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Most people have particular wishes about some items they own, usually being either high in sentimental or economic value. In drafting specific gifts into your will to feel comfortable that your wishes will come to pass, there are significant consequences where proper advice is not sought or relied on.
Specific gifts in a will are created by giving an identifiable item to a particular, identifiable beneficiary. This can be contrasted with a ‘residuary gift’ where any remaining assets you have are attributed to an identifiable beneficiary.
An example of a specific gift would be as follows:
I give my Royal Doulton china set with blue, hand-painted periwinkles to Sheridan Bucket.
[Points to those who get the pop culture reference!]
Identifying and allocating specific items in your will can be really important where, for example, you want absolute certainty about the fate of a particular item.
Care should be taken when describing the specific gift. For example, if your intention is that your friend Sheridan Bucket get any of your Royal Doulton china, you should avoid further description so as to narrow the meaning. This is particularly important where, for example, you replace your ‘blue, hand-painted periwinkle’ set with another one of similar quality, but do not update your will with the new description.
While specific gifts can be a key strategy in an estate plan, there are several issues that can occur with specific gifts.
Some of these issues include, but are not limited to:
1. ademption of the gift (meaning the item does not exist anymore and the gift fails);
2. issues around equality, where, for example, beneficiaries are each given specific assets that change in value over time (and the will is not updated);
3. funding issues where, for example, specific cash gifts are left, leaving nothing for the residuary beneficiaries;
4. the associated physical and financial costs of having to update your will when issues relating to the specific gifts change (the item itself changes in nature, value or fails to exist or where circumstances of the beneficiaries and your objectives vary).
Each of the above should be considered when determining the utility of specific gifts in your will.
As an alternative and where appropriate, many people are moving towards using ‘letters of wishes’ or similar to provide non-binding direction about specific items.
Again, specific advice should be obtained as to what is required in each case. Your circumstances and objectives will be the key drivers in any discussion relating to how you should structure your estate planning documents to take into consideration your wishes regarding specific assets.