will drafting

Question 1

What are dispositive clauses?

Answer 1

By these clauses a testator directs who is to inherit their assets, what each person should receive and on what terms.

Question 2

What is a specific legacy?

Answer 2

A specific legacy is an item (or a collection of items) that is separated off by the testator from the rest of their personal belongings to be given to a particular person.

Question 3

How is a specific gift clause drafted?

Answer 3

A specific gift should be drafted precisely. The subject matter must be clear so the item can be identified, otherwise the clause may fail for uncertainty.

e.g. I GIVE to [ ] my painting of Epsom race course framed in red and gold absolutely

e.g. I GIVE to [ ] my painting of Epsom race course framed in red and gold absolutely.

Question 4

For a specific gift clause, what happens if the testator does not own at death the item referred to in the will?

Answer 4

The gift adeems (fails to take effect) and the beneficiary receives nothing.

Question 5

What should the testator do to avoid the beneficiary receiving nothing if the testator does not own at death the item referred to in the specific gift clause?

Answer 5

Include an alternative substitute gift.

Question 6

When making a gift of a collection of items, what should the testator do to avoid the gift being void for uncertainty?

Answer 6

If needed, distinguish the collection from others.
e.g. A gift of ‘my dressing up clothes’ may be void for uncertainty if there is no way of distinguishing these clothes from any others.

However, a gift of all my household furniture won’t be void because not need to distinguish

e.g. A gift of ‘my dressing up clothes’ may be void for uncertainty if there is no way of distinguishing these clothes from any others.

Question 7

Where a division of a gift of collection is required, what should the will specify?

Answer 7

The will should specify how agreement should be reached, a time frame for deciding on a division (e.g. 6 months from death), and state how any failure to agree within such time should be resolved.

Question 8

If a testator wants to give away their interest in a property to a particular beneficiary(ies), what usual considerations should be addressed?

Answer 8

• The property must be identifiable. The full address and registered title number should be used.
• The clause should expressly state what will happen if that property is no longer owned by the testator when they die.
• The property must be capable of passing under the will so if owned as joint tenants the joint tenancy will need to be severed.
• A solicitor should check whether any third party interests affect the property and/or if the testator holds the property on trust for anyone else.
• The testator should be given tax advice regarding the Residence Nil Rate Band.
• If the property is being left to more than one person the terms of their joint ownership should be clear.

Question 9

If the testator does not want to make an outright gift and instead plans to leave the property on trust, what practical considerations should be considered?

Answer 9

Who will have a right to occupy?
Should they pay rent?
Can they veto a sale?
Who pays the expenses associated with upkeep?

Question 10

What is a general legacy?

Answer 10

A general legacy is a gift of property which is not distinguished from property of a similar type.

e.g. I GIVE to [ ] a Hasselblad Lunar camera free of tax and costs of transfer absolutely

so no use of “my”

e.g. I GIVE to [ ] a Hasselblad Lunar camera free of tax and costs of transfer absolutely.

Question 11

What is the difference between specific and general legacy?

Answer 11

The essential difference between specific and general legacies is that specific legacies have to be made from a specific item of property but general legacies can be made from an available part of the estate.

A specific legacy will generally but not always contain the word ‘my’ but general legacies will not.

Question 12

If the gift given in a general legacy clause is not part of the testator estate, what happens?

Answer 12

The gift will not normally fail because the PRs would have to buy the specified property if it was not part of the estate at death.

Question 13

What is a demonstrative legacy?

Answer 13

A demonstrative legacy is a type of general legacy (most often pecuniary in nature) which the will directs should be paid out of a specified fund. Such a gift will not fail if there are insufficient assets in the specified fund.

e.g. I GIVE to [ ] the sum of five hundred pounds (£500) to be paid from my Rochdale Building Society Account absolutely

e.g. I GIVE to [ ] the sum of five hundred pounds (£500) to be paid from my Rochdale Building Society Account absolutely.

Question 14

What if the specified fund for a demonstrative gift clause has ceased to exist or is inadequate?

Answer 14

Then the beneficiary is entitled to receive what is left in the fund and to have the balance of the legacy paid as a general legacy.

Question 15

What is a pecuniary legacy?

Answer 15

A pecuniary legacy is a gift of money. It can be specific (‘my £300 in the safe in the garage’) or general.

Question 16

What is a residuary legacy?

Answer 16

A residuary legacy is a gift of all of the testator’s property (capable of passing by the will i.e. the ‘succession estate’) which has not already been disposed of under the will or any later codicil.

Question 17

What happens if clauses disposing of the residue are not properly drafted?

Answer 17

There may be a partial intestacy.

Question 18

When should a trust be imposed for a residuary legacy?

Answer 18

• A beneficiary is given a life interest in the residue
• a discretionary trust of the residue is to be set up
• the residue is given to more than one person
• there are contingent or minor interests.

In each case the clause should be drafted incorporating the trust to cover a declaration of the trust and the terms of the trust itself.

Question 19

summarise the 5 legacies.

Answer 19

1. pecuniary legacy = gift of money
2. specific legacy = gift that is separated from T’s other belongings
3. general legacy = gift that is not distinguished from items of similar type
4. residuary legacy = what’s left over/anything that has not been already disposed
5. demonstrative legacy = item/gift to be paid from specific fund.

Question 20

What is the date from which the will speaks in regards to property?

Answer 20

Unless a contrary intention is shown, the will speaks from the date of the testator’s death in respect of identifying the subject matter of a gift.

Question 21

What words constitute contrary intention in respect of the date from which the will speaks?

Answer 21

Words such as ‘my’, ‘now’, or ‘at present’ when describing a gift.

Question 22

What is the date from which the will speaks in regards to a collection which is capable of growing?

Answer 22

If there is a gift of a collection which is capable of growing the will speaks from the date of death notwithstanding the use of ‘my’.

Question 23

What is the date from which the will speaks in regards to people who benefit from the will?

Answer 23

To identify the person(s) who should inherit under a clause the will is deemed to speak from the date of execution, unless the wording in the will shows a contrary intention.

Question 24

summarise construction

Answer 24

identifying property/gift = speaks from the date of death. exception is if “my”, “now” or “present”t is used - in which case it is date of execution.

identifying the person/beneficiary = date of execution, unless contrary intention shown.

collection = always from date of death, regardless of use of “my” etc.

Question 25

Where a gift is given to a class of beneficiaries e.g. 'my grandchildren' when does the class close?

Answer 25

The class closes when the first beneficiary in the class obtains a vested interest.

Question 26

if the clause has not identified the specific beneficiaries of a class gift, how is this interpreted?

Answer 26

the class closing rules apply. the general rule fo rthis is that a clause closed (in other words, the beneficiaries within a class are identified and no one born subsequently can qualify) when any one member of the class first becomes entitled in possession.

Question 27

what shoud a testator say when a gift is given to a class of beneficiaries? e.g. my grandchildren

Answer 27

a testator should state expressly when the beneficiaries will be determined. For example, if its to give monney to grandchildren who attain the age pf 25 - if one grandchild is 25 or over at the date of the testator's death, the classs closes on the testator's death. the 25 year old grandchild will recieve their share immediately, whereas the others will recieve theri share when they reach the age of 25. basically the point of this is to say that you do not need to wait until all children have a vested interest, you can divide before then.

Question 28

If there is an execution of a later codicil, from which date does the will speak?

Answer 28

Date of the codicil.

Question 29

What are relieving provisions?

Answer 29

Relieving provisions deal with such matters as who should bear the burden of: 1. taxes 2. charges (e.g. mortgages) 3. expenses and costs.

Question 30

summarise how bears the burden of relieving provisions?

Answer 30

IHT = a gift is free of IHT. IHT is then payable out of the residue. charges = beneficiary inherits the gift subject to the charge. expenses/cost of transfer = beneficiary bears the burden.

Question 31

In the absence of any express provision, what gifts in a will pay the IHT?

Answer 31

IHT would be payable out of the residue as a general testamentary expense. An individual gift in a will is made free of IHT.

Question 32

In the absence of any express provision, who bears the burden of the cost of delivery of the item of property to them and expenses incurred since the date of death in preserving the item or ensuring its upkeep?

Answer 32

Specific beneficiaries.

Question 33

If a property is subject to a secured debt/charge e.g. a mortgage over a house, then who pays the charge?

Answer 33

Unless the will shows a contrary intention, the asset charged bears liability for payment - beneficiary will receive the gift subject to the charge.

Question 34

Is a general direction in the will to pay debts and expenses from the residue of the estate sufficient to remove the effect of the rule that the asset charged bears liability for payment?

Answer 34

No - the testator should expressly relieve the property of the charge.

Question 35

When should extrinsic evidence be submitted in the administration of estates?

Answer 35

If the will or any part of it is meaningless; if the language used in any part of it is ambiguous on the face of it; if the will is ambiguous in light of the surrounding circumstances.

Question 36

If two deaths occur in circumstances where the exact order of death is uncertain, how is it determined who died first and who survived the other?

Answer 36

There is a presumption that the eldest died first.

Question 37

If the order of death is unknown, how does s 4 Inheritance Tax Act 1984 (IHTA) treat the deaths?

Answer 37

s 4 Inheritance Tax Act 1984 (IHTA) treats the deaths as simultaneous. For IHT purposes neither inherits from the other and the estates are taxed separately.

Question 38

What clause can be included to avoid the uncertainty if two deaths occur together?

Answer 38

Express survivorship clause.

Question 39

What is an express survivorship clause?

Answer 39

A survivorship clause in a will is one which states that in order to take a particular gift the beneficiary must survive the testator by a specified period of time.

Question 40

What does children constitute in a gift to children?

Answer 40

Illegitimate (born to unmarried parents), legitimated (born to unmarried parents who later marry) and adopted children.

Question 41

What are class gifts?

Answer 41

Where a gift is given to a group of beneficiaries who meet a general description such as 'children' or 'grandchildren'.

Question 42

When does a class close?

Answer 42

The general rule is that a class closes when any one member of the class first becomes entitled in possession.

Question 43

What is vested interests?

Answer 43

A gift vests if it is given outright and absolutely and there are no conditions which must be met.

Question 44

If a child is given a gift under a will before they reach 18, is their gift vested?

Answer 44

Yes - Vesting is not about age.

Question 45

What are contingent interests?

Answer 45

A contingent gift is made where a beneficiary will have to satisfy a condition before they inherit.

Question 46

If a beneficiary dies before the testator, what happens to their gift?

Answer 46

A gift to them in the will fails (lapses).

Question 47

What happens if a pecuniary legacy lapses?

Answer 47

Then the money that would have been given ends up in the residuary estate.

Question 48

What happens if a gift of the residuary estate lapses?

Answer 48

Then a full or partial intestacy is created.

Question 49

When does s 33 WA apply?

Answer 49

Section 33 WA applies where there is a will containing a gift to the testator's issue (child or other lineal descendant) and the intended beneficiary dies before the testator leaving descendants of their own who are living at the testator's death.

Question 50

Who are the only people that s 33 WA apply to?

Answer 50

It applies only to gifts to issue of the testator (whether to a named child or remoter descendant, or a class gift consisting of children or remoter descendants).

Question 51

Can the effect of s 33 WA be excluded?

Answer 51

Yes - Section 33 WA will apply unless excluded by the wording of the will or if the will otherwise indicates a contrary intention.

Question 52

If the testator wishes to leave a gift to a club, institution, charitable organisation or other unincorporated association, what considerations should be addressed?

Answer 52

- The organisation should exist and a full name and address (plus registered number of a charity) should be used to avoid doubt over the identity of the intended beneficiary. * Consider whether the organisation has registered charity status (there are IHT implications). * Express provision should be made for the organisation subsequently changing its name, amalgamating with another organisation or ceasing to exist. * Provision should be made for who can give valid receipt (it is common to name the treasurer). In the absence of express provision all members or potential beneficiaries would need to give a receipt which is not practical.

Question 53

If a gift to charity is void, what happens if the charitable gift is stated to be for general charitable purposes?

Answer 53

Results in the application of the cy-pres doctrine. under s 62 Charities Act 2011 the gift can be given to a different charity with a similar purpose where the original gift cannot be given effect.

Question 54

How can an unexecuted document be incorporated into a will?

Answer 54

By referring to it in the will.

Question 55

To successfully incorporate an unexecuted document into a will, what three criteria must be satisfied?

Answer 55

1. The document must exist when the will is executed, 2. the will must refer to the document as being in existence at the time of execution and 3. the document must be clearly identified in the will.

Question 56

If a document is validly incorporated into a will, does it need to comply with s 9 WA?

Answer 56

No - If a document is validly incorporated into a will, it becomes part of the will even though the document itself does not comply with s 9 WA.

Question 57

what is STEP?

Answer 57

society of Trust and Estate Practioners. this is a professional association which promotes best practice on matters such as will drafting and estate administration. STEP has a set of nationally recognised administrative powers for PRs and trustees

Question 58

Can a STEP clause be incorporated into a will?

Answer 58

Yes, step provisions can be incorporate into a Will by reference, each provision does not need to be copied out in full in the Will. - e.g. The standard provisions and all of the special provisions of the Society of Trust and Estate Practitioners (2nd Edition) shall apply.

Question 59

What are letters of wishes?

Answer 59

if a trust is creatted under a Will, it may find a letter of wishes stored with the Will. This letter sets out how the testator would like the trustees of the estate to manage their discretionary powers.

Question 60

Are letters of wishes binding?

Answer 60

No - the letters are not legally binding and merely serve as guidance.

Question 61

Do letters of wishes form part of the will?

Answer 61

No - these letters do not form part of the will (or trust created under it) and there is no intention for these documents to be incorporated into the will.