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How
to leave a legacy for your communityWhen you leave a legacy to County Durham Foundation you are leaving a gift that will support deserving causes in your local community for many years to come. You can decide exactly where and how your money will be spent. Members of your family can also be involved in deciding who receives grants from your fund. You can be as specific as you like. You can also take advantage of the same benefits as a gift made now when you set up a legacy based named fund, with the added bonus that legacy funds also have no inheritance tax liability, saving your estate up to 40% in tax. And because there are no lengthy legal responsibilities to consider there is no need for large solicitors bills. We have a simple agreement that outlines how the fund will operate, which we agree with you.
In this section:
A legacy to County Durham Foundation is a simple way in which individuals
can leave
money to the local community in which they may have lived and worked for
many years.
County Durham Foundation welcomes legacies of all kinds, including:
The total value of a person’s estate is calculated on their death.
Each year in the
Government’s Budget, the Chancellor of the Exchequer sets the tax
threshold. If the estate is
worth more than the tax threshold, the amount above the threshold is liable
for Inheritance
Tax. The current tax threshold (as at 17 April 2002) is £250,000
and the rate of Inheritance
Tax is 40%. The inhertiance tax threshold is due to increase to £312,000
in April 2008.
No tax is paid on wealth that is passed to a surviving spouse. However,
this simply delays
paying tax until the spouse dies. Anything that is left to people other
than a spouse – children,
for example, – will be liable for Inheritance Tax if the estate
exceeds the tax threshold. Even
money given to friends and relatives before death will be included in
the tax threshold if it was
given seven years prior to death. The only exceptions to this rule are
gifts of £3,000 in each
tax year, plus £3,000 from the previous year if this was not used.
Both husband and wife can give this amount each year. Wedding gifts are
exempted to the
amount of £5,000 from each parent or stepparent, £2,500 from
each grandparent and great
grandparent, and £1,000 from other friends or relatives.
When a legacy is left to a charity, the gift is totally tax free –
regardless of the amount.
Moreover, the value of the gift is deducted from the total gross value
of the estate. This
may reduce the amount on which tax is payable. For example, if the value
of the estate is
£10,000 over the tax threshold, £4,000 in tax must be paid.
However, if a legacy of £10,000 is
left to a charity, no tax is payable on the estate as the legacy is tax
exempt and this would
bring the estate to below the tax threshold.
Shares and securities may be particularly suitable for this purpose,
as assets that can often
comprise a larger part of an estate than cash in bank or building society
accounts, and can be
realised much more easily than property.
The donor can still continue to receive the income during their lifetime;
moreover, all such gifts can be made entirely free of Inheritance Tax.
If the donor has no intention of selling the shares because, for example,
they were inherited many years ago and have been kept ever since, it may
be possible to identify the specific shareholding in the will.
Alternatively, it may be possible to express the gift as all of the donor’s
shares and securities.
Specimen wording for a legacy to County Durham Foundation appears in our
free guide to leaving a legacy.
If the donor wishes the legacy to be used to create a new named fund,
we would recommend discussion at an early stage, if possible, in order
to ensure that it is set up in a way that will fulfil the donor’s
charitable wishes.
We would recommend that legal advice is always obtained when preparing
a will.
Click here
for a free guide on leaving a legacy to County Durham Foundation.
This is available for you and your solicitor or other professional advisor.
