It is important to ensure any beneficiary is properly identified otherwise the gift might fail due to uncertainty. For example, if the gift was to ‘my niece’ and the testator has more than one niece, the gift will fail. Equally, a gift to ‘my daughter’s husband’ would go the whomever the daughter is married to at the time of the testator’s death, which might not be the intended beneficiary if the daughter divorced and remarried. The full name, address and relationship to the testator should be specified.
Gifts to minors and young people
When considering a gift to a minor or young person the testator should consider whether they want the individual to receive the gift straight away or at a later date. If the gift is to be received straight away it is known as a vested gift that imposes no conditions; the beneficiary will be entitled immediately if they outlive the testator. If the beneficiary of say, £1,000, is a minor the money will be held on trust by the executors until the minor attains the age of 18. If the beneficiary died before reaching the age of 18 the money would form part of the beneficiary’s estate. If the beneficiary is 18 or over they would inherit the money straight away.
If the testator wanted to specify an older age at which the beneficiary would inherit money, at say 25, this is known as a contingent gift as it will impose conditions before the gift can be inherited. If, for example, a testator specified that her grandson should inherit £1,000 provided he reach the age of 25 he will only inherit if he reaches the age of 25. The money will be held on trust until he is 25 if he is under 25 at the time of the testator’s death. If the grandson dies before reaching the age of 25 the grandson’s estate receives nothing unless the will specifies otherwise. The testator may specify another beneficiary in default or if none, then the money will form the residue of the testator’s estate. This can have tax implications so please seek advice before deciding on contigent gifts.
Beneficiary predeceases the testator
In this case, the beneficiary is not able to benefit form the legacy and will remain part of the testator’s residual estate unless an alternative beneficiary has been identified. There is a limited exception to this rule if at the time of death the beneficiary has children, then those children will take the gift.
Classes of beneficiaries
If a testator wishes to leave a gift of say money to a class of beneficiaries such as grandchildren then it is better to specify a closing date for the class, say at the time of death of the testator, otherwise it could be difficult to administer once the testator has died and further grandchildren are born.
Charities as beneficiaries
It will be important to accurately identify the charity by name, address and registered charity number. In addition, if the charity changes its name or merges the testator should specify what should happen in these circumstances to ensure the gift does not fail. One option would be to provide discretion to the executors in such circumstances.
Spouses and children as beneficiaries
As long as the estate of the survivor shall not exceed the inheritance tax nil rate band threshold between spouses and civil partners, many spouses will choose to leave everything to the other or on a terminable life interest. For those that do not want to choose this option it is possible to leave a nil rate band gift.
When considering making a will it is important to ensure that the obligation to pay inheritance tax is minimized. However, because it is difficult to draft a will specifying a specific amount that will cause inheritance tax to be payable (as the bands change and will not be known at the testator’s death) it is important to word the will accordingly. This is a complex area of will drafting and appropriate professional advice should be sought.
Selection of gifts
If the testator wishes the beneficiaries to select a gift from the estate in order to ensure no dispute arises it is wise for the testator to specify the order of choosing or identify a means of resolving any dispute. The executors may be given power to make a final decision.
Gifts of company shares
Specific shares can be difficult to gift because they may be sold before the testator dies, the company may change its name or legal identity or the shares may be subject to a charge. The will therefore must be drafted to accommodate these circumstances.
Gift of land
Similar to shares, specific gifts of land can be difficult to gift because they could be subject to a mortgage or charge. These must be provided for in the drafting of the will.
The residue of the estate
Any will should include a gift of the residue to ensure intestacy rules do not apply.
A beneficiary has to be alive at the time of the testator’s death to acquire an interest. However, problems can arise when the beneficiary and testator die within a short space of each other, for example in a car accident. In order to avoid problems a survivorship clause should be included in the will, which might specify that the beneficiary must survive the testator by say a month or if not, an alternative beneficiary is specified.
Directions about the body
Testators may want to include wishes about how their body is to be handled after death, for example, buried, cremated or donated for research. However, these wishes have no legal effect so the testator should ensure that their family and friends are aware of their wishes.
Powers to trustees and personal representatives
If a will gives rise to a trust it will be necessary for the testator to confer powers on the trustees in order for them to administer the estate appropriately. These powers include (i) the power of appropriation so that any part of the estate may be appropriated to satisfy the value of a legacy provided that the assets have not been specifically bequeathed in the will; (ii) the power to insure assets so that when an insurance policy expires prior to the administration of the estate, the trustees have the ability to buy insurance against all risks, up to the value of the property; and (iii) the power to continue a sole trader’s business to ensure that it can be sold as a going concern. Many other powers need to be considered in accordance with the testator’s specific circumstances but these are too many to identify here. Specific legal advice should be sought.
All wills should contain a suitable signature clause, which should also include provision for the two witnesses to add their details.
More complicated wills will require additional clauses. It is possible to draft wills to include a huge array of wishes or circumstances, and professional advice should be sought for anything not covered here.
Trusts in wills can also be a powerful way of making sure your wishes are met while giving your executors some flexibility after your death. They can also be very tax efficient. Please see more under the Will Trust section.