Remember a Charity Week – make your legacy count

Charities and the third sector are under ever-increasing funding pressure and legacies are an incredibly important income stream for many organisations. Remember a Charity Week is a national campaign to encourage charitable legacy giving.

So what could possibly go wrong?

Every so often a legacy to a charity left by a will is unclear, incorrect or just out of date. Like any organisation, charities go through changes over the years and this can easily happen between a will being written and the legacy being paid after the testator’s death. Executors and trustees can usually work with charity legacy officers to resolve many of the most common issues. The first question for executors is ‘who gets the gift?‘ and the second is ‘what is the tax position that I have to report to HM Revenue & Customs?‘. Following some of the most common scenarios from the executor’s viewpoint highlights the interconnectedness of those two points and provides guidance for those writing a will, as well as for charity trustees and administrators who put those legacies to such good use.

Charity merger or apparent closure

Who?

The case of British Camelids v Brooke last year highlighted the importance of the Charity Commission register of mergers. Put simply, if a charity changes its legal structure or merges with another charity, then, provided that the change is registered with the Commission, gifts and legacies should not fail. This is a lesson for charities themselves to ensure that they register any such changes and also for executors and trustees to check the register when a gift to a charity looks like it might fail for the charity having ceased to exist.

Tax?

This is often a simple question for registered charities – the four requirements for the Inheritance Tax (IHT) exemption to apply are:

• an organisation that is established solely for charitable purposes;
• in the United Kingdom;
• is registered with the Charity Commission (if required); and
• is managed by fit and proper persons.

Provided that there is no regulatory action against a charity registered with the Charity Commission (for England and Wales, or Northern Ireland) or OSCR (for Scotland), then the IHT exemption should apply.

Misnamed charity

Who?

Occasionally, the name or identifying information of a charity is incorrect in a will and this can pose all sorts of problems. Firstly, there is the issue of whether the intended recipient exists at all! This can be harder to establish than it seems – small, family established charitable trusts may never have been registered with the Charity Commission and the original documents may have been lost. At this point, executors really need to take professional advice as to the precise wording of the will to ensure that they discharge their legal duties effectively.

Charities who find themselves misnamed in a will may need to liaise with the executors to ensure that a legacy is paid out. Sometimes this can be a simple typo, or a mismatch between the charity name and the registered number that is given. There are often collaborative solutions for these situations that can save the time and expense of going to court, where both executors and charity trustees can ensure that they give effect to the wishes of the testator, whilst complying with their own respective duties.

Tax?

Some unregistered charities may be required to register with the Charity Commission as receipt of the gift tips them over the income threshold for mandatory registration. This is fine in principle, but must be managed proactively. Other organisations may not be for-profit, but they may not be capable of registration as a charity, perhaps because their organisational purposes do not fit within the possible categories that can legally be registered. Examples of this would be a political organisation, or a not for profit organisation promoting international relations. These are purposes that the law of England and Wales does not consider legally registerable as charities. In these instances, the gift would still be valid, so would pass to the intended recipient, but would not benefit from the inheritance tax exemption.

Gifts for charitable purposes

Who?

Some gifts to charities in wills are written in more general terms as gifts for general charitable purposes. In this instance, there is often a letter of wishes to accompany the will or some other indicator of how the gift should be applied. The executors will need to take positive steps to direct the gift to a particular recipient. This is an element of uncertainty that many people writing a will may not expect and leaves something to chance that could have been confirmed. As this recent change in the law from the Finance Act 2026 makes things perhaps less certain than before, it is also an opportunity to revisit old wills that are gathering dust and make sure that they still do what is intended.

Tax?

As well as being trickier to administer practically, these gifts may also bring the inheritance tax exemption into question. Where a gift is not left directly to a UK registered charity, HM Revenue & Customs needs to be satisfied that the gift fulfils the relevant requirements for the inheritance tax exemption to be available (see above). Decisions about who is to receive the gifts need to be taken (and implemented) within two years of the testator’s death to crystallise the IHT position and activate the charity exemption, if it is available.

Next steps

If you are someone who has already remembered a charity in your will, then firstly, thank you for supporting this vital sector of our society. This is hopefully a reminder to check that your will does what you would like it to do, that the charity’s details are correct and that you are clear on the tax position.

For executors, if there is any question over a gift to a charity in the estate you are administering, take professional advice to ensure that you give effect to the will as it was intended. This might mean taking action promptly, to achieve certainty of recipient and crystallise tax exemptions.

And finally for charity trustees, legacy officers and administrators – make sure that any mergers and changes to your charity’s legal structure are registered. Communicate with your known donors to keep them up to date with changes and then, when anticipating receipt of a legacy, keep communications open with executors and trustees to smooth the journey of those much-needed funds from your generous donor to your organisation’s work.

In all of this, there are potential speed bumps, stumbling blocks and challenges to navigate, but with timely action and the right advice, they are rarely insurmountable. If you have any queries on making, administering or receiving a charitable gift through a will, our team are here to help.