Can’t take it with you – gifting property in your will

There are an infinite number of ways you can gift parts of your estate to the various people and organisations you care about in your will. Often, the limitless options can seem daunting, but it doesn’t have to be complicated. 

You can make gifts of real property, personal property or even a pecuniary legacy. You can do so in a number of ways – whether that be as a general, specific, demonstrative, residuary or class gift.

Each of those are used in different ways to effect slightly different results. A general gift is a gift of property, the funds for which are provided from the estate. For example, you may elect to make a general gift of shares. If at the time of your passing, you do not own those shares, the executors of your will must purchase those shares for the stated beneficiary.

In contrast, specific gifts are made when the part of the estate is clearly distinguishable from the rest of the estate. If you make a specific gift of your shares, and at the time of your passing, you do not own any shares, then the beneficiary will receive nothing from that gift. Specific gifts can also be used to provide for particular assets, such as family heirlooms with sentimental value or valuable jewellery that is specifically identified and described.

A demonstrable gift is a gift of a general nature, which is to be paid out of a particular fund or part of the testator’s estate, and any shortfall is made up from the rest of the estate.

A residuary gift is a gift of the rest of the estate, meaning the entirety of the estate, once all other gifts have been set aside or provided for. If one of the other gifts fails, the property will form part of the residuary estate. If the residuary gift fails, for instance, if the named beneficiary is unable to accept the gift, then the residuary estate will be distributed as though there was no will.

Any of the above gifts can be made to a specified individual, an organisation or even to a class of persons, such as your children, or siblings. Gifts to classes of people can be made per stirpes, which means that each person takes an equal portion of the gift, and in the event that the beneficiary dies before they are able to accept the gift, their heirs will receive the gift in his or her place.

Charitable Gifts

People often make gifts, in some form or another, to charitable institutions. In order to make a valid gift to a charitable institution, the following criteria must be met:

  1. the will must establish with sufficient specificity the institution to which the gift has been given;
  2. the institution should be a charity which has a public purpose, and the trust should be for the benefit of the public; and
  3. if the organisation cannot be identified or is non-existent, whether a charitable intent can be inferred from the will.1 

If there is any ambiguity in the description of the institution, this can cause issues as an executor may be unsure where the gift is supposed to go. In such circumstances, extrinsic evidence may be used to clarify the testator’s intention.

If an organisation named in a will cannot be identified or is non-existent, the court will consider whether a general charitable intention may be inferred from the will. If it cannot be inferred, then the bequest will fail.

Lavan comment

It is important to make sure that your will does exactly what you want it to, and that individuals or organisations named in your will are described correctly and with sufficient specificity. If you have any questions in relation to this article, or require assistance in relation to your own testamentary arrangements, please do not hesitate to contact Iain Freeman.