How to leave gifts in your Will
Your Will gives you the chance to do a number of things, such as arrangements for guardianship for any children under the age of eighteen; the distribution of your assets; making a Trust for one or more beneficiaries. The distribution of assets can be made as a gift to specific beneficiaries. It is possible to make three different types of gift in your Will; specific gifts, pecuniary gifts and residuary gifts, which are briefly outlined below.
A specific gift is when you gift a specific item, or a number of items of property to a beneficiary. The gift will fail if the testator (the person writing the Will) has transferred the property to someone else before dying. The beneficiary cannot claim for the value of the gift from the estate because the gift is specific.
A pecuniary gift is a gift of money. You can give a specific sum, or you can request that the executor take inflation into account.
A residuary gift is a way to give whatever is left on the estate after payment of debts, expenses and other gifts (this is also known as the residual estate). You can choose to either give the whole of the residuary estate to one beneficiary, or alternatively, the residuary estate can be divided between several beneficiaries.
Gifts to Children
Children under the age of eighteen are considered to lack the legal capacity to receive a gift from a legacy. If you do wish to gift an item or money to a child, you could give it to your parent or guardian, however, there is always the risk that it does not pass on to the child. The other option is to state that the gift be made available when they reach a mature age. Speak to us about passing inheritance onto children – we can discuss the various options available, including setting up a Trust for the child. Our friendly Will & Estate Planning Consultants will be more than happy to advise you.
Gifts to Charities
A growing number of people are now leaving either money or specific items (such as works of art) to charities. For most of these organisations, this is their largest source of income. The tax benefits for leaving charitable donations is a big incentive. Leaving a percentage of your estate to charity can help reduce or eliminate inheritance tax liability. There are two options here: If you donate a gift to charity, it won’t count towards the total value of your estate. This may help take you below the inheritance tax threshold. The HMRC will also give you a discounted rate of inheritance tax rate on your estate if you leave at least ten per cent of the net estate to charity. Doing this would take the inheritance tax rate on your estate down from forty percent to thirty-six per cent.
When Your Beneficiary Dies Before You Do
If you leave a gift of money or a specific item to someone who dies before you, the gift may lapse and form part of the residue of your estate. You can also provide for this eventuality in your Will by stating who you would like to be the alternative recipient should you outlive a beneficiary. If a residuary gift lapses because the beneficiary has died and you have not provided for an alternative recipient, the rules of intestacy for England and Wales will determine how the gift should be distributed. The rules of intestacy can have undesirable consequences because the gift might be dealt with in a way that would not necessarily meet your approval.