In this month’s articles we are going ‘back to basics’ to refresh your knowledge on some of the more basic but often overlooked aspects of will writing. After all, even the most basic things change sometimes and we need to make sure we’re keeping up to date. This week we are considering what gifts a will can make.
Specific gifts are gifts of some particular identifiable possession or item that is a distinguishable part of the Testator’s estate. Examples of specific gifts include gifts of chattels, jewellery, property or specific investments. Including any words that indicate possession shows a clear intention that a gift is to be specific.
For a specific gift to take effect, the subject matter of the gift must form part of the estate at death. If the subject matter of the gift is not part of the estate, for example if a gift of ‘my interest in 1 Park Avenue’ is made and the testator sells 1 Park Avenue after making the will, the gift will fail.
General gifts are gifts not of a precise asset or item that is owned by the Testator, it is a gift of something to be provided out of the Testator’s general estate. Whether or not that gift is actually part of the estate at death is irrelevant.
A gift of money will nearly always be a general gift. A Testator leaving a gift of £1000 may not have such cash in their estate. Their executors must raise the money to make such a gift.
Distinction between Specific and General Gifts
Gifts of stocks and shares can be used to show the distinction between what is a specific and a general gift.
‘I give my shares in XYZ Ltd’ would be a specific gift. The gift makes clear reference to shares being owned by the Testator, showing that the gift should be of a part of the estate.
‘I give 100 shares in XYZ Ltd’ would be a general gift. The gift does not make mention of any ownership of shares by the Testator and the executors would need to raise this gift out of the general estate.
Demonstrative gifts are a hybrid of the specific and general gifts. It is essentially a general gift that has to be satisfied from a particular source, for example £2000 from my bank account held with RBS.
If the specified fund is not large enough to make the gift in full, any excess would be made out of the general estate and treated as a general gift. Using the above example, if there is only £1500 in the specified RBS account at the Testator’s death, the remaining £500 will be treated as a general gift and made out of the Testator’s general estate.
Every will includes a gift of the residue, also known as a residual gift or gift of the residuary estate. This is a gift of everything in the estate left over after all other gifts have been made and the estate has paid any debts, taxes and other testamentary expenses.