Elderly Man Lacked Capacity to Make Final Will
The High Court recently upheld a claim that an elderly man’s final will was invalid on the grounds that he lacked testamentary capacity. The man and his wife had...
Continue readingThe Charity Commissioners are taking an increasingly tough stance on what constitutes ‘charitable activity’.
In recent months, they have withdrawn the charitable status of the Plymouth Brethren and refused charitable status for the Pagan Federation.
Whilst the charitable status of most charities is not in doubt, the issue for a ‘fringe’ organisation which fails to attain charitable status or whose charitable status is withdrawn might well be that a bequest left to it would fail to attract relief from Inheritance Tax (IHT). The gift itself would normally still be valid regardless of charitable status.
Gifts to charities are not subject to inheritance tax and may result in the estate being taxed at a reduced rate (if they account for 10% or more of the net estate then the rate of tax is reduced from 40% to 36%). If a bequest is made that does not qualify, it effectively means that any IHT due will be paid by the beneficiaries who inherit the estate after the specified gifts are made. In effect, their share of the estate could be reduced by 40 per cent of the sum bequeathed to the ‘failed’ charity.
For example, if a gift of £200,000 were made to an organisation without charitable status or whose charitable status had been withdrawn, the ultimate beneficiaries of the residue of the estate could find their share some £80,000 less than it would have been had the gift been made to a charitable organisation.
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