Our previous article highlighted issues that can arise with gifts made in a Will. The second part of this article will also focus on further issues we have come across with gifts made in Wills.
Gifting a sum of money to the guardian to be used for the children
The testator may want to leave a sum of money to the guardian of their children if they choose to take on the role and for the sum of money to be used for the children’s upkeep. The risk with this is that the guardian could accept the role, take the sum of money that was gifted to then and later decide they no longer want to act as guardian.
The other risk is that the guardian could accept the money, still act as guardian but use the money for themselves.
Resolution: place the sum of money in trust for the children and name the guardians as the trustees as this will ensure the sum of money left will be used only for the children’s maintenance or education.
Gifting the home to the guardian so they can look after the children
This has the same risks as above. Firstly, what if when the testator dies the children are no longer classed as minors as they are over the age of 18? The Will would still gift the property to the guardian if there was no condition in the Will for the gift.
Gifting the home to the guardian would mean the guardian would legally own the home and can do with it as they please. This could include selling the home and keeping the proceeds.
Resolution: gifting the home to the children would mean they would be the legal owners of the property but if the children are still classed as minors when the testator dies, the trustees would likely allow the guardian to live in the property on the basis that it is in the best interests of the children.
Gifting money or a share of the estate to one child instead of both children on the basis that X will financially look after Y
This is something we have come across all too often where a testator may want to gift the share that was due to go to X, to Y. The reason for this could be due to X receiving benefits where the testator would not want the benefits to be affected. Another reason could be because the testator is concerned X would not be responsible enough to look after their own inheritance due to either drug, gambling, alcohol abuse or even the inability to manage their own finances.
The risk this poses is that by gifting to Y, Y would then own the gift and can do with it as they please. It would only be a wish that they would look after X during X’s lifetime. If they fail to do so, X would have no recourse of action against Y.
Resolution: a better option would be to place the gift into a trust for X. This ensures the money would be used for X.
If you have any questions or need any guidance with the preparation of your Will or LPAs, please speak to one of our will writers today
