Leaving something special to a grandchild, niece, nephew, friend or caregiver can be a meaningful way to show love and appreciation. But in estate planning, even the kindest gesture can have unintended consequences if the Will is not carefully drafted.
A specific bequest is a gift of a particular asset or amount of money to a named person. For example, a Will may leave R100,000 to each grandchild, jewellery to a niece, or a vehicle to a nephew. These bequests are usually paid or transferred before the residue of the estate is divided among the heirs. The residue is what remains after debts, estate expenses, taxes and all specific bequests have been dealt with. In many cases, the spouse or children are named as the residual heirs, receiving what remains once the estate has been settled.
This is where problems often arise. Many people assume that a few “small” bequests will not materially affect their spouse or children’s inheritance. However, if the estate is not sufficiently liquid, the executor may need to use available cash or even sell assets to honour those bequests. For example, a second property or an investment account that was intended to form part of the residue may have to be liquidated to meet those obligations. The result is that the spouse or children, who were meant to receive the balance of the estate, could inherit far less than intended; or, in the worst case, be left to cover any shortfall.
Your Will does more than record wishes. It tests whether those wishes can work in practice. It considers liquidity, the order in which beneficiaries inherit, the wording of each bequest, and the effect on those who are meant to receive the balance of the estate.
Your Will may say exactly what you wanted at the time it was signed, but does it still achieve what you intend today? People’s financial circumstances can change quickly, and what once seemed possible, such as leaving special bequests to individuals, may no longer be realistic. We invite you to contact our office to review your current Will, identify potential pitfalls and help ensure that your legacy is passed on as clearly, fairly and practically as possible. When you become our client, we will review your Will annually, to see whether your circumstances have changed. By maintaining this ongoing relationship, we can help ensure your Will continues to reflect your wishes and minimise the risk of not achieving what you intended.