When people make plans for what happens to their possessions and money after they pass away, they often think about family and friends. But more and more Australians are choosing to leave a gift in their will to charity.
These gifts, known as charitable bequests, help charities continue their good work long into the future. But how does this work, and what should you know about leaving a charitable gift in your will? This guide will answer common questions about gifts in wills to charities, helping you make a thoughtful, informed choice.
What Are Charitable Bequests, and How Can I Include Them in My Will?
A charitable bequest is a gift that you leave to a charity in your will. This gift can take many forms, including money, property, or other assets. People often choose to leave these gifts to charities that have personal significance, like organisations that support health, education, the environment, or animal welfare.
These bequests help charities fund their projects and provide essential services.
To include a charitable bequest in your will, you first need to decide which charity or charities you wish to support. Once you know that, there are a few ways to structure your bequest:
- Residual Bequest: This means leaving what’s left of your estate to a charity after all other bequests and debts have been handled.
- Specific Bequest: This type of gift names a particular amount of money, a piece of property, or another asset to go to the charity.
- Percentage Bequest: You can also choose to leave a specific percentage of your estate to a charity. For example, you might decide that 10% of your estate goes to a charity of your choice.
- Whole Estate Bequest: Some people decide to leave their entire estate to a charity if they don’t have other beneficiaries or wish to make a large impact with their gift.
Once you’ve decided on the type of bequest, it’s essential to include the full name, address, and Australian Business Number (ABN) of the charity in your will to ensure there is no confusion.
Also Read: Setting Up a Discretionary Trust for Your Future
Why Should I Consider Leaving a Gift to a Charity in My Will?
There are many good reasons to consider leaving a gift to a charity in your will. Here are a few to think about:
- Making a Difference Beyond Your Lifetime: Leaving a charitable gift is a powerful way to create a lasting impact. Even after you are gone, your generosity will continue to support causes that matter to you.
- Honouring Personal Values: Many people feel strongly about certain issues, like protecting the environment, advancing medical research, or helping people in need. By leaving a gift to a charity in your will, you can express your values and support the causes closest to your heart.
- Inspiring Others: Your bequest might inspire friends and family members to also consider giving back, creating a legacy of generosity within your family or community.
- Giving in a Way That Suits You: A charitable bequest allows you to give without affecting your current lifestyle or finances. You continue to use your assets during your lifetime, and the charity receives your gift after you’ve passed on.
Are There Tax Benefits for Leaving a Gift to Charity in My Will?
Yes, there can be tax benefits for your estate when you leave a gift to charity. In Australia, gifts in wills to registered charities are exempt from Capital Gains Tax. This means that any increase in the value of an asset, such as property or shares, won’t be taxed if it’s given to a charity after your passing.
As a result, the charity can receive the full benefit of the asset without losing a portion to taxes.
Additionally, these charitable bequests can sometimes reduce the tax burden on your overall estate, which may benefit other beneficiaries as well. While you won’t receive personal tax benefits for a bequest made after your passing, the charity itself may be able to claim certain tax deductions, depending on the nature of the gift.
This can enhance the impact of your contribution and ensure that more of your donation goes directly toward supporting the charity’s mission.
It’s wise to consult with a legal or financial advisor to ensure that your bequest is structured in a tax-efficient way and benefits the charity as much as possible.
Also Read: What to Do With Inheritance Money to Avoid Taxes
Can I Choose the Type of Gift I Leave to a Charity?
Absolutely. You have full control over the type and size of gift you leave to a charity. Here are some options to consider:
- Monetary Gift: You may choose to leave a specific sum of money, no matter the amount. This straightforward bequest is often the simplest way to help a charity.
- Property and Assets: Many people choose to donate assets, such as real estate, stocks, or valuable items like artwork or jewellery. Just be sure to discuss with your advisor to confirm that your gift will be useful to the charity, as some items may be difficult for organisations to manage or sell.
- Residual Gift: This type of bequest gives the charity what’s left in your estate after all other beneficiaries have received their gifts and any outstanding debts have been paid. Residual gifts are flexible and often grow in value over time, allowing for a potentially larger gift to the charity.
- Percentage of Your Estate: If you’d like to share your estate among multiple beneficiaries, including a charity, you can allocate a percentage. This means that your charity will receive a fair share, regardless of the total value of the estate when you pass.
- Endowment Fund: If you want to provide ongoing support, you might consider setting up an endowment fund. With this type of gift, the charity receives annual distributions while keeping the fund’s principal intact, allowing your gift to benefit the organisation for years to come.
Each type of gift has its benefits and considerations, so take the time to discuss with a legal professional to ensure your bequest is clear and legally binding.
What Steps Should I Take to Ensure My Charitable Gift Is Honoured?
Ensuring your charitable gift is honoured requires careful planning and clear communication. Here are some essential steps:
- Seek Legal Advice: Consult an estate lawyer to help you draft or update your will. They’ll ensure that your bequest is clear, legally valid, and less likely to be contested.
- Inform the Charity: Consider contacting the charity you plan to include in your will. Many organisations appreciate knowing about future bequests and may have specific guidelines or preferences for accepting donations. Some may even offer assistance in preparing your bequest language.
- Review and Update Your Will Regularly: Life circumstances change, and so might your wishes. If your financial situation, family structure, or personal priorities shift, make sure your will reflects these changes to ensure your gift aligns with your current intentions.
- Use Clear Language in Your Will: It’s essential to use precise, legally sound language in your will to prevent misunderstandings. Make sure to include the full name of the charity, its ABN, and specify the type and amount of the bequest. This clarity reduces the risk of disputes over your will.
- Communicate with Your Family and Loved Ones: Letting your family know about your charitable intentions can prevent confusion and potential conflicts later. While these conversations may be challenging, being open about your wishes can help your family understand and respect your decision.
Leaving a charitable bequest is a meaningful way to support a cause you care about, but it does require careful consideration. Following these steps will give you peace of mind, knowing your gift will make a positive impact.
Also Read: Can an Executor Change a Will in QLD?
Making Your Legacy Last
A gift in your will to a charity is more than a donation; it’s a way to extend your values and make a lasting difference. With thoughtful planning and the right guidance, your charitable bequest can continue to bring hope and support to causes close to your heart.
For guidance on creating a meaningful legacy through charitable gifts in your will, trust the expertise of Walker Pender. Our experienced team is here to help you craft an estate plan that reflects your values and supports the causes close to your heart.
Whether you’re just starting or updating an existing will, Walker Pender can provide tailored advice to ensure your charitable intentions are honoured and your loved ones are cared for. Contact us today to discuss your options and start planning a legacy that makes a lasting impact.
