Leaving gifts in your Will
One of the main reasons why people write wills is to leave an inheritance and meaningful gifts to those left behind, whether that is in the form of money, property, shares or even a cherished piece of jewellery.
If you’d like to leave a gift to someone in your will, you may be wondering exactly how to go about it, so in this complete ‘gifts in wills’ guide, we’ll explain all there is to know about continuing your legacy when you die.
Gifts in wills – Types of gift
When writing a will, you’ll be given the opportunity to leave 3 different types of gift: specific, pecuniary or residuary.
Specific gifts
Specific gifts in a will consist of one or more items that are gifted to either an individual or group of individuals. This can include assets like jewellery, furniture or artwork. If the item in question is sold or disposed of prior to the testator’s death, it is said to have been ‘adeemed’, which means the beneficiaries lose their related inheritance.
You are also able to give specific gifts in trust, meaning that it cannot be inherited until the recipient reaches the age specified in the terms of the trust (perhaps when you feel they may appreciate it more, for example).
Pecuniary legacy
A pecuniary legacy is when a fixed sum of money is left to a particular person, either as an ‘outright gift’ (which they receive directly) or in trust. For example, you might decide to leave £5,000 to your nephew, or place £10,000 in a trust to be received by a child when they reach the age of 21.
Residuary estate
The Residuary estate is a term used during the process of probate and it refers to when the testator (the person who creates the will) decides to leave somebody the gift of whatever is leftover from their estate following the distribution of other gifts, as well as the payment of debts, taxes and administrative fees.
If no other gifts are stated in the will, the ‘residue’ of the estate simply includes everything after the relevant tax, debts and other costs have been settled.
Who can receive a gift in a will?
There are no specific rules that state who you can and cannot leave a gift to in your will, but the vast majority of people decide to leave their estate in the hands of close family.
It is not uncommon for people to leave gifts to friends in a will, and many also decide to make a donation to charity.
Gifts to children
The law states that children under the age of 18 cannot receive gifts from a will.
One way to get around this law is to gift the money to their parents or guardians instead, in the hope that they will secure the money in a bond or savings account to give to the child when they come of age.
There is an element of risk attached to this method, however, as there is nothing to prevent the child’s parent or guardian from squandering the money before passing it over.
These problems can be avoided by placing the gift in a trust, which not only helps to avoid Inheritance Tax, but gives the person in charge of the trust (the trustee) a legal obligation to manage it in line with the best interests of the beneficiary (the child).
The terms of the trust can vary, but when leaving gifts to children, many people state that the inheritance should be handed over when they reach a specified age (commonly 18, 21 or 25).
The matter of tax on gifts to children (both before death and in your will) can be complicated, and if you want to find out how to reduce the impact of it, we advise that you read our Inheritance Tax planning guide.
Gifts to charity
You are able to gift to a charity in your will if you wish to do so, with one of the main incentives being that any gifts given to charity are not subject to Inheritance Tax. To further encourage charity donations, leaving 10% of your estate to a charity will reduce the Inheritance Tax rate from 40% to 36%.
When leaving money to charity in your will, it is important that you state exactly how much you wish to give and provide the name, address and registered charity number.
Gifts to charity do not have to be monetary; leaving your house to charity is entirely possible and would work in a similar way to gifting property to children or other loved ones. Within your will, you can include what is known as a ‘letter of wishes’ to state any specific request you may have for the gift in question.
There are thousands of charities to leave your money to, but this kind gesture is most often seen when an individual has a strong attachment to the charity’s cause.
Failure of gifts in a will
Despite your best efforts, there are a number of reasons why the gifts you leave behind might not reach their intended recipient. Some common examples of this include:
Unclear wishes – for example, if you state that you want to leave your car to your son, but you have more than one son (or more than one car).
Death of a beneficiary – if the person you intended to receive a gift in your will dies before the end of probate, the gift will fail. (To avoid this, state clearly what you’d like to happen to the gift if the beneficiary dies before you).
Unclear joint beneficiaries – for example, if you state that you want to leave £10,000 to your children, it is unclear whether that is £10,000 between them or £10,000 each.
Uncertain conditions – if the terms of your gift are uncertain or difficult to meet. For example, forbidding the recipient from associating with certain people.
Writing a will yourself can be complicated and stressful, which is why we will always recommend that you use a professional will-writing service, like that provided by Quick Wills, to ensure that all of your wishes are carried out after death.
Write a will with Quick Wills
If you want to leave gifts in your last will and testament, our online service allows you to write a will, giving you the option to include any gifts, appoint executors and name beneficiaries.
Should you experience any difficulty when writing your will, don’t hesitate to contact us by completing the form below to speak to one of our professional advisors.