For initial advice call Co-op Legal Services on 03306069591 or contact us online and we will help you.
It's fair to say that legal terminology is commonly criticised for not being plain English. This can make it difficult to understand and interpret at times.
The language used in Wills is no exception to this and it can sometimes be confusing. In this article I explain some of the terminology used and the types of gifts that can be left when making a Will.
Firstly, the type of gift you leave is generally dictated by how you want to leave it. For example, you may want to leave a personal possession, such as your engagement ring, to a particular person. Alternatively, you may want to leave them a fixed sum of money or even a proportion of whatever you have left in your Estate after any debts and liabilities have been paid off. Depending upon what you are looking to do will shape what type of gift you leave.
If you want to leave a particular gift or item to someone then this is called a Specific Legacy. It should always be referred to in your Will as "my". For example, I give my engagement ring to X. As the gift relates to a specific item then, if you do not own that item when you die, the gift fails.
Alternatively, if you say that you want a particular gift or item that you don't actually own then this is called a General Legacy. An example would be to say 'I give 500 shares in ABC PLC to X'. If you don't own 500 shares in ABC then your Executor will need to use money from your Estate to buy 500 shares after your death and give the shares to X in order to satisfy the gift in your Will.
Or you could want to leave a fixed sum of money to someone, for instance I give £5,000 to X. This type of gift is called a Pecuniary Legacy. It doesn't specify where from your Estate it is paid from so it is paid from your general Estate after death.
Another option is to say that you want a specific sum of money to be paid from somewhere in particular. For example, I give £5,000 to X to be paid from my Co-op bank account. This is called a Demonstrative Legacy.
The remainder of what is left after any debts, Inheritance Tax (IHT), administrative expenses and legacies have been paid is called the Residue of your Estate. The Residue is essentially the net balance of your Estate. You can't put an exact value on this as it's a constantly evolving figure during your lifetime. Giving away the remainder of your Estate like this is called a Residuary Gift. It can be left to an individual, or to a group of people, or charities in equal shares or varying percentage splits.
As with all gifts you can name substitute beneficiaries as well. This means that if your first choice beneficiary has died before you then you can say who you'd like to benefit instead. This type of gift is called a Contingent Gift. The reason being that the beneficiary of this gift only receives it if something else happens first, rather than being absolutely entitled to it in the first place. If that "something" never happens then they will not receive anything.
Understanding your options and the types of gifts that can be made under your Will is an important part of putting an effective Will in place that aligns with your wishes.
For initial advice and guidance about making a Will, call our Will writers on 03306069591 or contact us online and we will call you.