In this new era of holistic financial planning, advisers have a crucial role to play in advising the...
In this new era of holistic financial planning, advisers have a crucial role to play in advising the general public about will-making procedures. And with the remit of financial advisers expanding to include a wide range of financial matters, they are now well positioned to raise awareness of charitable will donations.
Charitable will donations, or legacies, are currently the single biggest source of voluntary income for charities in the UK, worth £1.1bn a year and generating more than 40% of funds for the top 10 charities alone. However, current stock market instability, pension market performance, and personal finance concerns mean that fewer people are leaving money to charity in their will.
This loss of income, coupled with the reduction of corporate donations, is having a severe impact on charities across the country. In an effort to raise awareness of the importance of charitable bequests, last year the largest ever charity consortium launched Remember A Charity. The campaign aims to increase the percentage of wills that include a charitable donation, identifying IFAs as important partners in promoting legacy giving.
As key influences in the will-making process, and on 'life-change' events (mortgages, marriages and children) that often have implications for wills, IFAs are in a good position to communicate the benefits of legacy giving to the public. As Paul Smee, director general of the Association of Independent Financial Advisors (Aifa) , remarks: 'The traditional role of the independent financial adviser is expanding. Advisers must adapt to the ever-increasing demands of clients. This means guiding clients in many aspects of their financial affairs. This, in turn, suggests advisers cannot afford to ignore the issue of will-making and ensuring their clients have made adequate provision to this end. Within this comes the opportunity to consider legacy giving."
Offering advice on wills and legacy giving shows intermediaries to be responding to, and catering for, the increasingly holistic and long term financial demands of clients. And put simply, IFAs providing such services will have a distinct competitive edge over those who do not. Many clients, particularly those with an interest in ethical investments, will be keen to hear about an opportunity for charitable giving that they were, most likely, unaware of.
On a practical level, clients will also appreciate the tax exemptions that charitable will donations bring. Given the rise in property prices, more people are leaving high-value estates that are liable for inheritance tax ' tax that claims 40% of every pound above the nil rate band (currently £255,000).
Charitable will donations are exempt from this tax, thereby reducing the total amount of tax paid on the estate.
Clients may be keen to know that, in this way, funds can be channelled into a good cause, rather than be intercepted by the Chancellor.
IFAs including will-making and legacy guidance offer a 'win-win' package of practicality and philanthropy.
To help IFAs guide clients through the will making procedure, Remember A Charity has produced a free consumer guide to will making, which can be ordered by calling 020 7930 2620. For more information about the campaign and how to get involved visit www.rememberacharity.org.uk.
Theresa Dauncey, director, Remember
A Charity Campaign
More than £167,000 raised
Beware ‘temporary’ vulnerability
Partner Insight: A renewed focus on 'knowledge-intensive' companies should help investors realise that these entrepreneurial companies are found in sectors other than biotech or technology.
Celtic WM and Active Wealth