When drafting a will, one of the most significant decisions you can make involves the type of gifts you choose to leave behind. Among the various options available, pecuniary gifts provide a straightforward and effective means to ensure your assets are distributed according to your wishes.

Understanding the different types of gifts you can leave in your will can put you in good stead for ensuring your wishes are followed after your death. Being able to structure your will and the gifts you leave behind can give peace of mind for you and your loved ones.

This guide will provide a comprehensive overview of what pecuniary gifts are, their advantages, key considerations, and how to effectively incorporate them into your will. Getting this right will help to make sure that your final wishes are executed with precision and care.

If you have any questions we have not answered, the expert Wills, Trusts & Probate solicitors at Percy Hughes & Roberts Solicitors are happy to speak to you regarding your query and provide the legal services you need. You can contact us by completing the enquiry form below or by calling 0151 666 9090.

What Is a Pecuniary Gift?

A pecuniary gift, commonly referred to as a cash gift, is a fixed sum of money left in your will to be given to a specific person, charity, or organisation. This type of gift is explicitly defined by its exact monetary value, making it straightforward and clear-cut.

This differs from residuary or specific gifts, which may consist of a percentage of an estate or a particular item. A residuary gift is paid from the remaining value of the estate after any debts, pecuniary legacy and other gifts have been paid. This clear difference ensures that the exact, intended cash amount is passed on to the beneficiary after your death.

An example of a pecuniary legacy would be where Mrs Smith would like to leave a lump sum to a charity close to her heart. Mrs. Smith should then include in her will:

“I bequeath £5,000 to Happy Tails Animal Shelter, registered charity number 123456, for their general use.”

This simple clause clearly specifies the gift amount and the beneficiary, leaving no room for error or misinterpretation. If you are concerned about any ambiguity or undesirable consequences of leaving a specific sum as a pecuniary legacy, work with an expert solicitor in preparing your will. They can help to make sure that your will is legally binding and accurately reflects your wishes.

Benefits of Pecuniary Gifts

Pecuniary gifts offer several advantages that make them a popular choice in estate planning:

• Simplicity and clarity: They are straightforward to implement and understand. By specifying the exact amounts to be given, these gifts reduce ambiguity and make the executor’s job easier. This can help to make sure that your wishes are executed precisely as intended.

• Flexibility in distribution: You can allocate pecuniary gifts to a wide range of beneficiaries, including family members, friends, charities, or other organisations. This flexibility allows you to tailor your legacy according to your personal values and relationships.

• Immediate impact: Cash gifts provide immediate benefits to the recipients. Whether by supporting a loved one with a financial gift or enabling a charity to fund specific projects, these gifts can quickly make a significant impact.

• Potential tax efficiency: Pecuniary gifts to charities can be exempt from Inheritance Tax, and potentially lower the overall tax burden on your estate. This not only benefits the charities but also maximises the value of the gifts to your other beneficiaries by preserving more of your estate.

• Avoid disputes: Since pecuniary gifts are clear and specific, they can help prevent disputes among family members over who gets what from the estate. This can be especially important in larger families or in situations where there may be potential for conflict.

In the case of residuary gifts that are based on a percentage of the estate, executors must calculate this value and assign the appropriate sum of money to each beneficiary. This can leave room for doubt among beneficiaries as to whether they are receiving their fair share, and sometimes leads to disputes - even though executors are legally bound to follow the will's instructions. There is much less potential for ambiguity with a pecuniary legacy.

Considerations When Leaving a Pecuniary Gift

While pecuniary gifts are straightforward and offer many benefits, there may also be downsides in some cases. Here are some important considerations to keep in mind when including a pecuniary gift in your will:

• Inflation: Over time, the value of money can decrease due to inflation. A cash amount that seems generous today might not have the same purchasing power in the future. It is wise to review and possibly adjust these amounts periodically to maintain their intended value.

• Estate liquidity: Your estate needs to have enough liquid assets to cover all pecuniary gifts. If most of your assets are tied up in property, shares, or other non-liquid forms, your executor might need to sell these assets to raise the necessary cash, which could complicate the estate settlement and delay distributions.

• Tax implications: While gifts to charities are exempt from Inheritance Tax, other pecuniary gifts may count towards the value of your estate for tax purposes. It is important to understand how these gifts could affect the overall Inheritance Tax liability of your estate.

• Impact on residuary estate: Pecuniary gifts are distributed before the residue of the estate. This means that they can significantly reduce the amount available for residuary beneficiaries. It is crucial to balance fixed cash gifts with the expected size of your total estate to ensure that you do not unintentionally deplete funds meant for other purposes or beneficiaries. If you are concerned about the expected value of your estate, consider leaving a residuary gift instead.

       You can read more about the residuary estate in our guide. 

• Recipient circumstances: Consider the personal and financial circumstances of your beneficiaries. Large sums might impact their situation, such as affecting their eligibility for means-tested benefits. Tailoring gifts to the needs and conditions of each recipient can maximise the benefit they receive from your gift.

It can be complicated to cover every eventuality in your will and to make sure that the gifts you leave behind have the intended effect. Working with a solicitor who is experienced in writing wills can help to make sure you consider all of the possibilities and produce a will that matches your intentions and meets your needs.

How Do I Leave a Pecuniary Gift in My Will?

To include a pecuniary gift in your will, specify the exact amount and the full name of the beneficiary, such as:

"I leave £15,000 to my friend Alice Green of 123 Oak Lane, Anytown."

Consult a solicitor to make sure the gift is properly documented and meets legal requirements. Check that your estate has sufficient liquid resources to fulfil the gift without needing to liquidate assets unexpectedly. Then, you must sign your will in the presence of two witnesses who must also sign, and confirm they witnessed your signature. This process secures the validity of your pecuniary gifts and ensures they are executed according to your wishes.

It is important to review your will periodically, particularly after major life events, to ensure that it still reflects your intentions and that your estate can support the specified gifts.

How Can Percy Hughes & Roberts Help? 

Navigating the nuances of estate planning and the inclusion of pecuniary gifts in your will can be complex. At Percy Hughes & Roberts, we understand that every aspect of your will must reflect your wishes accurately and clearly, especially when it comes to cash gifts.

With our expertise in estate planning, you can be confident that your legacy will be preserved exactly as you intend. Whether you are contemplating how to structure pecuniary gifts, or require comprehensive estate planning services, our expert Wirral wills solicitors are here to offer the guidance and support you need.

If you would like to contact one of our expert wills, trusts and probate solicitors you can do so by calling 0151 666 9090 or by completing the “Get in touch” form on this site.