Thinking of leaving your house to charity? Or are you thinking of leaving everything to charity in your Will?
How do you go about leaving your whole estate to charity? There are several ways to do it.
Set Up a Non-Profit Entity
You could set up a non-profit entity. You may consider setting up:
1. A society.
2. A public company limited by guarantee.
3. A charitable trust.
Under Section 2 of the Societies Act, a society includes “any club, company, partnership or association of 10 or more persons, whatever its nature or object”. Societies are not independent separate legal entities and its members are personally liable should a particular society be sued.
A public company limited by guarantee is a separate legal entity with limited liability. It is usually used if you intend to set up a non-profit organization that requires corporate status.
A charitable trust is not a separate legal entity. Trustees appointed under a deed of trust are responsible for administering the assets in accordance to the charitable intentions in the trust deed.
The general steps in setting up a non-profit entity includes:
1. Registering the entity if that is a requirement. Have the information and documents in hand.
2. Apply for charity status.
3. Apply for Institute of Public Character (IPC) status (not applicable for charitable trusts).
More information can be found here.
The benefits of setting up a non-profit entity are as follows:
1. More flexibility in deciding how the money is used.
2. Limited liability (for public company limited by guarantee).
3. Tax exemptions.
The disadvantages of setting up a non-profit entity are as follows:
1. There may be additional statutory requirements, like holding AGMs.
2. In some cases (charitable trust and societies), members are personally liable.
3. It may not be cost-efficient since it may be expensive to set up a non-profit entity.
Leaving Your Assets to a Foundation for Disbursement
If the disadvantages of setting up a non-profit entity outweighs the benefits, you may consider leaving your assets to a charitable organization that can disburse the money according to the community’s needs.
For example, the Community Foundation of Singapore works with donors to match their interests with the community’s underfunded needs. You may wish to have a discussion with the foundation to identify specific societal needs that you can donate to. In this way, your donations can be utilized more effectively.
The benefits are:
1. Efficient utilization of funds.
2. Professionalism since the funds are managed by professionals.
3. Tax deductions for donations.
The disadvantages are as follows:
1. Less flexibility in disbursement of funds.
2. It may be difficult to match your interests with societal needs.
Leaving Everything to Charity in Will
You may decide to have a clause in your Will to leave everything to charity by way of your Will. You should clearly define and identify the charity that you wish to donate to. You will have more control over which charity you will leave your assets to.
If you wish to prepare a Will to leave your estate to charity, you should consider engaging a Wills lawyer to assist you.
Contact us at +6598330314 (whatsapp) if you need help with preparing your Will.
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