Clauses Recommended To Be Included And Clauses Recommended To Be Excluded From Your Will
Gordon Bowley has practised as a family solicitor for over thirty years. This is his second book aimed at helping lay-people reduce or avoid entirely the exorbitant cost of consulting a solicitor.
YOUR NAME AND ADDRESS
It might seem simplistic to say so, but besides identifying the document as a will, the will should clearly state whose will it is. The usual way to identify the document as your will is to make sure that it says so by including your name and address but, as in most business matters, carelessness can cause confusion and in legal matters confusion equals expense. The first rule should be to give your true names and all your names, even though you do not normally use some of them or you are usually known by a nickname. Do not shorten a name, e.g. Beth for Elizabeth. If you have assets in a name which is not your true name, include that name as an alias. Thus the first sentence of your will might read, ‘This is the last will of me Joseph Anthony Brown otherwise known as Tony Brown of 12 The Street Newtown Essex’. If a parent’s names or a child’s names are exactly the same as yours, include further identification by describing yourself as Junior or Senior or adding your occupation after your address. In the past, when men followed an occupation for life and women were not generally in employment, it was customary when drafting legal documents that a man should always be described by his occupation and a woman by her legal status such as married woman. Today this might be considered discriminatory.
THE DATE OF THE WILL
Always make certain that your will includes the date upon which it was signed and that codicils include their date and also refer to the date of the will to which they are a codicil. This is a great help if you omit to destroy an earlier will.
A REVOCATION CLAUSE
Include a clause to revoke earlier wills and codicils unless you wish the earlier document to stand as well as the one you are currently making. To avoid confusion, if you wish to make only a few additions or alterations to the earlier will, describe the new document as the first, or second as the case may be, codicil to your will dated […]. If you wish to make numerous alterations it is better to revoke the earlier will and start afresh. It might be more convenient to have more than one subsisting will if each is to relate to property in a different country and they will need to be proved in different countries, but if you do so take care to ensure that the revocation clause in the later will is so worded that it does not inadvertently revoke the earlier will.
THE APPOINTMENT OF EXECUTORS
Chapter 4 has dealt with recommendations as to the number and choice of executors. Suffice it to say here that every will should appoint competent, trustworthy and willing executors who are likely to be available at the appropriate time.
ALTERNATIVE PROVISIONS FOR BEQUESTS TO BENEFICIARIES WHO PREDECEASE YOU AND FOR BEQUESTS THAT FAIL
If you make a bequest to someone and that person dies before you, your will will be treated as though it did not contain the bequest, the bequest will fail and the person’s estate will not receive the bequest. In practical terms the effect of the beneficiary dying before you will be that the value of the residue of your estate will be increased by the amount of the bequest unless you include an alternative beneficiary for the gift in your will. If the bequest which fails is a bequest of a share of your residuary estate or of the entire residuary estate, unless you include an alternative beneficiary for the bequest, what is known as a partial intestacy will occur and, although the remainder of your will will take effect, you will be treated as though you have died intestate as far as the bequest is concerned and it will be dealt with according to the intestacy laws.
The same rules apply if a bequest fails for any other reason, for example because the bequest is contrary to the perpetuity law or contrary to public policy.
There are two exceptions to the above rules, namely gifts to charities which show an intention to benefit a charitable cause generally and not just a particular institution, and gifts which come within section 33 of the Wills Act 1837 as amended by the Administration of Justice Act 1982.
Charity is strictly defined for legal purposes and means the relief of poverty, the advancement of education or religion or certain recreational purposes and other purposes beneficial to the community. The definition will be conisderably widened when the remainder of the Charities Act 2006 comes into force (anticipated in early 2008) but there will still be a requirement of public benefit which will not be presumed.
In the case of gifts to charity showing a general charitable intention such as a bequest to be used for research into a cure for a disease, if the charitable intention becomes impractical or impossible to carry out (for example once a cure has been found), a court will order that the bequest shall be used for the benefit of other charitable causes as similar as possible to those you intend unless your will shows a contrary intention.
The amended section 33 of the Wills Act provides that if you leave a gift to your child or other descendant such as a grandchild, and the proposed beneficiary dies before you but leaves a descendant who is living at your death, that first-generation descendant of the deceased beneficiary shall receive the bequest and it will not fail, unless your will shows a contrary intention. Illegitimacy is to be disregarded and any child who has been conceived before your death but born alive afterwards is treated as living at your death.
To avoid the complications, uncertainties and unexpected effects which can arise from the above rules it is better, within reason, to include an express provision in your will to provide what shall happen if your beneficiary dies before you. You can do this by stating that the bequest is given ‘to X or if he shall die before me to Y’ or you might decide to make the bequest ‘to such of X, Y and Z as shall survive me and if more than one then equally between them’. Do not use the words ‘in equal shares’ unless you go on to state what is to happen to the share bequeathed to X, Y or Z if he dies before you. If you wish to leave the bequest to X, Y and Z in unequal shares, include words of accrual such as:
I devise my farm in Devon as to one half thereof to X and as to one quarter thereof to each of Y and Z but if X Y or Z shall die before me the share of the said farm bequeathed to the person who dies before me shall not lapse but shall accrue and be added to the shares of those who survive me and if more than one pro rata so that they shall hold the farm in the same relative proportions.
Alternative wording could be:
I devise my farm in Devon to my Trustees upon trust to divide the same into four equal shares and to hold two of such shares for X a further of such shares for Y and the remaining share for Z provided that if any of the said X Y and Z shall die before me the share bequeathed to him shall not lapse but shall accrue and be added to the other share or shares the trusts of which have not failed.
Of course you may take the view that if a beneficiary dies before you, you will make a codicil or new will, but you might not have the chance if you lose your testamentary capacity or otherwise become seriously ill before, or soon after, your original beneficiary dies.
CLAUSES RELATING TO THE REMARRIAGE OF YOUR SPOUSE OR THE REGISTRATION OF YOUR CIVIL PARTNER’S NEW PARTNERSHIP AFTER YOUR DEATH AND PROVIDING FOR CHILDREN OF YOUR PREVIOUS MARRIAGE OR REGISTERED PARTNERSHIP
People are frequently concerned as to what will happen to their assets if they die and leave a spouse who remarries or a partner who enters into a new registered civil partnership after their death. They naturally do not wish their hard earned assets to be inherited via their spouse or partner by someone they have perhaps never even met and they wish to provide for their children as well as their spouse or partner. The problem is compounded by multiple relationships when the testator wishes to provide for the children of an earlier relationship as well as the second spouse or partner and perhaps children of the second relationship. Usually there are too many beneficiaries and not enough estate!
For the sake of easy reading I will write of spouses and marriage but the same points apply in this section to civil partners and registration of civil partnerships.
One possibility which you could consider is to leave your estate to your executors for your spouse during her lifetime or until she shall remarry and thereafter for your children. A problem with such a provision is that your spouse will only be able to spend the income produced by your estate, because if she spends capital, it will not be there to be inherited by the children after her death. Because many of the fixed outgoings which your spouse and yourself have during your joint lives will continue after your death, for example the costs of running your home, the income of your estate will be insufficient to provide a comfortable lifestyle unless it is supplemented by other income of your spouse or unless your estate is a large one.
Further possibilities that might be of assistance in part are
- to leave non-income bearing assets to the children;
- to leave the matrimonial home to your surviving spouse only during her remaining life;
- to leave the matrimonial home to her only during her widowhood; or
- to leave your estate to your executors and provide that they shall hold it upon a discretionary trust for your spouse and the children and/or other chosen beneficiaries so that the trustees can make payments from the estate to the trust beneficiaries in the trustees’ discretion and according to the beneficiaries’ needs as the trustees see them.
If you leave the matrimonial home to your spouse for life, it could cause problems for your spouse’s second husband after her death, unless the second husband has his own funds out of which he could buy the home from the children or unless he has an alternative home.
By statute there is a presumption that makes an absolute gift of property in your will or codicil to your spouse and an interest in the property for your issue ineffective, as far as the gift to your issue is concerned, unless the document shows a contrary intention. Accordingly to say ‘I give my house to my wife’ and later to say ‘I give my house to my son’ will give your son nothing and it is necessary to say ‘I give my house to my wife for the remainder of her life and after her death to my son’, or words to that effect.
If you choose to leave the matrimonial home to your spouse for life or only during her widowhood or to set up a discretionary trust, you should ensure that you fully understand the tax implications and it is better to have your will drawn up by a professional who is experienced in tax and in the law of wills. You will also need to consider how the furnishings are to be left. If a life interest in the furnishings is to be given, provide that the executors shall take an inventory of the furnishings and of their condition at the date of your death and state who is to bear the cost of insuring them. The problem discussed in this section of the book can be discussed with your spouse and if a reciprocal agreement is reached, mutual wills as discussed in Chapter 3 can be entered into to ensure that the desired result is achieved and one spouse does not cheat upon the other after the first death.
However you propose to leave your estate, you should always bear in mind the Inheritance (Provision for Family and Dependants) Act 1975 which was referred to in Chapter 3.
In Chapter 5 I have written extensively on the subject of mirror wills and mutual wills and I suggest that you refer back to that section and decide whether or not it is appropriate for you to include a declaration in your will as to whether it is a mutual will or a mirror will or whether such a declaration can be safely omitted.
In Chapter 5 I have made some observations upon the use of survivorship clauses in wills. Refer back to them to decide whether or not you should include such a clause in your will.
WHO BEARS THE DEBTS, FUNERAL EXPENSES AND EXPENSES INCURRED IN CARRYING OUT YOUR WILL AND INHERITANCE TAX?
Always make sure that you have made it clear in your will from which parts of your estate you intend your debts, funeral expenses and expenses incurred in carrying out your will shall be paid. In Chapter 5 I have dealt with the circumstances in which legacies are grossed up in calculating inheritance tax and I suggest you refer back to that chapter to decide whether your legacies should be given free of tax or subject to tax.
Unless you state otherwise in your will, inheritance tax in respect of lifetime gifts made less than seven years before you die and inheritance tax on joint or foreign property is borne by the person who receives the property or gift and not by those who inherit your residuary estate, but tax on any other kind of property is borne by those who inherit your residuary estate with the exceptions of your surviving spouse, or your surviving registered civil partner and registered charities. They can never be made to bear the inheritance tax.
GIVING PROPERTY WHICH IS MORTGAGED OR SUBJECT TO A FINANCIAL CHARGE
If you leave property which is mortgaged or security for any other debt such as a local authority charge for unpaid road charges or the cost of keeping a relative in a local authority home, the debt must be paid primarily out of that property unless you show a contrary intention in your will. Merely stating that all your debts are to be paid out of your residuary estate does not in itself show a sufficient contrary intention and you should say that the gift of the property is ‘free from all mortgages and all charges subsisting in respect of it at the date of my death’.
GIVING LIFETIME INTERESTS IN ASSETS
If you leave a building such as your house to someone only for their life, do not forget that you will need to decide who is to be responsible for maintaining the property and paying the outgoings and expenses of occupation such as council tax, water rates and sewage charges, and to set this out in your will. Are such items to be borne by the life tenant or by your residuary estate?
Remember that a life tenant of a property is entitled to live in the property or to have the benefit of the net income produced by the property during their life. Similarly the life tenant of any other trust fund is entitled to the net income produced by the trust fund during their life. If you are thinking of leaving a life interest by your will, consider whether it might be a better idea, in the particular circumstances, to use the principles set out in Chapter 4 in connection with spendthrifts and discretionary trusts and protective trusts instead. You would do this by not leaving the property to the beneficiary for life, but only until the beneficiary dies or goes into a nursing or residential home for the elderly as the beneficiary’s normal residence (whichever happens first). This would prevent the income being taken into account by the local authority in assessing contributions to fees. If you decide to do this you will need to consult a professional lawyer for advice and to draft the will.
ADDITIONAL ADMINISTRATIVE POWERS IN WILLS
There are certain powers the general law does not give to your executors but which you can give to them by expressly including a clause in your will to oil the wheels and make their task of carrying out your wishes much easier. Equally there are powers which the general law gives to your executors which you might not wish them to have and which you can expressly exclude by clauses in your will. I will discuss some of these powers below and include specimens of such clauses in the appendix.
Powers of maintenance and advancement in relation to contingent gifts and gifts to minors
If you make a gift to a person which is only to take effect upon the occurrence of a contingency or a gift to a person who is under age, there are statutory and common law powers for your executors to use part of the gift for the maintenance or other benefit of the person concerned before the contingency has been fulfilled or the beneficiary has come of age. The powers are hedged around with complex restrictions and limitations and it is better to give your executors flexibility by including a simpler and wider express clause in your will.
Powers of investment and borrowing
If there is the possibility that the administration of your estate will continue for some time after your death, for example if by your will you leave a life interest or bequests which are contingent upon the happening of some event such as a beneficiary attaining a particular age, you should consider giving your executors wide powers to invest the assets of your estate and to borrow upon them. The powers otherwise given to them by law are cumbersome.
Receipt clauses for bequests to minors and bequests to organisations
Unless you insert a specific clause in your will to authorise it, a minor has no power to give a receipt for a bequest and unless the minor is married or in a registered civil partnership he cannot give a valid receipt for any income it produces. Therefore, if you have left a bequest to a minor, unless you include a suitable receipt clause, your executors will be unable to hand over the bequest until the beneficiary attains his majority; or unless an expensive application is successfully made to a court to vary the will; if they do so the beneficiary might be allowed to claim and receive the bequest a second time upon reaching the age of 18 and your executors will have to carry the can.
If you leave a bequest to an organisation such as a charity, it makes life simpler for your executors if you include a clause in your will stating specifically which officers of the organisation can give your executors a valid receipt and discharge for the bequest.
Beneficiaries who cannot be found
Sometimes, in spite of all their best efforts, your executors may not be able to find beneficiaries who are named in your will. Section 27 of the Trustee Act 1925 provides that in such a case your executors shall be free to distribute the estate having regard only to claims of which they have notice after making certain searches and giving ‘such notices as would, in any special case, have been directed by a court of competent jurisdiction in an action for administration’. Rather than putting your executors at risk or compelling them to protect themselves by putting your estate to the expense of asking a court what notices it directs should be given, it is better to include in your will a clause setting out a simpler procedure for dealing with the interests of missing beneficiaries.
Limited interests and apportionment of income
If you are leaving a bequest by your will to someone during the beneficiary’s lifetime or for a limited period, your executors will find it very helpful if you insert a clause which relieves them of any obligation to apportion, between the beneficiary and those who subsequently become entitled to the bequest, any income which arises from the bequest and straddles the limited and subsequent periods. This is particularly the case if you leave the beneficiary a life interest in the estate and the executors invest the estate in a spread of investments to minimise risk.
Giving your executor power to carry on a business
A personal representative’s power to invest in or carry on a business is hedged around with restrictions and conditions and unless they are complied with it should be wound up and that should be done within one year. If the business is carried on for longer than one year without complying with the restrictions the personal representatives are personally liable for any debts and losses incurred. If you run or are likely to run a business, consider giving your executors power to carry on either alone or in partnership any business in which you are involved as a partner or proprietor at the date of your death and provide that they shall be entitled to be indemnified out your estate for any debts or liabilities reasonably incurred in carrying on the business. A specimen clause can be found in the appendix.
Giving your executor power to buy things from your estate
An executor has no right to buy property from your estate even though he may offer a good price for it or buy it at auction, unless you authorise him to do so by your will. Giving powers to appoint new or additional trustees After your will has been proved your executors can appoint new trustees to act jointly with them in the administration of your estate should that be necessary, but if you wish you can give that power to someone else.
Excluding the beneficiaries’ power to remove trustees
In essence Section 19 of The Trusts of Land and Appointment of Trustees Act 1996 gives beneficiaries who are together absolutely entitled to trust property and legally competent, power to replace existing trustees with new trustees of the beneficiaries’ choice, provided that there is no one still alive who was given power by the will to appoint new trustees. If you do not wish your trustees to have the power to remove the executor trustees you have chosen, exclude the application of this section from your will. The section applies to all trusts unless it is excluded and not just to trusts of land.
The duty of trustees of land to consult with beneficiaries
Section 11(1) of The Trusts of Land and Appointment of Trustees Act 1996 reads ‘The trustees of land shall in the exercise of any function relating to land subject to the trust:
- (a)so far as is practicable, consult the beneficiaries of full age and beneficially entitled to an interest in possession in the land; and
- (b)so far as is consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or in the case of dispute of the majority (according to their combined interests).’
This section is vague and uncertain in several respects: what is ‘the general interest’ of the trust and under what circumstances is it not ‘practicable’ to consult? Uncertainty leads to disputes and legal disputes are expensive. It is better to exclude the section from the operation of your will. Your trustees do not need statutory authority to authorise them to consult affected beneficiaries before taking major decisions and they are probably always wise to do so in case they are later sued over the decision, whether or not they have a duty to do so. If you trust your trustees, it is better not to fetter their powers. If you do not trust them, appoint someone else instead.
Limiting the extent of liability for acts done in the administration of your estate
You might wish to consider including a clause in your will to exempt non-professional executors from legal liability for their acts and omissions in the administration of your estate unless the acts constitute fraud or gross negligence. Without such a clause such executors, who are unlikely to be insured against negligence in the performance of executorship duties, might well be unwilling to accept the position. Everyone makes mistakes from time to time. Such a clause will not be void on the grounds of public policy, even if the executor drew up the will for you.
Your will should always include what is known as an attestation clause, i.e. a clause which explains the circumstances in which it was signed and witnessed to show that they comply with the requirements of the Wills Act.
Settling old scores
Finally, do not attempt to settle old scores by your will. The probate document will omit anything which is libellous or blasphemous.