Does your Will reflect what you want?

Adele Anthony

Adele Anthony

Principal Lawyer at Your Legacy Lawyer

Okay, Carol Smith wants to leave her 500 shares in ABC Limited to her sister Louise.

Carol’s will, as drafted, says: “I give 500 shares in ABC Limited to Louise Smith”.

This is likely to be considered a general legacy because it does not refer to actual property owned by Carol. It is missing the word ‘my’, as in ‘my 500 shares in ABC Limited…’.

You might ask what the difference is.

If the gift is considered a general legacy and Carol does not own 500 shares in ABC Limited at the date of her death, her trustee (executor) must allocate funds from assets in her residuary estate to the value of the 500 ABC Limited shares so that Louise receives this gift.

‘Residuary estate’ comprises anything that Carol owned at the date of her death that she has not specifically gifted to anyone in her Will. Her residuary estate must cover her funeral, testamentary and estate administration expenses, and debts first.

So let us say that ABC Limited shares are valued at $5.50 today – 500 of the shares amounts to $2,750.00.

If Carol died today not owning 500 ABC Limited shares, her trustee would need to take $2,750.00 from assets comprising her residuary estate, and if insufficient, other assets gifted specifically to other beneficiaries. This could mean that a car, antiques, or a house she has gifted to other beneficiaries may need to be sold to cover the $2,750.00 if her residuary estate assets are insufficient to cover this amount.

By way of example, if Carol’s residuary estate consisted only of a bank account with $10,000.00 in it, and after payment of her funeral, testamentary and estate administration expenses and debts have been paid, there is only $1,000.00 in this bank account, it may mean that an asset Carol has gifted specifically to someone (as mentioned above) may need to be sold to cover the $2,750.00 so Louise may take this gift. The beneficiaries may choose to take their gift(s) intact, but they will have to pay for the $2,750.00 in ABC Limited Shares from their own funds to do so.

This could be what Carol wanted, but it might not be.

Changing the Will’s wording to make it a specific legacy: “I give my 500 shares in ABC Limited to my sister LOUISE for her own use and benefit absolutely PROVIDED ALWAYS that should this gift fail for want of a beneficiary, then this gift shall form part of the residue of my estate” changes everything.

If Carol does not own 500 ABC Limited shares at the date of her death, this gift will adeem and Louise will not receive any shares. If Carol owns some ABC Limited shares at the date of her death, then Louise will receive the shares, albeit a diminished amount.

Make sure your Will reflects your wishes.

The above does not constitute legal advice and the persons discussed are not real but merely portray a probable scenario.

If you have any concerns or require legal advice in this regard, please contact Adele Anthony, Your Legacy Lawyer on 0417 012 991 or email at adele.anthony@yourlegacylawyer.com.au.

Be prepared

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