Leaving a bequest or a gift to a charity in your Will is a good way to continue support for a charity that is close to your heart, long after you’re gone. A charitable bequest can be made alongside distributions to children, family members and friends, or alternatively, your entire estate can be distributed to charities.
Types of Gifts
Bequests to charities in your Will can take the following forms:
- A gift of a specific sum of money,
- A gift of a percentage of your overall estate, or
- A gift of a particular assets (i.e. property, shares, etc.)
If you intend to make a bequest to a charity in your Will, it is important to ensure your Will is drafted in order to cover any future changes to the charities structure, such as amalgamation or change of name. This can be done by empowering your executor(s) to distribute your gift to the amalgamated or renamed charity, or, in the case of charities that have since closed, to a charity with a similar charitable purpose. This ensures that your wishes will not go unfulfilled.
As well as the philanthropic benefits that come with gifts to charities, bequests can also have advantageous tax implications.
Bequests of assets in your Will (i.e. shares, real estate, etc.) to a charity can have significant tax implications for the receiving charity. Where the charity is a registered Deductible Gift Recipient (DGR), an exemption from Capital Gains Tax (CGT) may apply, such that any capital gain on the asset bequeathed to a charity is disregarded in the hands of the charity.
While donations to a DGR during your lifetime are fully tax-deductible, charitable bequests of money in your Will do not receive the same treatment. If you do require a tax deduction for your gift, it’s worth considering (where possible) making donations to your chosen DGR charity prior to your passing. This would allow you to receive the accompanying tax benefits within your lifetime.
Charitable Giving Fund
A charity giving fund, also known as an ancillary fund, is a vehicle for public and private philanthropy. It is a type of charitable trust designed to provide an investment structure for philanthropic giving purposes. Simple and quick to set up, it offers tax deductions to donors and tax exemptions for income earned by the fund.
Establishing an ancillary fund during your lifetime is another effective tool to facilitate your philanthropic endeavours and would allow you to donate periodically over an extended period of time, preserving your gift for many years to come.
For more information on setting up a charity giving fund (ancillary fund) please refer to our previous article.
For an extensive list of Australian charities to whom you can make a bequest, and the causes they support, visit Include a Charity.
How can Sharrock Pitman Legal assist?
Please do not hesitate to contact us if you would like to include a charity in your Will or for any other Wills and Estates or Charity and Not-for-profit enquiries. Please feel free to call our Wills and Estates team on 1300 205 506 if you have any queries.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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Mitchell is the Managing Principal of our law practice.
He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.