Planning what happens to your wealth and personal items after you die can be an emotional undertaking. Putting together your Will and noting the particular bequests you’d like to make can feel overwhelming, but once completed will give better peace of mind.
The importance of writing a Will
A Will is one of the most important documents you ever prepare. It forms the cornerstone of your Estate planning and acts as a guide for what you’d like to happen after you die. Your Will is a legal document and can include the details of all the bequests which you want to make, along with any other wishes including your funeral arrangements.
What is a bequest?
Bequests are gifts which you leave in your Will. They refer to items of personal ownership and can take a number of forms including money, homes, shares, investments or other items including jewellery or art. You can choose to leave bequests to family, friends or your preferred charities.
Different type of bequests
There are several different types of bequests which can be made. The terms usually explain, from a legal and financial perspective, how the bequest is dealt with.
- Specific bequest – signifies you are making a particular gift such as a property, piece of jewellery or certain shares.
- General bequest – refers to a sum of money which is left to a certain individual.
- Residual bequest – this option gifts a portion or all of what’s left of your Estate after all other payments have been made. It often relates to the remainder of your Estate which will be left to your spouse, partner, children, friends or charities once all other bequests, liabilities and administration expenses are paid.
- Demonstrative bequest – this is like a general legacy but is directed to be paid out of a specified fund or sale of something.
- Conditional bequest – this is used when you would like to leave a bequest based on a set of conditions. So, you may choose to leave a sum of money to each of your children to be used for a first home or wedding costs, or gift your car to a beneficiary once they have passed their driving test.
- Reversionary bequest – this option is used if you want to build in some form of future-proofing to your Will. For instance, you may want to leave a piece of jewellery to your sister, but note that if she predeceases you, the item will pass to her child.
- Charitable bequest – leaving gifts to charity may be important to you, and can also help reduce your Inheritance Tax liability,
The limitations of bequests
One of the key limitations of bequests happens if you fail to keep your Will up to date. At this point there is some scope for your beneficiaries, but your Estate may not be distributed exactly as you’d planned. As a result, specific bequests can become invalid, or fail. So, if you’ve left a car or piece of jewellery to a family member, and have subsequently sold that asset, your beneficiary can’t receive the gift and won’t receive any compensation, unless you explicitly include a provision in your Will to that effect.
If any of your named heirs predecease you, any specific or general bequests will then be shared with any other beneficiaries unless additional provisions are included to direct the bequest elsewhere. These elements can be complex to consider, so working with a professional will help you explore different scenarios to ensure your Will always reflects your wishes. However, it’s worth noting that a regular review of your Will, perhaps every five years or so, is sensible to ensure that it remains valid.
Ensuring the validity of bequests in a Will
Bequests should form part of a valid Will, which has been properly witnessed. If someone wants to contest the validity of a bequest, they would have to contest your Will, which can be a complex process. If a Will is deemed to be invalid, your Estate may be divided according to the laws of intestacy. Depending upon the value of the Estate it is possible for children to also receive funds at the same time as the surviving spouse. This could lead to an unexpected Inheritance Tax liability.
Estate planning at Progeny
Our Estate planning team is highly skilled and can offer sensible and practical support to help you craft your Will and ensure that it includes details of any bequests which you want to make.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
The Financial Conduct Authority does not regulate will writing and some forms of estate planning.
