There are three types of gift you can leave in your Will: specific gifts, non-specific gifts and residuary gifts. There are also some issues that should be considered when leaving gifts to children and when giving to charities through your Will. Gifts that are not properly laid out in the Will can 'fail', but proper legal advice and attention to detail can prevent this. This section provides more information on all these issues.
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A specific gift is a particular item or sum of money that you wish to give someone in your Will, for example, a house, a piece of jewellery, £10,000. It is important that the gift is described precisely in your Will, so that the executors can understand exactly what you intended. For example, when leaving someone a house, you should state the full address and make clear whether its contents are to be included as part of the gift or distributed to other beneficiaries.
A non-specific gift is a general gift that does not refer to any particular item, such as 'all my personal possessions'.
The 'residue' of an estate is everything that is left in your estate after all debts, bills and taxes have been paid and all specific and non-specific gifts have been distributed. Leaving the residue of an estate to a named beneficiary is called a 'residuary gift'. Residuary gifts are a common way to ensure that all remaining property passes to your chosen beneficiaries, rather than falling under the intestacy rules.
Gifts to a child under the age of 18 will normally be held by the executors for safekeeping until the child reaches 18, unless you state in your Will that the child's parent or guardian may take receipt of the gift on the child's behalf.
A common way to pass gifts to children is to set up a trust, especially when making arrangements in your Will for your own children. For more information, see our section on Trusts.
All gifts that you leave to charity in your Will are free from Inheritance Tax. You can choose to give a specific amount of money or even a valuable item, for example a piece of jewellery.
By giving a charitable donation in your Will, you can support the causes that were important to you during your lifetime. Over the past few years, more people have been giving regular donations to charities through direct debits and standing orders, and it is logical for many to leave a small or sustainable sum to their selected charity when they have passed away. Even if the amount left seems small, it can often be very helpful to charities compared to regular donations, because legacies left to charities are not taxable.
There are also financial benefits in leaving money to selected charities in a Will. Some people decide to give charitable donations to reduce the value of their estate, while supporting a good cause. This can ensure that an estate is valued below the nil-rate band, so that no Inheritance Tax is payable on their assets.
If you choose to leave a gift to a charity, your Will should state the full name of the charity, the registered charity number and the amount or item that you wish to give.
When a problem in the Will prevents the intended beneficiary from receiving what the deceased person wanted to give them, this is referred to as gift failure. It can happen for a number of reasons, the most common being that the instructions in the Will are not specific or clear enough about what is being given or to whom. The following examples show the kinds of errors that can lead to a gift failing.
- The beneficiary is unclear: for example, your Will states 'I leave £10,000 to my sister', but you have two sisters, or you have always referred to your friend as 'my sister'.
- The joint beneficiaries are unclear: for example, your Will states 'I leave £3,000 to my dear friends Mr and Mrs Jones', it is not clear whether you mean to leave them £3,000 each, or £3,000 to be shared between them.
- The gift is unclear: for example, your Will states 'I leave my house to my husband John', but you own more than one house.
- The beneficiary dies before you. If this happens, the gift will either fall back into the residuary estate, or, if the beneficiary is a residuary beneficiary, the gifts will fall under the intestacy rules. To avoid this, you can nominate an alternative beneficiary when you write your Will, or if you have not done so, you could reallocate the gift after your original intended beneficiary dies by writing a codicil.