- Trainee Solicitor
Legacies are commonly one of the most thoughtful and important aspects of any Will. Deciding what to leave beneficiaries and ensuring that they receive the gift requires careful thought from the individual detailing their wishes, but also skill on behalf of the solicitor drafting the document.
A common element which can often be overlooked when considering making legacies is the priority which is automatically given to debts and funeral expenses. These will always take priority over any other beneficial aspects of a Will and are often designated with their own clause after the appointment of the executors or trustees. If an estate has a level of debt greater than its overall value, then all of the legacies will fail.
That said, where the value of an estate allows legacy giving, these generally fall into the following categories:
Once a Will has been drafted it’s not uncommon for the content to be forgotten about over time. Therefore, it is possible for someone to pass away leaving a Will containing legacies which cannot be fulfilled. Examples of how and why this can happen include an absence or lack of funds from a specific source or perhaps a particular item was sold prior to the individual’s death. Under Scots Law, this is known as Ademption.
The most straightforward way to avoid this scenario is to ensure that your Will is regularly reviewed and updated, particularly when major life events occur, such as a marriage or divorce, or the birth of a new child or grandchild, but also when you purchase or sell a major asset. Further, a skilled solicitor will be able to phrase your Will with longevity in mind. For example, a legacy for a property can be drafted so as to refer to the principal dwellinghouse occupied by the testator at the time of death. This avoids the situation of naming a specific residence, meaning that it will be relevant should you happen to move on after having your Will drafted or updated. Similar protection can be included to cover off the closing, replacement or amalgamation of bank accounts or other holdings. In sometimes more contentious matters, if there is the potential for uncertainty around pricing and valuations, the executors may be appointed as the sole judge of how matters are to be dealt with.
A popular form of legacy which are often included within Wills are those to charitable organisations. Beside the goodwill of donating to charity, much of their popularity stems from their exemption from inheritance tax (IHT) and the ability to reduce the rate of IHT payable. A change in the law in 2012 means that where a testator leaves more than 10% of their estate (after all deductions and reliefs) the taxable rate is lowered from 40% to 36%. However, as with other legacies, care is needed to ensure that these are successfully fulfilled.
If you wish to leave a bequest to a charitable organisation, it must be registered in the United Kingdom to be considered an exempt transfer, with a charity number. It is essential that the full name, registered address and charity number are provided in the Will. It is also sensible to cover off any potential changes to these charities, such as a potential amalgamation, if it ceases to exist or if it changes its name. The wording of the legacy can be amended to account for whether the individual still wishes for the legacy to be granted in these circumstances.
That said, irrespective of the above, where a charitable legacy is provided, the operation of falsa demonstatio non nocet means that a legacy will not fail, provided that the testator’s intentions can be determined.
Another noteworthy aspect of charitable gifting is Gift Aid. Currently, this initiative means that any donations of money or other assets such as property, shares or land given to charity or community amateur sports clubs during your lifetime can be boosted by 25p for every £1 given if the donor is a qualifying UK taxpayer. Further information on Gift Aid and the recently announced changes are addressed in one of our earlier pieces following the Spring Statement, which you can read here.
Our private client team can offer tailored advice and support when making your will. Our experts can talk you through the process of preparing your first will or assist you with amending a will that you already have in place.
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