With the introduction of a reduced rate of Inheritance Tax to estates that leave charitable gifts it is likely that charitable giving will become more popular.
This is good news for the charitable sector but may lead to increased practices of aggressive ‘begging’ by charities who want a slice of the estate.
A recently published article details the experience of one executor who was dealing with his mother-in-law’s estate.
In her Will she had left £20,000 to be divided between a number of specifically named charities.
Despite the charities being clearly named the executor received 58 letters from other charities asking that they be considered when he was distributing the estate. Not only was this practise upsetting for the executor but completely pointless as the chosen beneficiaries had already been named.
It would appear that firms are making money out of providing a service to charities, informing them of when money may be ‘up for grabs’.
The largest of these firms, Smee & Ford provides a valuable service of informing charities named in Wills that they are due to receive a legacy but also provides other services which include notifying all charities in a certain area when a discretionary gift has been left for a similar charitable purpose and a full information service for when a gift or estate has been left to a discretionary charitable trust.
The information they provide to the charities includes the personal details of the executor so that they can contact him or her directly to ask that they be considered to receive part of the gift.
While this is a valuable source of information for charities it can be distressing for executors. Following the recent publicity of this method of fundraising some charities have agreed to amend their practice. It is likely though that this method of contacting executors will continue where discretionary gifts are left.
One solution may be to establish a charitable trust during lifetime so that the funds are already within the trust on death and not gifted under the Will. Of course this means that the estate will not benefit from the reduced IHT rate.
This would also be the case if a fully secret trust was used as the Will would appear to gift the legacy to an individual rather than for charitable purposes.
Extract from SoWW Newsletter Issue 201
