When writing a Will, people often get confused between distributing their residual estate, and giving specific gifts. To explain the difference between your Estate and your Gifts, we'll need to start off with a few definitions:
- Estate: Your estate is the collection of everything you own at the point of your death. This includes all assets, however big or small, before anything has been repaid or distributed.
- Residual Estate: Your residual estate is whatever is left over from your estate (described above), after all debts and expenses have been paid, and after all specific gifts have been distributed.
- Gifts: The gifts you choose to include in your Will are the specific items, assets, or amounts of money you choose to give to a specific beneficiary (an individual or a charity).
- Beneficiary: A beneficiary is anyone who benefits from your Will, meaning they receive either a gift or a part of your residual estate.
A beneficiary can therefore receive property under your Will in one of two ways:
- They receive a portion of your residual estate (in the âEstate' section)
- By gifting a specific possession or amount of money to someone (in the âGifts' section)
Leaving a beneficiary part of your Residual Estate means they will receive a percentage of whatever is left over from your estate after all expenses, debts and gifts have been paid out or distributed. Gifts, as described above, are the specific items, assets, or amounts of money you express in your Will that are given to an individual or charity.
This means that the specific gifts you allocate will take precedence over giving a beneficiary part of your residual estate. It can be confusing, but here's an example to show how it works in practice:
Sam is writing her Will. She wants to leave her house to her husband, and the rest of her estate (all her possessions, savings, and other assets) to be split between her three daughters.
Sam will therefore leave a âGift' of her house to her husband. She will then move to the âEstate' section, where she will list her three daughters as the beneficiaries of her residual estate. This means that the house will go to Sam's husband, and her three daughters will receive an equal portion of everything else that Sam owns.
If you're still unsure about how this might apply to your personal circumstances, we recommend you seek individual legal advice.