Charitable giving – what do you want your legacy to be?
Despite the bad press that modern society often gets, there is still a strong culture of generosity and charitable giving features on many people’s ‘must do’ lists. While most choose to give to existing charities, there is another philanthropic option: to set up a charity specifically to support aims that are close to your own heart.
If you do decide to set up a grant-making charity, should you do it during your lifetime or provide for it to be created under your Will? The key driver in this decision is likely to be whether you have the means and desire to set up and run a charity while you are alive, or if you simply want to ensure your charitable ideals are fulfilled after your death.
If the latter, setting up a charitable trust by Will means your charitable legacy can be created, after your death, by chosen trustees who understand your aims and can be guided by a separate letter of wishes which acts as your voice beyond the grave. An additional benefit is that such a trust may create an inheritance tax advantage for your other beneficiaries; when 10% or more of an estate is gifted to charity on death this reduces the rate of inheritance tax on the rest of the estate (click here to read more about this).
Alternatively, if you have the means to do so, creating a charity whilst you are alive puts you in the driving seat in both setting up the charity and moulding its future, allowing you to see your dream become a reality. On a more material note, you may also benefit from income tax relief on assets being gifted to the charity. And for anyone concerned about long lost (or perhaps not so lost) relatives coming out of the woodwork to contest their Will, given recent cases where the courts have re-directed legacies away from the charity beneficiaries, a lifetime gift may also safeguard against such a claim.