2nd September 2021
Legacy giving is a way to leave a lasting impact on the world after your death. A legacy gift is a percentage of your estate or property designated as a donation to a chosen charity or non-profit organisation in your will. It’s called ‘Planned Giving’ because it’s a future gift to a cause you care about, and a part of the legacy you leave behind.
Prism’s Donor Advised Fund (DAF) structure offers a quick, cost-effective, and flexible way to administer a legacy gift.
Inheritance Tax: Rules on legacy gifts
In April 2012, the UK government introduced a new tax incentive for charitable gifts left in a will to encourage giving to the sector. The inheritance tax relief applies to those who wish to leave a legacy of 10% or more of their taxable estate to charity. This means that if you choose to leave a gift to charity in your will, of 10% or more of your estate, the remaining funds or assets will only be taxed at 36% instead of the usual 40%.
Your donation is taken off the value of your estate before inheritance tax is calculated so HMRC reduces the rate on the rest of your estate to reflect the charitable contribution. The burden of the donation falls mainly on HMRC – for every £1 donated, 76p comes off the inheritance tax bill and just 24p comes from the beneficiaries listed in your will.
Below is an example calculation if the net value of your estate was £5 million. You can also take a look at our legacy giving calculator to see what this could mean for your legacy gift.
Leaving a legacy gift with Prism
Prism’s Legacy offering is simple and doesn’t require unwanted legal responsibility for beneficiaries, or the work of setting up a new charitable entity. Prism’s Donor Advised Fund (DAF) allows you to nominate your DAF as the charitable beneficiary in your will. You can set up and use the DAF in your lifetime or you can establish a DAF on death. In either example, you nominate the executors of your DAF in a letter of wishes and also select which charities or cause areas you want to give to – Prism takes care of all of the administration. You may also with to have the balance of your DAF asset managed to grow the philanthropic pot to continue your charitable legacy over time.
Without a DAF, legacy gifts have to be restricted to one specific cause or endowed into a charitable trust or grant-making foundation, which requires extensive paperwork, expense, and legal responsibility for the executors. Using a DAF at Prism is time and cost effective, involving minimal bureaucracy; for example, there’s no need to nominate trustees or create policies and payment processes. The executors of the DAF also have more flexibility when selecting which causes to donate to.
Why choose Prism?
At Prism, we have more than a decade of experience administering legacy gifts to charities around the world. We help make philanthropic giving efficient and simple:
- There’s no need to set up a charitable foundation
- There’s no ongoing burden of administration
- You name the account as you would a foundation
- A DAF is time, cost, and tax effective
- Prism oversees the governance, compliance, and due diligence on all charitable gifts
- You can leave a gift of cash, shares, or property to your DAF
- Prism can make donations to charities, social enterprises and not-for profits-globally.
- You have peace of mind that your legacy has been administered in compliance with UK charity law and HMRC guidelines.
Leaving a legacy gift in your will is a meaningful way to support the causes that have mattered to you in your life and help ensure that they can continue to do good work. For more information on legacy giving with Prism, please email Kitty Harris at email@example.com.