How to deal with a charity legacy as a personal representative

Guidelines for Managing a Charity Legacy: Navigating Your Responsibilities

If you are named as an executor to the estate of someone who has died and they have left a gift to charity, there is a particular process you should follow in dealing with the legacy.

Charities depend on money left to them in Wills. When your loved one includes a charity bequest, it’s likely because they believe in the cause or have been helped by it themselves or had a family member who was helped at some point.

Notify the charity

Contact the charity once you’ve seen the Will. The charity trustees have a legal responsibility to act in the charity’s best interests, so they’ll need certain information from you. This includes:

  • The deceased’s name, address, and date of death
  • Details of what the charity has been left

If the charity has been left a share of the residuary estate (rather than a fixed sum of money), provide them with:

  • A copy of the Will
  • A list of the deceased’s assets and liabilities, when available
  • Valuations of expensive assets
  • A copy of the estate accounts, when available
  • Form R185 in respect of the income paid to the estate during the administration period so that the charity can reclaim the tax paid

It’s acceptable to simply send a notification at first. Some of the other documentation will not be available until later in the administration process.

Gifts of specified sums or items – pecuniary legacies and specific legacies

If a charity is left a set amount, such as £5,000, this is referred to as a pecuniary legacy. The gift of a named item is a specific legacy. Charity trustees should be provided with a valuation of a specific legacy and information about how and when it will be transferred to them.

Gifts of a share of the estate – residuary legacies

The gift of a proportion of the estate is referred to as a residuary legacy. If a charity is left a share of the residue, they will have more interest in the winding-up process. This will include issues such as property sale and the agreed price for items being sold.

Providing updates

Charities appreciate progress updates and estimates of when certain steps will be reached. For example, when probate has been applied for, when a property is put on the market and a sale agreed, and when it is anticipated that funds will be distributed.

If several charities have been included in the Will, they usually agree to notify each other of progress. Therefore the executor will only need to send updates to one organization. They in turn will pass on information either to the other charities or to one charity who, in turn, will notify the next, forming a chain.

Inheritance Tax

Executors need to handle Inheritance Tax correctly when distributing an estate that includes a residuary gift to charities. Charities are exempt from Inheritance Tax, so money left to them should not have any deduction made.

If 10% or more of the estate has been left to charity, note that a reduced rate of Inheritance Tax of 36% is payable on the part of the estate liable to tax.

Paying a legacy to a charity

Once the estate administration is completed, send the charity the final accounts for approval if they have been left a residuary gift. They’ll also want to see an income account for the administration period. The charity will approve the accounts, and the sum in question can be sent to them along with a receipt which the trustees will sign and return to the executor.

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