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.
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.
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).
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 the gift is to a child, nephew or niece and the testator has not provided for it to pass to their descendants if they predecease, it is possible that in some circumstances a destination to these relatives may be implied to have been the testator’s intention. In cases like this, legal advice should be sought. 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, the normal rule is that the younger is deemed to have survived the older.
There are exceptions to the normal rule. For example:
- Where the elder has made a Will leaving their estate to the younger but specifying what happens if the younger dies first and the younger has made no Will – here the elder will be deemed to survive the younger
- Spouse and civil partners are also exceptions to the normal rule – here, neither is deemed to survive the other
There is a particular situation where a gift may not fail even though the beneficiary dies, or is treated as dying, before the testator.
This is where the testator makes a gift to their child or a nephew or niece of theirs and that child or nephew or niece dies before the testator leaving a child or children. If that child or those children are alive when the testator dies, the testator’s gift may be treated as if it was a gift to that child or those children. Whether it does or not will depend upon the circumstances. The rule really applies only in cases where it is presumed that the testator did not omit these descendants deliberately but instead through oversight.
A testator can prevent this exception applying by specifically excluding the possibility of benefiting these descendants in his or her Will.
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.
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.
If property or any interest in property is left to a spouse/civil partner and the parties divorce/dissolve their civil partnership after the making of the Will, the property or interest in property will still pass in many cases to the former spouse/civil partner, depending upon the wording of the Will. It is therefore important for a testator to consider this issue when preparing their Will.
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.