Structuring a charitable legacy – Remember a Charity

Legacy giving is a key part of any philanthropic approach to wealth management and succession planning. But there are multiple ways clients may choose to leave a lasting impact on the causes close to their heart.

Here, we outline some key considerations of the different options for clients to structure their legacy gifts. This information is kindly supplied by Russell-Cooke legal firm.

Charitable legacies under a Will

As a giving vehicle, a Will is widely used where an individual wishes to make relatively simple charitable legacies.
Legacies under a Will are typically specific, pecuniary, or residuary gifts*.
Gifts under a Will are made on death and the Will can be amended or revoked prior to death, provided that the testator has the requisite capacity.

Read an interview with a high value supporter about their legacy gift

Charitable discretionary Will Trust

A discretionary charitable Will Trust is a more sophisticated vehicle for giving and enables the trustees to exercise their discretion as to who, how and when the named charities should benefit.
The trustees will be guided by a letter of wishes prepared by the deceased setting out their wishes. Often where the charities or charitable causes are named in the letter of wishes, as opposed to the Will, such an arrangement provides a degree of privacy for the deceased and the charities.
More often than not, charitable discretionary Will Trusts are used for high net worth estates.

Donor Adviser Fund

A Donor Advised Fund (DAF) is similar in characteristics to a charitable trust in that once the gift is passed to the DAF it is irrevocable and can only be used for charitable purposes.
Increasingly, DAFs are being used to pass on gifts to good causes at the end of the donor’s lifetime as well as for lifetime giving.
Donor advised funds are often used to facilitate giving to non-UK charities.

Letter of Wishes alongside a Will or DAF

A Letter of wishes is a non-binding document which can be read alongside a Will helping to articulate the wishes of the deceased. It creates some flexibility around the gift and can provide some anonymity.

Deed of Variation

If there is a requirement to amend the terms of a Will after death, it may be possible to prepare a Deed of Variation.
If applicable, a Deed of Variation enables a beneficiary to vary their entitlement and effectively write their entitlement back into the Will for tax purposes. This can be beneficial where the beneficiary(ies) wish to honour the deceased’s lifetime wishes and/or if they want to utilise some of the tax advantages associated to charitable giving.

* Find out more about the differences between specific, pecuinary, and residuary gifts, as well as other terms pertaining to charitable gifts in Wills, in our A-Z glossary.