When someone leaves an inheritance under the terms of their Will it may be by way of a legacy or alternatively as a share in the residue of the estate.
We look at the difference and why it can make quite a difference to the amount inherited.
When writing your Will you need to decide who you want to inherit your estate and how much each beneficiary will receive. If you don’t leave a Will, then your close relatives will inherit all of your estate, with your spouse receiving the first £250,000 plus all of your personal possessions and half of the remainder, with any children sharing the other half equally between them.
If you leave a Will, you can ensure that your assets are left to those you would like to benefit. You need to be aware of the different ways to leave money and the risks involved.
You can name people in your Will and leave them individual items, known as specific legacies, or lump sums of money, known as pecuniary legacies. These are paid out first, before the residue.
Once all debts and taxes have been paid and all legacies made, the residue is distributed. This can be left to one person or shared between several in named proportions, for example a quarter or a specified percentage.
The risk in leaving legacies first is that by the time the Will is needed, you cannot be sure that your estate will have the same value as it does now. It may be that a considerable sum has been used in care home costs for example, leaving only a tiny residue. This could mean that the person you wanted to inherit the most from your estate in fact only receives a small amount, or even nothing at all.
The executor or administrator under your Will is required to produce estate accounts showing in detail all expenses and taxes that have been paid and all income of the estate. The residual beneficiaries are entitled to see a copy of these accounts and also have the right to challenge them.
If you would like a professional executor to deal with your estate and be responsible for the administration and the preparation of accounts, you can appoint one in your Will.
They will be responsible for collecting in your assets, valuing them, calculating the amount of Inheritance Tax due and distributing legacies and residue to your beneficiaries.
Writing your Will
It is always advisable to seek professional help in drawing up the right Will for you, to ensure that your loved ones benefit from your estate as you wish.
If you would like to talk to one of our expert Will writers, call us on 0117 952 0698 or email us at firstname.lastname@example.org.