What is Charitable Bequest?
A charitable bequest is a gift left to a charity or non-profit organization in a person’s will.
It allows individuals to support causes they care about even after their death, creating a lasting impact that benefits communities, research, or services.
These bequests can take various forms, such as specific sums of money, a percentage of an estate, or particular assets like property or shares.
Types of Charitable Bequests
- Specific Bequest: This involves giving a specific amount of money, a particular asset, or a designated item to a charity. For example, you might leave $10,000 or a piece of artwork to your chosen charity.
- Residual Bequest: This type involves leaving the remainder or a percentage of your estate to a charity after all other bequests, debts, and expenses have been paid. It ensures your loved ones are taken care of first, with the charity benefiting from any remaining assets.
- Contingent Bequest: This comes into effect only if certain conditions are met, such as if a primary beneficiary dies before the testator. It allows you to prioritise family and friends while still supporting a charity if circumstances change.
- Percentage Bequest: Instead of a fixed amount, you can leave a percentage of your entire estate or a particular asset to a charity. This means the charitable gift adjusts in value with the size of your estate.
- Reversionary Bequest: This allows a specific asset or sum to be given to a loved one during their lifetime, with the remainder going to a charity after that person passes away. It ensures your family is cared for while still leaving a legacy to a charitable cause.
Key Tip: Different types of charitable bequests offer flexibility in estate planning, helping you support causes you care about while balancing the needs of your loved ones.
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Benefits of Leaving a Charitable Bequest
- Support for Important Causes: Continue supporting the causes that matter to you even after your death, reflecting your values and passions in your legacy.
- Tax Advantages: In Australia, charitable bequests are typically exempt from capital gains tax and can reduce the overall tax burden on your estate, making charitable giving a financially wise choice.
- Personal Fulfillment: Arranging to support a charity can provide peace and fulfillment, knowing your contributions will make a difference for future generations.
- Legacy Building: Create a lasting impact that honors your memory and benefits others long after you are gone.
Key Tip: Charitable bequests offer a meaningful way to support causes you care about, providing personal satisfaction and potential tax benefits.
A charitable bequest is a powerful way to make a positive impact beyond your lifetime. Whether through a specific amount, a residual gift, or a percentage of your estate, you can support meaningful causes and leave a significant legacy. Understanding the different types of bequests, their benefits, and potential challenges can help ensure your charitable intentions are honored in the future.
