheriting the first 50% absolutely of the estate valued more than £270,000. The remaining 50% is shared equally between any children.

This means that cohabitants, stepchildren (unless adopted) and grandchildren will only inherit if there is no surviving spouse/civil partner or children, which may not be what the deceased person or their family would have wanted. It also means that charities and causes close to the heart of the deceased will not benefit unless a gift is made by a family member from their share.

Can I contest the rules of intestacy?

If you’re not provided for, for example if you lived with the deceased but were not married or in a civil partnership or if you have inherited but feel you should have received a larger share, you can make a claim under the Inheritance Act 1975. This is a lengthy, costly and stressful process with no guarantee of getting your desired outcome.

You can give up all or part of your own inheritance with a Deed of Variation if you want to make the distribution of the estate fairer, minimise inheritance tax or ensure someone not covered by intestacy rules is provided for.

An estate passes to the Crown If there are no relatives able to inherit under the rules of intestacy.

Does dying intestate mean a bigger inheritance tax bill?

Inheritance tax is a complicated area, but we have known cases where estates shared by the rules of intestacy are subject to more tax. This is because the law dictates who inherits what, whereas a person making a Will may include it in their financial planning and minimise what needs to be paid on their death.

Our recommendations

We recommend making a Will with a solicitor and keeping it up to date. This will ensure your personal and financial assets are distributed to those you want to benefit, and stress and uncertainty for the loved ones you leave behind will be minimised. They’re usually cheaper and quicker to create than people imagine, and you can include other details such as wishes for your funeral and who you would like to care for children and pets.

Everyone should make a Will, but we emphasise that cohabitants are at risk of not inheriting unless they’re married (and the marriage must be lawfully recognised, which not all faiths are) or in a civil partnership. In the eyes of the law, it doesn’t matter how long you have been or couple or even if you have children together, there is no such thing as a common-law marriage giving automatic legal rights over a partner’s estate.

We know from experience that families often disagree over who should inherit what but, if your wishes are clearly laid out in a Will, relationships are less at risk of breaking down through jealousy and arguments.

Remember verbal promises mean nothing in the court, but a Will is a legally binding document for which there is no substitute.

Call us on 0116 340 0094 or email hello@agrlaw.co.uk to find out more about our Will writing service. 

Wills and Lasting Powers of Attorney demystified

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Why do I need a Will?

One of the most common misconceptions we come across is that people feel they are too young, too healthy or not rich enough to make a Will.

Anyone over the age of 18 can, and should, make a Will because the consequences of dying without one makes things difficult for those left behind.

What happens if you die without a valid Will?

When a person dies without a Will, or with an invalid Will, it is called dying intestate. Your estate will be divided up as per intestacy rules, which are determined by the court, rather than to your wishes. This makes the probate process more expensive, complicated and challenging.

The court will decide how your property, possessions and money are distributed. Even if you promised assets to relatives or loved ones, they might not inherit without a Will in place but someone you did not want to benefit may do so.

We cannot stress enough that is not the case that co-habiting partners have automatic right to make a claim, even if you have children, jointly own your home or have been a couple for a lengthy period. This could create financial issues for the surviving partner and possible conflicts within your family as they argue over who should be entitled to what.

What goes in a Will?

  • Property and assets – You can ensure items of high sentimental or monetary value are gifted to those that are most important to you
  • Debts – Details of your mortgage, loans, credit cards, overdrafts etc
  • Children and pets – You can name a guardian to take care of young children and create trusts to ensure they are financially secure. You can also ensure any pets you leave behind will end up in the hands of someone who will love them like you do
  • Your funeral wishes – You may want to be buried in a particular spot or be cremated and have your ashes scattered in your favourite place. You can state this, plus your wishes for your funeral, in your Will
  • Gifts and donations – You can leave money to charities you support in your Will to help them raise much-needed funds and continue the good work they do. There may be tax benefits to doing this too
  • Your executors – These are people tasked with distributing your estate. They can be family members or friends. It’s a big job and it’s important that you can trust them, so choose carefully

How often should I update my Will?

Wills never expire, but we advise you review yours every three to five years or as circumstances change. Marriages, breakups and the birth of children can mean changes need to be made to ensure the correct people are looked after and protected when you die. Any alterations must be witnessed as per the rules below.

 When is a Will valid?

For a Will to be deemed valid, you must have sufficient mental capacity to:

  • Know what assets you own
  • Understand the effect of your Will – what will happen when you die and the consequences of including/excluding people
  • Approve the content of your Will
  • Know that you are signing it
  • Follow the correct procedure for witnesses. It must be witnessed by two people aged over 18 with sufficient capacity to understand what they are acting as witnesses to. They must not be beneficiaries of the Will, so can’t be spouses, partners or family members

A Will can be challenged and deemed invalid if any of the above rules aren’t followed. If the challenge is successful, the person’s previous Will (if it was valid) will apply. If no Will was made previously, they will have died intestate.

What role does AGR Law play?

A Will is a legally binding document, so we always advise using our services to ensure there are no mistakes which could make the Will invalid.

Some Wills are more straightforward, but there are circumstances which make Wills complicated. These include:

  • Where you share a property with someone you are not married to or in a civil partnership with
  • You have a dependant who is unable to care for themselves
  • You have a large family who may make a claim, such as children from a previous marriage
  • You do not reside permanently in the UK or if you do live here but have property overseas
  • You own a business or businesses

Our experienced team will guide you through the process, so you can be safe in the knowledge that your assets will be protected after your death.

What is Lasting Power of Attorney?

What is LPA?

We wanted to briefly mention LPAs as they’re often drawn up at the same time as Wills. Lasting Power of Attorney (or LPA) gives a nominated individual the right to handle your personal business if you lose mental capacity. If you are married or in a civil partnership it is not the case that your spouse will automatically be able to deal with matters for you.

There are two types of LPA – one related to your finances and property and the other to your health and welfare.

Why do I need an LPA?

Life-altering illnesses or accidents can mean you are no longer able to manage your financial affairs or look after yourself.

If you lose the ability to make your own decisions your chosen attorney could:

  • Pay your bills, sell your property or investments and operate your bank accounts
  • Make decisions about your daily routine, your medical care, where you live and, if specified in the LPA, any life-sustaining treatment

What if I lose mental capacity but don’t have an LPA in place?

Without an LPA in place, your family will need to apply to the Court of Protection to have a deputy appointed. This can be a slow, costly and stressful process, and a deputy’s powers are limited compared to someone appointed through an LPA.

Want to know more about Wills and LPAs? Drop us a line at hello@agrlaw.co.uk or call us on 0116 340 0094