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Contents of Wills—legacies

The terms 'legacy' or 'bequest' are generally only applied to a gift of money or a personal item but they can also, in certain circumstances, refer to the gift or devise of land. In addition, the term 'legacy' may or may not include annuity, according to the context. This was explained by Sir William Page Wood, VC in Gaskin v Rogers:'…if you find simply the word "legacy" used, and a direction to apportion the property amongst the legatees, unless there be something apparent on the face of the Will which shows that the testator has not used the word in its ordinary legal signification, it will include annuitants. The expression 'pecuniary legatees' in itself, I do not think, would go further than this—it would exclude specific legatees, that is, legatees of mere chattels, but it would have no effect in excluding, prima facie, annuitants from taking the same benefit as they would have taken if the word had been 'legatees' instead of 'pecuniary legatees'. All these rules of construction are...

Payment of legacies

Identification of beneficial interestsThe personal representatives (PRs) of an estate must identify:•the beneficiary or beneficiaries entitled to each particular legacy•what each beneficiary is entitled to receive, and•the time at which each legacy should be distributedExecutor's yearPRs have at least one year from the date of death before beneficiaries can call on them to distribute any part of the estate. Even after one year, the PRs may not yet be in a position to distribute the estate.Deciding to distributeBefore deciding to commence distribution of legacies, PRs must consider if there is reason to delay distribution due to other aspects of the estate administration being incomplete or potential issues arising, such as:•outstanding tax liabilities•outstanding debts•unknown beneficiaries•rectification action in relation to the Will•family provision claim under the Inheritance (Provision for Family and Dependants) Act 1975•variation or disclaimer, or•any other uncertainties regarding the estateBeneficiariesDuty to distributePRs must distribute to the persons entitled under the deceased's Will or under the intestacy rules. Before distributing, they must satisfy themselves as to the correct identity of the...

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Will—to spouse absolutely, then to children on flexible life interest trust

Will—to spouse absolutely, then to children on flexible life interest trust FORTHCOMING CHANGE: At Spring Budget 2024 on 6 March 2024, the government announced its intention to move to a residence-based regime for the purposes of liability to IHT, rather than the current system which is largely based on domicile. The government will publish a consultation later in the year, followed by draft legislation. Questions to be considered will include a ten-year exemption period for new arrivals and a ten-year ‘tail-provision’ for those who leave the UK and become non-resident. No changes to IHT will take effect before 6 April 2025. For more information, see News Analysis: Spring Budget 2024—Private Client analysis — International. See also Practice Note: Domicile. 1 Revocation I [full name of testator] of [address of testator] revoke all former testamentary dispositions made by me[ to the extent that and so far only as they affect my property of every kind in the United Kingdom of Great Britain and Northern Ireland]...

Will—to spouse on flexible life interest trust, remainder to children absolutely

Will—to spouse on flexible life interest trust, remainder to children absolutely FORTHCOMING CHANGE: At Spring Budget 2024 on 6 March 2024, the government announced its intention to move to a residence-based regime for the purposes of liability to IHT, rather than the current system which is largely based on domicile. The government will publish a consultation later in the year, followed by draft legislation. Questions to be considered will include a ten-year exemption period for new arrivals and a ten-year ‘tail-provision’ for those who leave the UK and become non-resident. No changes to IHT will take effect before 6 April 2025. For more information, see News Analysis: Spring Budget 2024—Private Client analysis — International. See also Practice Note: Domicile. 1 Revocation I [full name of testator] of [address of testator] revoke all former testamentary dispositions made by me[ to the extent that and so far only as they affect my property of every kind in the United Kingdom of Great Britain and Northern Ireland]...

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Are the costs of closing a foreign bank account and transferring the funds to the legatee of a demonstrative legacy who is resident abroad payable out of the residuary estate or the legacy itself?

Are the costs of closing a foreign bank account and transferring the funds to the legatee of a demonstrative legacy who is resident abroad payable out of the residuary estate or the legacy itself? An English Will can cover assets solely in England and Wales, or those worldwide, and an English Will is recognised as valid in the majority of jurisdictions. However that does not mean that the applicable law will be English law in other jurisdictions as some jurisdictions have in place principles regarding succession, such as so-called 'forced heirship' which requires assets to be left in a particular way. The validity of the Will and how any foreign situs assets should be administered should be considered in this context. A demonstrative legacy is a general legacy paid out of a specific fund or asset. Therefore a payment of the funds in a foreign bank account will amount to a demonstrative legacy. Recourse should first be had to the terms of the Will when considering how such expenses are...

The beneficiary of an intestate estate (sibling of deceased) enters into a deed of variation establishing two individual legacies of £200,000 to each of their two grandchildren ‘to be upon trust until xx shall attain the age of 21 and thereafter absolutely’ with a declaration that the gift shall carry the intermediate income to be paid free of trust. STEP provisions are included. Are there any tax implications on advancing the legacy out ahead of the beneficiary turning 21? Would this be classified as an immediate post-death interest as it carries the intermediate income?

The beneficiary of an intestate estate (sibling of deceased) enters into a deed of variation establishing two individual legacies of £200,000 to each of their two grandchildren ‘to be upon trust until xx shall attain the age of 21 and thereafter absolutely’ with a declaration that the gift shall carry the intermediate income to be paid free of trust. STEP provisions are included. Are there any tax implications on advancing the legacy out ahead of the beneficiary turning 21? Would this be classified as an immediate post-death interest as it carries the intermediate income? This Q&A assumes that the deed of variation qualifies for the special inheritance tax treatment in section 142 of the Inheritance Tax Act 1984 and qualifies for the special capital gains tax treatment in section 62(6) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992). As a result of the declaration in the deed of variation that the contingent interests of the grandchildren will carry the intermediate income, section 31 of the Trustee Act 1925...

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Question of the week: How does abatement apply where a testator has left £50,000 to trustees on discretionary trusts and £50,000 to a family member, but there are insufficient funds to settle the legacies in their entirety?

This Q&A considers how abatement applies where a testator has left £50,000 to trustees on discretionary trusts and £50,000 to a family member, but there are insufficient funds to settle the legacies in their entirety.