Making a charitable bequest

A4.2Perhaps you are not in the position to donate to a charity during your lifetime but did you know that you can leave a bequest to a charity in your last will and testament?

A bequest is a specific instruction that is included in your will and your Executor is compelled to act upon it. This is of course provided your estate has sufficient liquidity for the bequest.

You may bequeath a specific amount of money or a specific asset to a charity of your choice. A few examples are below:

Specific bequests

  • I bequeath to Hospice the sum of R100,000 (one hundred thousand rand); or
  • I bequeath to SPCA Randburg my entire fleet of vehicles owned by me on the date of my death; or
  • I bequeath to the Childhood Cancer Foundation of South Africa (CHOC) all of my artwork, sporting equipment.

Residual heirs

  • I bequeath 50% (fifty percent) of the residue of my estate to the WWF South Africa; and
  • I bequeath 50% (fifty percent) of the residue of my estate to the Nelson Mandela Children’s Fund.

The residue is comprised of any assets which remain in your estate after the deduction of all expenses, legacies and debts. This may include cash, vehicles, properties, investment policies etc. Once ownership is transferred into the name of the heirs, they can either choose to keep the assets or to liquidate them altogether.

To add to the attractiveness of a charitable bequest, section 4 (h) of the Estate Duty Act stipulates that any donation made to a Public Benefit Organisation is deductible for estate duty purposes.

Estate duty is payable to SARS at a flat rate of 20% for estates with a net asset value of R3.5 million and above where such estate is not bequeathed to a surviving spouse. A section 4(h) deduction will be offset against the net estate value and could reduce or eliminate an estate duty liability altogether.

Please call one of us at FPM Fiduciary Services for assistance.

Wayne VisserWayne Visser

Managing Director

011 778 9300

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)