Why and how to include philanthropic giving in your estate plan

Providing a strong financial foundation for your children and grandchildren is likely an important part of your long-term plan. Indeed, this might be the goal that’s driven you to build and preserve your wealth.

However, if you also want to instil independence and purpose in the next generation, you’ll need to think carefully about how to integrate wealth into your children’s lives.

Philanthropic giving could provide a valuable opportunity to pass your wealth on tax-efficiently while also building a long-term legacy. By talking to your loved ones about your wishes and involving them in your decisions, you could plan your charitable support as a family, so that your expectations and values are clearly aligned.

According to recent research by Remember A Charity, 50% of people with over £1 million in investable assets have included a charitable gift in their will. This figure rises to 75% for those with estates worth £5 million and over.

Moreover, the charity has revealed that 6 in 10 professional advisers think recent and upcoming inheritance tax (IHT) changes – such as the removal of the IHT exemption on most unused pension wealth – will prompt a growth in charitable legacies.

Keep reading to learn more about why and how to include philanthropy in your estate plan.

Giving to worthy causes in your estate plan could deliver emotional and financial benefits

If you’re thinking about including philanthropic giving in your estate plan, here are a few key benefits to consider:

• Create a lasting legacy – Donating to causes that reflect your values and family priorities could help drive meaningful work for years to come. What’s more, it sends a powerful message to future generations about who you were and what mattered most to you.
• Build shared values with your family – Involving your children and grandchildren in your charitable decisions could instil financial responsibility and shared values. This may help to ensure that the wealth you pass on to family benefits your chosen causes long after your donations end.
• Pass on your wealth tax-efficiently – Philanthropic giving may allow you to reduce the size of your estate for IHT purposes, making it a useful part of a wider tax planning strategy. Moreover, if you leave 10% or more of your estate to charity, the IHT rate payable on the remaining taxable estate usually falls from 40% to 36% (2026/27).

Changes to inheritance tax rules make philanthropic giving an increasingly important estate planning tool

Charitable giving is taking on a more prominent role in estate planning for affluent individuals due to the shifting IHT environment.

Frozen IHT thresholds

The government has frozen IHT thresholds – below which no IHT is due – until 2030. This could mean that as property and asset values rise in line with inflation, more of your estate falls beyond the threshold.

Reduced Agricultural and Business Property Relief

If you’re a business owner, you’ll need to navigate less generous Agricultural and Business Property Relief, which came into effect on 6 April 2026. The previously unlimited 100% relief is now capped at the first £2.5 million of combined qualifying assets. Any assets that exceed this amount will receive 50% relief on the standard 40% rate, creating an effective 20% IHT rate.

Removal of the IHT exemption for pensions

From 6 April 2027, most unused pensions and death benefits will be included in your estate for tax purposes. This is a landmark reform as currently pensions are seen as a valuable estate planning tool.

According to figures published by UK Parliament, these changes are forecast to increase the amount of IHT raised from £8.4 billion in 2024/25 to £14.7 billion in 2030/31.

Philanthropic giving could help you reduce a potential IHT bill and pass on more of your wealth to loved ones.

5 steps to take now if you want to include philanthropic giving in your estate plan

If you’d like to weave philanthropy into your estate plan, here are five things you can do to get started:

1. Review the overall value of your estate

Getting a clear picture of how much your estate is worth could help you make informed decisions about passing your wealth on and help you understand your potential IHT liabilities.

2. Decide how much to give

Philanthropic giving provides a valuable opportunity to define your priorities and balance generosity to worthy causes with supporting your loved ones. You’ll need to decide whether you want to donate a fixed amount, a percentage of your estate or specific assets.

3. Choose the right structure for charitable giving

There are several different options for including philanthropic giving in your estate plan. You might like to gift some of your wealth during your lifetime as part of an IHT planning strategy, allowing you to see the good your money helps to achieve. You could also make charitable donations in your will.

If you’d like more flexibility and control over your gifts, it might be worth talking to your financial planner about setting up a charitable trust or a donor-advised fund.

4. Ensure your charitable donations align with your wider estate plan

Make sure that your philanthropic giving fits with your broader plans for family wealth, succession and asset protection. This ensures that your estate plan supports your values and goals, while also reducing the risk of unintended consequences for your other beneficiaries.

5. Speak to your financial planner

If you have a large and complex estate – for example, one that includes global assets, business interests and so on – deciding how to pass it on fairly and efficiently might not be straightforward.

Your financial planner can help you navigate these complexities and embed philanthropic giving into your estate plan in the most tax-efficient way. They’ll review your plan periodically and, if anything changes in your life, help you adjust it to ensure it supports your current goals and values.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.