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BLOG: Legacy donations can help reduce your inheritance tax burden

Lauren Killilea
Written By:
Lauren Killilea
Posted:
Updated:
31/01/2014

Leaving a legacy donations is an effective way to do good as well as reduce the inheritance tax burden on your family, writes solicitor Lauren Killilea.

Writing a will often falls down the bottom of our list of priorities. Thinking about our mortality, let alone planning for how our wealth will be distributed after we die, is something many of us prefer to put off. But the implications of doing so shouldn’t be ignored.

Last January, Macmillan Cancer Support launched its discounted will writing service to help those affected by cancer, and their loved ones, to manage their affairs with complete peace of mind.

Writing a will can be an emotive task, managing the process in the knowledge that your time may be limited, due to illness, can be very frightening. Yet, making a will is the only sure way to guarantee that your assets are distributed according to your wishes.

That’s especially true if you have a partner but are not married or in a registered civil partnership. No matter how long you may have been living together, the truth is that without a will, your partner gets nothing under intestacy rules.

As one of four legal partners recommended by Macmillan, Shoosmiths can guide you through the process.

Macmillan-recommended solicitors also understand the intricacies of inheritance tax and can advise you on how to reduce your tax burden.

For example, many people don’t realise that inheritance tax is charged when your worldwide estate is worth more than £325,000. Anything you leave to a spouse or civil partner is exempt from inheritance tax and so are gifts to charity. Married couples and registered civil partners can transfer an unused allowance to their surviving husband, wife or civil partner to give a double allowance (£650,000) on the survivor’s death. Tax is payable at 40% on anything above your available allowance. (Please note that different rules apply if you are not domiciled in the UK).

Leaving 10% of your net estate to charity (after deduction of your allowance) cuts the inheritance tax rate payable from 40% to 36%, which can make a big difference to the loved ones who will benefit from your estate and the charity to which you decide to leave your legacy gift.

Legacy donations make up more than a third of Macmillan’s entire income and enable it to support more of the growing numbers of people affected by cancer. Any gift, no matter how small, will help – it’s incredible to think that just £50 can provide a Macmillan nurse for two hours.

People do not have to leave a legacy gift to Macmillan to make use of the discounted will writing service. However, they hope people might consider it to help support those affected by cancer in the future – which, by 2030, is likely to be four million people. Without the necessary funding, helping people to reclaim their lives from cancer through medical, practical, financial or emotional support, will prove more of a challenge than ever.

However you choose to distribute your estate, make sure your wishes are carried out – without a will your money will not automatically go to your loved ones. The more informed you are the more secure you will feel that, after you die, your legacy will live on through the people and causes you care about.

 Lauren Killilea is a senior associate at Shoosmiths Solicitors.

 Anyone interested in using the Macmillan will writing service should contact Macmillan free on 0800 107 4448 or email leavealegacy@macmillan.org.uk orgo here