Increasingly, those making preparations for events after their death choose philanthropy. The act of setting out in a legally recognised document your intention to bequeath part of your estate or assets to charity is, from a moral point of view, a very satisfying one.
For some, the donation is small – a gesture of gratitude towards a charity that has had an impact on their lives. For others, the motivation is related to the Inheritance Tax benefits of leaving a legacy to charity, as well as pure philanthropy.
Bill Gates is perhaps the most high-profile philanthropist in the world today. Gates has pledged to leave his huge $76 billion fortune not to his three children but to charity. Even more importantly, along with fellow billionaire businessman Warren Buffett, he has invited the world’s richest people to do the same, by creating The Giving Pledge.
Beginning in 2010, The Giving Pledge asks billionaires (or people who would be billionaires if they did not give) to donate over half of their wealth to charity either during their lifetime or in their will. This unprecedented campaign has seen the great and the good commit to making the world a better place by sharing their money. Fashion world icon Diane von Furstenberg, entrepreneur Richard Branson and Facebook founder Mark Zuckerberg are just a few of the many names who have made the pledge. Bill Gates himself has already given $1 billion to charitable causes, while Mark Zuckerberg has parted with $500 million in the name of charity. There are no restrictions on which charities the billionaires’ money goes to – the pledge is simply that a public declaration of the intention to give.
But you don’t need to be a billionaire to perform the commendable act of leaving money in your will, and there’s no need to leave half your wealth – just a token is enough. However, you will need to decide which charity you would like to endow with your gift. Whether you choose a local charity whose work you’ve witnessed close at hand, a national or worldwide charity doing work for animals or children, research or medical charity, or one with a political stance you support, the choice is an important one.
It’s also important to understand how your gift can be made. In the UK, you can choose to leave a fixed amount of money, an item or what is left once other gifts have been given out, in aid of philanthropy. And, as well as gaining the same warm feeling enjoyed by Bill Gates and The Giving Pledge billionaires, you could also receive significant tax benefits, depending on your circumstances. The value of your donation will be taken off the overall value of your estate before Inheritance Tax is calculated. Or, if more than 10% of the value of your estate is left to charity, your Inheritance Tax rate will be reduced. This means that for some people, giving to charity also means giving more to their friends and family after their death, making the act doubly beneficial.