What are bequests, devises and legacies?

June 01, 2022

For beneficiaries of an estate the terms “bequest”, “devise” and “legacy” used in a Will can be confusing. Here are some of the issues that can arise in relation to administration of estates in relation to the various different types of gift.

What is a bequest, devise or legacy?

  • A bequest – a gift of personal property other than land, such as an item of jewellery or a car.
  • A devise – a gift of real property, such as a house.
  • A legacy – used to cover all types of gifts, including property, personal items and cash.

What types of legacy are there?

  • A pecuniary legacy – is a fixed sum left to specific individuals or charities.
  • A specific legacy – specific personal possessions (property or a specific bank account or investment) gifted to specific individuals or charities.
  • A residual legacy – any assets left after the payment of other legacies and liabilities.

When an estate is administered debts are usually paid from the residuary estate.  If there are not enough funds to clear all liabilities, money is taken from the pecuniary legacies, which might mean beneficiaries do not receive the total amount the testator had intended on them receiving.  If there are still not enough funds, assets will be used from the specific legacies to discharge the liabilities.

The importance of understanding how a Will would operate in practice?

A will is a “living” document and it is important you regularly review it to make sure gifts  are kept up to date  to avoid items no longer in your possession at the time of your death being “gifted” in your will.

You should also understand the consequences of gifting various items.  It may be that a property you have gifted is subject to a mortgage at the time of your death.  Consider how that mortgage is to be settled.  Depending on a country’s laws, gifts may be subject to inheritance tax with beneficiaries being liable for tax on that asset.

Consideration should be given to the way in which a gift is described. A Will which provides for a specific legacy of “all my shares in ABC Limited” might have been 10,000 shares at the time of making the will but only 10 at the date of death, in which case this is all the beneficiary will receive as the wording is general.

Clearly identifying the asset will assist as this is what the beneficiary will receive. The Will might say “I leave any car that I own at the date of my death” to a beneficiary.  The beneficiary will inherit whatever car the testator owned on death even if this was a more valuable car than he owned at the time of making the will.

This can cause difficulties if the testator does not own the item at the date of his death.  If the will says “I give a Rolls Royce” to a beneficiary, even if the testator did not own such a vehicle, the executors would need to buy one from the estate funds to fulfil the legacy.

It is important clear instructions are given to your Will Writer so they have a clear paper trail of your instructions to avoid any disputes if someone challenges it following your death.

For free advice to help you make the right decisions, please contact us