Losing a gift

Losing a gift

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Where a person leaves a specific gift to a relative, friend or charity, but it is not properly described and cannot be identified, or the gift is not in existence at the date of death, the relative, friend or charity may well lose the gift. See our 'Gifts and beneficiaries' section for more information.

Uncertainty

A gift may fail for uncertainty if the property cannot be identified from the description in the will. For example, if the testator (someone who makes a will) gives the beneficiary 'a ring' and it is subsequently found that there are a number of rings and there is no description as to which ring has been given to the beneficiary. The gift will fail if it cannot be identified and will form part of the residue (what is left over) of the estate.

A gift may also fail if the beneficiary is not properly identified. This applies both to individuals and institutions.

Not meeting requirements

Where a gift is subject to a condition, it will not only fail if the beneficiary dies before the testator, but will also fail if the beneficiary dies after the testator but before fulfilling a specific condition. The most common situation that arises is where the testator leaves a gift to a child subject to the child reaching a particular age. If the child does not reach the specified age the gift will fail, unless it is protected by a destination over clause leaving the gift to another person or persons (e.g. grandchildren).

Destinations are usually set out in the format to A whom failing B. So if A dies before you then B would inherit. Where you die and the property vests in the main beneficiary A, but then A subsequently dies, two things can happen – it can either pass to B or remain in the estate of A.

For wills executed before 1 November 2016, the presumption of whether or not it should pass to B or remain in A's estate depends on the type of property which forms the inheritance. If it's heritable – a house or land then it passes to B and if it's moveable (money shares etc.) or a mix of moveable and heritable then it remains in A's estate.

However, these sorts of destinations in wills executed on or after 1 November 2016 are treated as remaining in A's estate. If you want a different outcome you need to expressly say so in your will.

Failure

If the beneficiary of a gift dies before the testator the gift will fail. In these circumstances, the general rule is that the gift falls into the residue and does not form part of the beneficiary's estate. If a gift is made in your will to a direct descendant (a child, grandchild, etc.) and they die before you leaving issue (i.e. children or remoter descendants of their own), then unless your will makes it clear otherwise, there is a default rule that the issue will take the share that their deceased parent or ancestor would have taken if they hadn't died before you. If the gift is one of residue and it fails, the property passes under the intestacy rules (see 'Dying without a will'), unless there is a destination over in the will. A gift will not fail if the beneficiary can be shown to have survived the testator, for however short a period, unless inheritance is expressed as being conditional upon the beneficiary surviving the testator for a certain period of time.

If the deaths of the testator and beneficiary occur close together in time it is important to establish the order in which those deaths take place. If two people die together (for example, in an accident) and there is no evidence of the order of their deaths, for the purposes of who will receive the assets, it will be presumed that neither survived the other.

If a will leaves an inheritance to a number of people by reference to the order of their deaths and it is uncertain which beneficiary survived whom (e.g. an insurance policy is payable to the survivor of person A and person B but A and B die in circumstances where it is unclear which one survived the other) then if the deaths occur on or after 1 November 2016, their estates would each receive an equal share. You can override this rule by making express provision in your will for how the proceeds or property were to be distributed in these circumstances.

Destinations over

To prevent the failure of a gift, it may be advisable to include a destination over. This will be included in the will to take effect if the original beneficiary dies before the testator. A typical example would be to leave a gift to a child and if the child dies before the testator then the grandchild will inherit the child's share. Alternatively, you may be quite happy that the gift, for example of a sum of money, falls into residue if the beneficiary dies before you, in which event, you would not include this in the will.

To avoid a situation where it may be difficult to decide who died first, a clause can be inserted which makes the gift conditional on the beneficiary surviving the testator for a specified period (usually 30 days). Such a gift will fail if the beneficiary survives the testator but dies within the specified period. Once again, the testator should consider a destination over in the event of the beneficiary dying within a short period of the testator. If there is uncertainty as to whether the beneficiary has survived you for the stated period, it will be presumed that they did not.

Where a gift is left to two or more beneficiaries equally and to the survivor of them, the gift will not fail unless all these beneficiaries die before the testator. If, for example, one of two joint beneficiaries dies, the remaining beneficiary will take the whole gift.

However, if the wording in the gift indicates clearly that each beneficiary is to receive a specific share of the gift, if one of the beneficiaries dies, the surviving beneficiary will take their share and the other share will either fall into residue, be subject to the intestacy rules if it is a gift of a share of residue or if there is a destination over, the substitute beneficiary will take that share.

Divorce/Civil partnership dissolution

If property or any interest in property is left to a spouse/civil partner and the parties divorce/dissolve their civil partnership (or if the marriage or civil partnership is annulled) after the making of the will, the property or interest in property will pass as if the former spouse/civil partner had died before you unless you make it clear in the will that you still want them to benefit. This rule applies if you die domiciled in Scotland and where the divorce, dissolution or annulment is obtained from a court of civil jurisdiction in the UK, Channel Islands or Isle of Man or is otherwise recognised in Scotland.

A gift that is not yours to give

Where the gift is of specific property that the testator owns when he or she makes their will and the testator disposes of that property during his or her lifetime, the gift will fail. This is because only that specific thing can be gifted. This is known as 'ademption' and the gift is said to be 'adeemed'. For example, the gift in the clause 'My yacht to my friend Natasha.' in the will of a testator who sold the yacht a few months prior to his death for £30,000 is said to have been adeemed. Unlucky Natasha cannot claim the £30,000.

Where the gift is of property that the testator did not own at the time the will was made, it may not be adeemed. Unless the testator merely made a mistake in attempting to bequeath something that the testator thought that he did own, the property that is the subject of the gift may need to be provided out of the testator's general estate; for example, if a testator makes a gift of 4,000 shares in a quoted company in the knowledge that he did not own these, the executors of the estate will need to use money in the estate to purchase such shares, or sell other assets in the estate to raise money for this purpose. The onus of proving that the testator knew that he did not own the asset at the time he made the will is on the legatee (the recipient of the intended gift). There is no automatic presumption that such was the case. Because of that, this is a fairly unusual complication.

The gift, however, even though it is not adeemed, may fail - for example, if (using the above example) the quoted company has ceased to exist by the time of the testator's death.

Problems also arise where the asset is not sold but has changed in nature. This happens most commonly with company shares. The company may have been taken over since the will was made so that, on death, the testator owns the shares in a different company.

In each individual case it must be decided whether the asset has changed merely in name or form or whether it has changed in substance. Only if there has been a change in substance will the gift be lost. It is therefore extremely important in preparing the will that a particular asset is clearly described and the testator must be aware of the risks should there be a substantial change in the asset.