Charitable giving is a powerful way to leave a lasting legacy. You can make an impact that extends far beyond your lifetime. Include donations to causes close to your heart when writing your will. This practice allows you to give back meaningfully. Sadly, it remains underutilised.
As South Africa marks Mandela Day this month, now is an excellent time to consider including charitable giving in your will. It is an opportunity to leave a legacy of giving that reflects your values.
Charities and non-profit organisations work tirelessly to address challenges and fill critical gaps in our society. They often care for people and communities that are underserved. Their work uplifts and strengthens local communities by providing vital support. However, they often rely on donations to continue operating.
South African estate law allows you to support worthy causes by bequeathing assets to them in your will. Charitable giving is not only legal but also beneficial. It helps the charity and can support the overall health of your estate.
What is charitable giving?
Whether you support education, healthcare, animal welfare or the environment, your legacy can live on through the causes you care about. Charitable giving allows you to leave a legacy of giving that speaks to your passions.
You can transfer money, assets or property to a registered non-profit organisation after you pass away. This is typically done through a bequest in your will. The bequest is legally binding.
You have full control over what you give and how you structure your charitable gifts. South African law recognises testamentary freedom. This means you may leave your estate to anyone you choose, including charities.
You can choose to leave a specific sum of money, a percentage of your estate, or a particular asset such as a vehicle or property. You can also leave the remainder of your estate after debts, taxes and inheritances have been handled.
Choose your charity carefully
Charitable giving not only furthers a cause that matters to you. It may also reduce your estate duty liability. This preservation of wealth can benefit the loved ones you leave behind.
To ensure your gift has a real impact, verify that the charity is registered with South African Revenue Service (SARS) as a Public Benefit Organisation (PBO). A PBO is a trust, company or association established in South Africa to perform public benefit activities. These organisations are typically exempt from tax under the Income Tax Act or the Taxation Laws Amendment Act.
Ask for the PBO number. Research the charity’s mission and values, especially if you are not already familiar with them. Ensure their goals align with your own. It is wise to contact the charity in advance. Confirm they are equipped to receive and use what you intend to give, especially in the case of specific assets like vehicles or property.
Understand the tax benefits
If you decide to make a charitable bequest, your estate could enjoy tax benefits. Estate duty is a tax levied on the transfer of assets to beneficiaries after death.
Bequests made to PBOs are exempt from estate duty. When structured well, your charitable gift could reduce the taxable portion of your estate. This could increase the value passed on to your heirs and beneficiaries.
Before setting aside a charitable gift, make sure your will addresses all other responsibilities. These might include minor children, dependents with special needs and any financial or business obligations.
Leave a legacy of giving through smart planning
It is a good idea to review your will regularly. Aim to do so at least once a year, or when significant life events occur, such as marriage or the birth of a child. This review should include any charitable gifts.
If you plan to donate a specific amount to charity, regular reviews can help ensure it remains appropriate and feasible. An alternative is to leave a percentage of your estate. This method may be more flexible, as asset values tend to fluctuate over time.
When you choose to leave a legacy of giving, you not only extend your values into the future. You also play a role in creating a more compassionate and equitable world.
Kenrick Newport | National Manager | Succession Planning | Capital Legacy | mail me |