How to leave money to charity in your Will
Leaving money to charity in your Will, often referred to as making a charitable bequest, allows you to create a lasting legacy. This can be done while still ensuring that your family and other beneficiaries are considered as part of your broader estate plan.
In South Africa, there are several ways to leave money or other assets to a charitable organisation in your Will. However, the wording of the bequest, the organisation you choose, and its tax status all deserve careful consideration.
A valid Will is the only legal document that allows you to set out how you want your assets to be distributed after your death. While a Will is often only used to provide for those closest to you, it can also be used to support a cause that has been meaningful to you during your lifetime.
Here is what you need to know if you are considering leaving money to charity in your Will.
Can you leave money to a charity in your Will in South Africa?
Yes. A person with a valid Will can determine how their estate should be distributed after their death, including leaving money or assets to a charitable organisation.
The Department of Justice and Constitutional Development explains that a Will allows you to decide who the beneficiaries of your estate will be. If you die without a valid Will, your estate is instead distributed according to South Africa’s intestate succession rules.
A charitable organisation can therefore be named as a beneficiary in your Will, provided the bequest is clearly and correctly set out in a valid Will.
This is sometimes referred to as legacy giving or a charitable bequest.
What is a charitable bequest?
A charitable bequest is an instruction in your Will that directs part of your estate to a charity or other qualifying organisation after your death.
You remain in control of your assets during your lifetime. The bequest generally only takes effect when your estate is administered after your death.
Depending on your wishes and financial circumstances, you may leave the charity:
- a specific amount of money;
- a percentage of your estate;
- a particular asset;
- a portion of the residue of your estate; or
- in some circumstances, your entire residual estate.
The right option will depend on your family circumstances, the value and composition of your estate, and how you want to balance charitable giving with providing for other beneficiaries.
Different ways to leave money to charity in your Will
There is no single way to structure a charitable bequest.
Leave a specific amount of money
You can specify a fixed amount that you would like a particular organisation to receive.
For example, your Will could provide for a specified rand amount to be paid to the organisation after your death.
This can be straightforward, but it is important to remember that the value of money changes over time. A fixed amount that is appropriate today may represent a very different proportion of your estate in 10 or 20 years.
Leave a percentage of your estate
Instead of specifying a rand amount, you may choose to leave a percentage of your estate to charity.
This can allow the value of the bequest to move in proportion to the value of your estate.
Where a percentage is used, the Will should clearly state whether the percentage applies to the gross estate, net estate or residue after debts, costs and other bequests have been dealt with. Precise drafting helps avoid uncertainty when the estate is administered.
Leave part of your residual estate
Your residual estate is broadly what remains after debts, estate administration expenses and specific bequests have been dealt with.
You may choose to leave all or a percentage of this remainder to a charitable organisation.
This approach can be useful where your priority is making specific provision for family members or other beneficiaries before determining what should pass to charity.
Leave a particular asset
A charitable bequest does not necessarily have to be cash.
Depending on the organisation and your circumstances, your Will could make provision for a particular asset to pass to the organisation.
Care should be taken when using this approach. The asset may no longer form part of your estate when you die, its value may change substantially, or the organisation may not be able to make practical use of it.
Professional estate planning can help determine whether leaving the asset itself or an equivalent monetary benefit would be more appropriate.
Choose the charity carefully
Before adding a charitable organisation to your will, make sure that the organisation can be clearly identified.
Record the organisation’s full legal or registered name and, where available, its registration and PBO number or other identifying details. Simply referring to a broad cause or using an informal name can potentially create uncertainty when the estate is eventually administered.
It is also sensible to confirm that the organisation is still operating and that it can accept the type of bequest you intend to make.
Your Will can also include an alternative beneficiary or other appropriately drafted instructions in case the chosen organisation no longer exists when you die.
This is one reason why professionally drafted wording is valuable.
Does leaving money to charity reduce estate duty?
It can, depending on the organisation receiving the bequest.
SARS states that property bequeathed to a qualifying SARS-approved Public Benefit Organisation (PBO) generally qualifies as a deduction under section 4(h) of the Estate Duty Act when determining the net value of the estate and is therefore not subject to estate duty.
This distinction is important.
A non-profit organisation, charity and SARS-approved PBO are not necessarily the same thing. SARS approval under the relevant provisions of the Income Tax Act is important when determining whether a charitable bequest qualifies for this estate duty treatment.
According to SARS, estate duty is currently charged at 20% on the first R30 million of the dutiable amount of an estate and 25% on the amount above R30 million. A R3.5 million basic deduction (abatement) is also available when calculating the dutiable amount.
For this reason, charitable giving should form part of the estate planning conversation rather than being considered in isolation.
PBO status and Section 18A status are not the same thing
This is another useful distinction when planning charitable giving.
SARS-approved PBO status and Section 18A approval are related but separate.
Section 18A approval allows certain qualifying organisations to issue tax-deductible receipts for qualifying donations made by taxpayers during their lifetime. Not every PBO necessarily has Section 18A approval.
When considering a bequest in your Will, the organisation’s PBO status is particularly relevant. A testamentary bequest is treated differently from a Section 18A donation made during your lifetime, so it is advisable to confirm the organisation’s SARS status and obtain appropriate estate planning advice.
Should you tell the charity that it is included in your Will?
You do not necessarily have to tell an organisation that you have included it in your Will.
However, contacting the organisation can sometimes be useful, particularly if you want the funds used for a particular purpose.
It can also allow you to confirm the organisation’s legal details and understand how it manages testamentary gifts.
If you want to place conditions on how the money is used, obtain professional advice before finalising the wording. Conditions that are too narrow or difficult to fulfil can create complications, particularly if the organisation’s activities change over time.
Can you leave money to family and charity in the same Will?
Yes.
Charitable giving does not have to mean choosing between your loved ones and a cause you care about.
Your estate plan can make provision for your spouse, children, other dependants and beneficiaries while allocating a specific amount or proportion to a charity.
For example, you might choose to leave specific assets to family members and then allocate a percentage of your residual estate to a charitable organisation.
The important consideration is whether the overall structure reflects your priorities and is financially workable.
Make sure your Will is valid
A charitable intention can only be carried out effectively if the will containing it is valid and its instructions are sufficiently clear.
South African Wills are subject to specific formalities.
According to the Department of Justice and Constitutional Development, a Will must be in writing and signed by the testator or testatrix at the end of the Will in the presence of two or more competent witnesses. The witnesses must sign in the presence of the testator or testatrix and each other. The witnesses must be competent to give evidence in a court of law and be at least 14 years old. Additional formalities apply where a Will consists of more than one page or where the testator cannot sign in the usual manner.
The Department also cautions that a beneficiary — and their spouses — should not sign as a witness because doing so can affect that beneficiary’s ability to receive a benefit under the Will, subject to certain exceptions.
Given the consequences of getting these requirements wrong, professional assistance with drafting and executing a Will is worth considering.
Review your charitable bequests when your circumstances change
A Will should not be treated as a document that you prepare once and forget about.
Your financial circumstances, assets, family structure and charitable priorities can change over time.
The organisation you originally selected could also merge, change its name, change its focus or cease operating.
Reviewing your Will periodically gives you an opportunity to confirm that:
- the charity still exists and its details are correct;
- the amount or percentage you have allocated is still appropriate;
- your family and dependants remain adequately provided for;
- your executor and beneficiary details remain current; and
- your overall estate plan still reflects your intentions.
Major life changes such as marriage, divorce, the birth of a child, retirement, the acquisition or disposal of significant assets, or the death of a beneficiary should also prompt a review of your estate plan.
Leaving a legacy is part of broader estate planning
For many people, estate planning is about more than transferring wealth.
It is an opportunity to think about what your money should achieve, whom you want to protect and what causes you would like to support after your lifetime.
A well-considered charitable bequest can form part of that plan, but it should be structured alongside the other responsibilities and objectives within your estate.
At Efficient Group, we believe that financial well-being includes planning not only for today, but also for the people, priorities and causes that matter to you in the future.
Professional estate planning can help ensure that your wishes are documented clearly, your loved ones are appropriately considered and the legacy you intend to leave can be carried out as effectively as possible.
Speak to an Efficient Group professional about reviewing your will and broader estate plan.
Frequently asked questions
Can I leave money to charity in my Will in South Africa?
Yes. You can leave a specific amount, percentage of your estate, asset or part of your residual estate to a charitable organisation.
Does leaving money to charity reduce estate duty?
A bequest to a SARS-approved Public Benefit Organisation generally qualifies as a deduction under section 4(h) of the Estate Duty Act when calculating the net value of the estate for estate duty purposes.
Can I leave a percentage of my estate to charity?
Yes. You can specify that a percentage of your estate or residual estate should pass to a named charity.
What happens if the charity no longer exists when I die?
This depends on how your Will is drafted. Your Will can include instructions for an alternative organisation or similar cause.