Leaving Gifts in your Will

Making a Will, at its simplest, involves deciding “who gets what”. There are a number of different issues to consider depending on the type of gift, the recipient, and the conditions triggering such a gift:

In your Will, you can gift “chattels” (your personal effects), digital assets (photos, videos, crypto currency, NFTs), real property (bricks and mortar), money and even your pets. Each type of gift carries with it a number of issues:-

Chattels

• Keepsake gifts can be extraordinarily emotive and contentious; consider sounding out any particular emotional attachments to specific items amongst your beneficiaries.
• If beneficiaries are going to disagree, try to set ground rules by, for example, giving rights of selection according to an explicit “pecking order”, or by leaving the final say to your trustees.
• Collections or matched sets may be far more valuable if kept together.

Money

• Beware “demonstrative legacies” – leaving a beneficiary the funds you have invested in “Account XYZ” may be an empty gift if those funds have been moved to “Account ABC” by the time of your death.
• Consider index-linking legacies to preserve their value in real terms.

Real Property 

• Ensure that you are able freely to gift jointly held real property interests. “Joint tenants” inherit automatically by right of survivorship but “tenants in common” may gift their property shares to whomever they wish.
• You may also need to consider how any outstanding mortgage is to be discharged.

Pets 

Although pet owners will disagree, as far as Wills are concerned a pet will be treated as if it is a “chattel” – a personal possession, to be dealt with in the same way as an antique, artwork or jewellery. Because pets are legally viewed as property, they cannot own property of their own and cannot be the donees of gifts made by Will or otherwise.

However, you can appoint a “guardian” for each pet by, effectively, leaving a specified pet (or indeed any pet you happen to own at your death) to that guardian’s care. Just as with minor children, including a substitute guardian is a good idea. You can choose anyone over 18 to look after your pet, but you will need to ask them first to ensure that they agree. Try to find the best fit between guardian and pet – do they need outside access or a garden; long walks or a gentle owner; what if there are other pets and children with whom the pet must co-exist? If there is no one in your immediate family and friendship circle there are charities that specialise in pet care and rehoming; it would be usual to leave them a pecuniary legacy in your Will as well, to help them continue their work.

The cost of keeping many pets can be fairly minimal, particularly for an existing animal lover, but the same cannot be said for larger animals – such as horses who have a lifespan of up to 30 years. In these circumstances it is not uncommon for ongoing financial provision to be discussed. You can leave the guardian money for the care and maintenance of your pet directly, although you would have no control over whether that money is actually used for that purpose. Alternatively, you can establish a “pet trust” in your Will to do so, accompanied by a Letter of Wishes to set out how you would like your pet to be cared for and what to do with any remaining funds when your pet is also no longer around.

Digital Assets  

• Technology has pervaded every aspect of our lives. Social media, online banking, media streaming and storage and blockchain technology and the rise of cryptocurrencies have transformed the digital landscape over the past two decades, but are unlikely to have influenced how most of our Wills are drafted.
• A Law Society survey in 2020 found that only 26% of respondents knew how their digital assets would be dealt with on their death and that 93% had not addressed digital assets in their Will.

Types of Digital Assets

There are broadly, three classes of digital assets:

1. Digital assets with financial value – such as online banking accounts, cryptocurrencies (Ethereum, Bitcoin etc), Non-fungible Tokens and online shopping accounts / Paypal;
2. Digital assets with social value – for example Twitter, Facebook, Instagram, WhatsApp, LinkedIn, and TikTok – some of which are themselves of financial value given the number of followers/ influence they have attracted; and
3. Digital assets with sentimental value – typically online photos, videos and music including accounts with Google, iCloud, Flickr and YouTube.

Prudent digital estate administration should involve the following tasks:

1. Using your Will to appoint executors in overall charge of your estate, either by including a designated “digital executor” or by encouraging them to consult with a nominated individual comfortable in the digital domain.
2. Creating – and regularly updating – a digital directory containing details of your social media accounts, digital assets and (in a secure way) the means to access them legitimately.
3. Safeguarding digital asset passwords: you should never include them in your Will as it will become a public document once probate is granted, or leave them in an unencrypted document on your computer which could be hacked. Writing your passwords down is often a breach of the terms and conditions of the provider and your internet service provider. You should consider leaving instructions to retrieve them (physically or via a third party password protector, digital vault or a physical device) in a Letter of Wishes stored with your Will.
4. Backing up digital assets of sentimental value such as photographs, videos and emails / messages to hard copy or remotely accessible storage, to ensure that your family can continue to view treasured memories.
5. Leaving clear instructions to your executors as to how to deal with each aspect of your online life.
6. Ask for our digital LifeFile.

Residue: what is left after debts, tax and other gifts have been paid.

• Ensure that gifts of percentages of your residuary estate add up to 100!
• Ensure that a partial intestacy cannot arise by specifying what happens if your first choice/s of residuary beneficiary fails to survive you.

When should beneficiaries receive a gift?

• Minors (children under 18) cannot hold property in their own right, although in some circumstances their parents or guardians can accept gifts on their behalf.
• For significant gifts, it might be advisable to add an “age contingency” meaning that the beneficiary has to attain a certain age before inheriting.
• Avoid trying to attach binding conditions as to the use of gifts. Your wishes could generate unintended disputes and may not be practical when the time comes. If you are concerned as to the misuse of significant sums, a discretionary trust may be the better solution.

First and second death gifts

If you are in a relationship and have created a pair of “mirror Wills” in the same terms, leaving everything to each other and then to children or other beneficiaries, then you can decide whether to leave gifts to others if you are the first, or the second, to die.

• First death gifts will be taxable and will count towards your £325,000 nil rate band, leaving less to carry over to any spouse or civil partner’s estate.
• Making a first death gift ensures that the gift reaches its intended recipient – many Wills leave everything to the surviving spouse, registered civil partner or cohabitee and there is no guarantee that they will then respect your ultimate wishes in their own Will, which can be revoked or amended after your death.
• First death gifts might “double-up” if you and your spouse or partner both make them to the same individual – check this is your intention.
• “Second death gifts” may never come to pass if you fail to survive your partner or spouse.

Good to Know: Related Posts

Executors’ responsibilities throughout the estate administration process and how to get their appointment right.

Appoint legal guardians to continue your children’s upbringing after you have gone.

Provide guidance to your executors, guardians and trustees, so that they can carry out your wishes.