It was reported earlier this week that Stirling Moss, who died last April, had left a 16 page will. Though the bulk of his reported £22million estate was left to his wife and children, his will included a number of legacies to extended family members and friends. Some of the legacies carried a specific wish from Mr Moss on how the funds should be used. For example a legacy of £1,000 to a couple to enjoy at Joe Stone’s Crab restaurant in Miami and a legacy of £10,000 to his niece to put towards buying another horse.
Although such wishes in wills cannot be binding on the recipient of the legacy, many clients include such wishes, to give the recipient the freedom to use the money for something fairly frivolous without any feelings of guilt for doing so. Such wishes can guide the recipient on how they should use the funds and often are used for the purchase of an item or an experience in memory of the deceased.
Many clients believe their will should distribute their estate to their closest family members, primarily spouses and children or where the client isn’t married to siblings and nieces and nephews. Mr Moss' will shows it is possible to include gifts to extended family and friends.
However it is always important to take advice on the best way to incorporate legacies into a will. In particular advice should be taken on the following points.
It is important to remember that legacies are paid out in priority to the rest of your estate. The will and the legacies in particular should be kept under careful review against the value of your estate. Should your estate decrease in value then you may need to update your will in order to reduce the legacies to ensure there are sufficient funds to pay these while still leaving a residuary estate for your spouse and children. If you are concerned about the estate decreasing in value, then it may be sensible to leave those you were leaving a legacy to a small percentage of the estate, this could be as little as 0.5%. Of course if you leave them a percentage of the estate and your estate increases in value then they may receive more than you originally intended.
It is important to stipulate whether the legacies are paid free of inheritance tax or whether they are subject to inheritance tax. Often legacies in a will, will be below that person’s inheritance tax allowance, their nil rate band, which is currently £325,000. If the nil rate band is available then the legacies will be free of inheritance tax but will use up some of the nil rate band which can affect the inheritance tax position for the remaining estate. However if the deceased has made life time gifts in the seven years before their death and fully used up their nil rate band, then these legacies could be subject to inheritance tax, unless the will stipulates otherwise. If the will states the legacy is free of inheritance tax then the tax due is paid from the remaining estate. Careful consideration needs to be given as to how the tax on legacies will be paid.
You also need to consider what happens if the legatee dies before you. Should provision be made for the gift to be made to their children in substitute or should the gift fail.
Where gifts of particular personal items are being made, the description of that item in the will must be sufficiently detailed that the item can be identified easily.
Mr Moss' will shows that legacies can be seen as a thoughtful bequest to friends and family. However the points set out above show that is not as straightforward as including a few gifts in a will and legal advice should be taken on those bequests.
Sir Stirling Moss' will has revealed a series of surprising gifts and treasured possessions that he left to friends and loved ones. The incredibly detailed list included thousands of pounds for friends to enjoy a dinner at a Miami seafood restaurant, paying off telephone bills, and for some friends to continue 'enjoying our usual nights out'.