When people think about gifts in your Will, they often picture one large sum of money. In practice, a Will can hold many kinds of gift, from a cash sum for a godchild to a treasured watch or a share of what is left. This guide explains the main types of gift, how each one works under the law of England and Wales, and what to think about before you choose.
Cash gifts: a simple fixed sum
A cash gift, sometimes called a pecuniary legacy, is a fixed amount of money. For example, you might leave £1,000 to each grandchild or £500 to a close friend.
Cash gifts are clear and easy to understand. However, they are paid before the rest of your estate is shared out. So if your estate shrinks, perhaps because of care costs, the fixed sums still come first and the people sharing the rest may receive less than you expected. Also decide what happens if someone dies before you. A gift to your own child usually passes to their children, but most other gifts simply fail.
Specific gifts: particular items and possessions
A specific gift is a named item, such as jewellery, a painting, a car or a collection. Often the most meaningful gifts in your Will are the sentimental ones, and they do not need to be valuable. A well-loved book or a set of tools can matter a great deal to the right person.
Describe each item clearly so there is no doubt about what you mean. Also, remember that if you sell or give away the item before you die, the gift simply fails. For a long list of smaller possessions, a separate Letter of Wishes can be easier to update than the Will itself.
Gifts of property
You can leave your home, a share of it, or another property to a particular person. Before you do, check how you own it. If you own a property with someone as joint tenants, your share passes to the other owner automatically and your Will cannot change that. Owning as tenants in common, by contrast, means your share passes under your Will.
Also think about any mortgage. Unless your Will says otherwise, the person who receives the property usually takes it with the mortgage still attached.
Percentage gifts and the residue
The residue is everything left after debts, funeral costs, tax and any fixed or specific gifts. Many people share the residue by percentage, for example 50% to each of two children.
Percentage gifts adjust automatically as your estate grows or falls. As a result, the balance between your beneficiaries stays the same, which is often fairer than fixed sums. This is why the residue is usually the most important part of any Will, even when the other gifts receive more attention.
Gifts to charity
You can leave a cash sum, an item or a share of the residue to a charity. Use the charity’s full name and registered charity number so the gift reaches the right organisation.
Gifts to UK charities are generally free of Inheritance Tax. In addition, if you leave at least 10% of the baseline amount of your estate to charity, the rate on the rest of the taxable estate may fall from 40% to 36%. GOV.UK explains how this works on its gifts to charity page. For advice on your own tax position, we can refer you to an appropriate professional.
Gifts for education or a particular purpose
Some people want money used for a purpose, such as a grandchild’s education. You can express this wish in a Letter of Wishes alongside a straightforward gift. Alternatively, a trust in your Will can let trustees use the money for a beneficiary’s education or general benefit until they reach a set age.
Gifts for experiences, such as a fund for an annual family holiday, sound appealing but are hard to put into practice. They would need a trust, trustees to run it and a clear end date. In most cases, a simple gift with a Letter of Wishes is more practical.
Guardians for children and gifts of pets
A Will is also where you can appoint guardians for children under 18. This is not a gift, but for many parents it is the most important part of the Will.
Pets are different. In law, a pet is property, so it cannot have a guardian. Instead, you can leave the pet to a named person who has agreed to care for it. You can also leave that person a cash sum to help with the costs.
Wording gifts in your Will clearly
Whatever you choose, clear wording matters. Name each person in full, say what should happen if someone dies before you, and think about who receives the residue. Talking to your family about your plans can also reduce the risk of surprise or disagreement later.
Finally, review the gifts in your Will after major life events, such as a marriage, a birth or selling your home.
Talk to A.D.E. Wills
If you would like to talk through the gifts in your Will, Edward offers a free initial chat with no obligation. Our Wills are prepared for a fixed fee, shown on our Wills Pricing page. Call 01865 507174 or email info@adewills.co.uk, or read more about our Wills.
