Gifts in Wills FAQ's

The importance of having a Will/issue of not having one

A good deal of people do not think they need a Will and the reasons for this may be manyfold, however there are numerous advantages to writing a Will regardless of the size of your estate and the assets you own. Such advantages include:

1. You are able to control who inherits your estate – your Will records your wishes so that your executors and family know what you would like to be done with your estate. We have complete testamentary freedom in England & Wales, meaning that you can have autonomy as to who should inherit your estate. Some individuals will have a legitimate expectation of inheritance however, such as your spouse, children or other persons financially dependent on you. A well-drafted Will can empower you to leave gifts to friends, other family members, or charities as well as making provision for your loved ones.

2. You will avoid the intestacy rules – if you pass away without making a Will, your estate will be divided and distributed in accordance with rules set out by an Act of Parliament. These rules are called the intestacy rules and they will apply rather than your wishes for your estate. The rules of intestacy provide for an individual’s closest blood relatives to inherit in a specific order. If no surviving relatives can be located, your estate will pass to the Crown. Some people do not want their family, such as parents or siblings to inherit and instead may wish to give their estate to friends or charity, which will not be possible without a Will. In addition, there is no provision for an unmarried partner under the intestacy rules. Such an individual would need to resort to claiming part of the estate but a claim is likely to only be successful if they were financially dependent on the person who died.

3. It significantly reduces the stress of your next of kin – it can become very stressful to manage and distribute an estate at an already emotionally heightened time. Your loved ones will have to make numerous difficult decisions during the probate process but writing a Will recording your wishes will help to alleviate this.

4. Provision for the care of your children – anyone who has a child should make a Will confirming the appointment of guardians for the child in the event that both parents pass away before that child reaches the age of 18. The absence of such a provision could result in your child being taken into care in those very sad circumstances.

5. Your funeral requests can be made clear – you will be able to set out the kind of funeral you would like to receive (such as a burial, cremation or a woodland burial) and even include details and special provisions such as the songs to be played or a dress code.

6. Record wishes in relation to dealing with your body – a Will is a helpful place to record any wishes you have relating to your body such as donating organs after you pass away or donating your body to scientific research or education.

7. Provision for your pets – in your Will, you can include provisions for your pets including identifying who will look after them, leaving a gift for their care and setting out instructions about how you wish for them to be cared for.

8. It may reduce your inheritance tax – you can take advantage of inheritance tax efficiencies in relation to your estate. At present, all of us has a “Nil Rate Band” relating to the first £325,000 of our estate, which is taxed at 0%. You may also receive the “Residence Nil Rate Band” which applies to the value of your home up to £175,000 if you leave it to your lineal descendants. Anything above this amount will be taxed at a flat rate of 40%. In addition to this, there are also certain inheritance tax exemptions and reliefs, which depend on to whom you leave your estate and sometimes it depends on what assets you own when you pass away. A Will can help to ensure you are taking full advantage of exemptions, reliefs and your Nil Rate Bands.

9. You can protect someone’s rights or create a trust – the intestacy rules only allow for inheritance by your closest blood relatives. If you would like to make any special provision, such as allowing someone to occupy your home after you pass away (say, to protect them from eviction), or appoint someone to look after funds on behalf of someone else then this can be achieved in your Will. The latter may be particularly relevant if any person in your family has a disability, in which case it may be sensible to set up a trust in their favour rather than give them a portion of your estate outright.

Types of Gifts (Residuary/Pecuniary/Specific)

There are generally 3 common gifts that can be given in your Will. These are specific gifts, pecuniary gifts and residuary gifts.

1. Specific Gifts – the gift of a particular item that you own, such as a family heirloom, an item of jewellery or a piece of furniture or artwork. You can choose to give certain items to a defined person or to be shared amongst a group of people. Problems can arise when the gift expressed has been sold or the recipient has been poorly defined in the Will.

2. Pecuniary Gifts – an expressly stated sum of money which is given to an identified person or an organisation such as a charity. You must be careful in defining how much you wish to give as problems may arise if there are insufficient funds in the estate to pay for the sums specified.

3. Residuary Gifts – the residue of an estate is “everything else”, i.e., what is left after the specific and pecuniary gifts have been bequeathed. Probate expenses, estate debts and liabilities, and any inheritance tax will be paid from the residue. After these sums have been paid, what is left is the residue of your estate. This can be given to one person or organisation or it can distributed in defined shares to specific people or to a group of individuals. You can also provide contingent gifts which will apply if someone named in your Will dies before you.

Executors

An executor of a Will is someone who is chosen to act on your behalf. They must be a trusted person because they will be in charge of carrying out your wishes that have been set out in your Will.

An executor must first register the death of a person and then they are obliged to work to understand what someone owned when they pass away. The executor may need to tell HMRC what made up the estate and then they can obtain the grant of probate from the court. Not all estates need a grant of probate. The executor must then collect in all of your assets (either by holding the assets or selling them and safeguarding the proceeds), and deal with all of the paperwork as well as paying any taxes, funeral costs, administration expenses and debts.

Once they have completed the above steps, they will be responsible for the distribution of the estate in accordance with the Will.

Your executor can be anyone you choose. You can have between 1 and 4 executors. Your executor/s must be over the age of 18, someone very trustworthy and someone who is willing to take on the responsibility of being an executor, such as a family member, a friend or a professional such as a solicitor.