Understanding your Estate

There are a number of different assets that could be gifted by your Will. However, there are also a number of assets that may fall outside of your estate and need to be dealt with separately from your Will. It’s important that you know the difference between what your Will can and can’t deal with.

This article will cover the main types of assets that make up your estate and how they can be gifted.

Property

If you own any property or land, whether this is giftable by your Will depends on how you own it.

Property you own solely will always be giftable by your Will. If you own property together with other people, you should be aware that there are two different types of joint property ownership and this will affect your ability to gift your property. These are known as joint tenants and tenants in common.

Joint ownership is the more common type of ownership. If other owners survive you, your share in the property automatically passes to the surviving owners and is not giftable by your Will.

If you want assets to pass to someone other than the surviving owners, for example to a trust or to your children, this type of ownership is not desirable and should own as tenants in common. To achieve your wishes, you may need to change the ownership of joint property from joint tenants to tenants in common. This is a process known as a severance. If you are unsure of the ownership of your property, discuss this with our consultant.

Personal chattels

Personal Chattels is a legal term used to describe your personal possessions. The legal definition is ‘tangible movable property’. This is quite a wide definition that covers a wide range of assets such as jewellery, cars and electrical goods as long as those possessions are not land and property (or a fixture of the property), money, used for a business or owned as an investment.

Money and bank accounts

Money you have in bank accounts is usually giftable in your Will. You could include certain money gifts to people, or perhaps a gift of all the bank account. Should you have any joint bank accounts, it is likely that these will be owned as joint tenants and therefore the contents will pass to the surviving owners.

Financial investments

There is a large variety of different financial investments on offer now. The majority of these will be giftable by your Will, however some of these may be held within a trust and pass outside of your estate. You may need to discuss this with the consultant.

Life insurance policies

Life policy proceeds may form part of your estate and can be gifted by your Will. It is relatively common for these to be placed into trust so that they do not form part of your estate. The intentions behind this are:

• The proceeds do not need to pass through probate and therefore your beneficiaries can receive the proceeds sooner; and
• The proceeds will not be taken into account when inheritance tax is calculated for your estate (unless it is linked to paying off a mortgage).

If life policy proceeds are in trust, you would need to contact your provider if you wanted to change your beneficiaries.

Death in service benefits

Similar rules apply to death in service benefits. These may form part of your estate or may be held in trust and will pass outside of the estate. You should be able to name anyone you want to benefit from the benefits, however the trustees of the death in service benefit have a discretion as to who will receive the benefit. They are not bound to follow your wishes, but in most cases will.

Pensions

Pension benefits that pay out on your death will usually pass outside of your estate and cannot be gifted in your Will. You would need to contact your pension providers to name your beneficiaries. This does mean that pensions would pass free of any inheritance tax.

Businesses

If you have an interest in a business, you are able to gift this in your Will. However, your ability to do this may be restricted by agreements you have in place with other owners of the business. If you own a business, you should discuss this with your consultant.