Individual and joint legacies

Individual

Leaving a gift to a single person, as opposed to a group of people, is called leaving an ‘individual legacy’. Individual legacies can be used for either personal possessions, any assets that you own absolutely, or sums of money.

Individual legacies are most commonly used for leaving gifts to your spouse or civil partner, and for dealing with cash gifts or individual items of personal significance. For a fuller list of the kinds of people who can benefit from individual legacies, please see our page Beneficiaries - who can benefit from your will?

Setting out precisely what each of your beneficiaries will receive can also have benefits in the future. It is particularly useful as a way to assist family members to co-operate, and to avoid problems arising from uncertainty as to how your assets should be distributed.

Individual legacies also avoid any of the potential complications associated with co-ownership. These are explained more fully below.

Joint legacies

An alternative way to give gifts is through joint legacies. A joint legacy is any gift that you give to be owned by two or more people. Generally, the people receiving the gift become joint tenants of the gift. This means that they both own the item completely, rather than owning a share of the gift. They will then be able to choose how to divide the gift between themselves, or continue owning the gift jointly.

Joint tenancy also means that everyone needs to agree on any decisions about the gift. For example, if your left a house jointly to your two children, both of them would need to agree before they could sell the house.

You can also give a joint legacy as tenants in common. This means that each recipient of the gift will own a share of the gift rather than the whole gift. If you would like to leave a joint legacy that is unequally shared between multiple people, your beneficiaries will be tenants in common. It is also possible for people who receive a gift as joint tenants to decide to change to being tenants in common – changing from everyone owning the whole gift, to everyone owning an equal (or unequal) share of the gift. For more information about the difference between tenants in common and joint tenants, please see our page Joint property ownership – when does it form part of your estate? Understanding the difference is especially important if you are planning to leave property as a joint legacy.

What happens if the recipients of a joint legacy can’t agree?

Let’s say that you leave your house jointly to your two children. One of them wants to keep it, while the other wants to sell it. How does the law solve the problem?

Both of your children will own the house as joint tenants and will be the legal co-owners of it. All legal co-owners must agree to any sale of a property before a sale can take place, which can be problematic if your children have different views on what to do with it.

If your children cannot amicably agree about whether the house should be kept or sold, they can apply to the court for an order. The court will consider a number of factors before making an order to resolve the dispute, including:

  • Your intentions when leaving your children the property jointly. This information may or may not be available depending on whether you made your intentions known, or whether you included them in a letter of wishes (please see Letter of wishes for more information).
  • The purposes for which the property is held. Again, this information may or may not be available.
  • The welfare of any minor who occupies the property or might reasonably be expected to occupy the property.
  • The interests of any secured creditor – typically any mortgage lenders with an interest in the property.

After considering these factors, the court will decide whether it thinks that a sale is appropriate or not. If it does, it will make an order for sale and that will bind both of your children.

An order for sale may take one of a variety of forms, such as:

  • an order for private sale;
  • an order for sale by auction; or
  • an order for sale by tender.

These are examples of the sort of order the court might make. If you are concerned about the prospect of any future litigation it is a good idea to explain your intentions in a letter of wishes that can accompany your will.

Assets you can’t divide

While there are clear principles to apply for resolving disputes over property, the issue can be more complicated if you leave a joint legacy of multiple items. For example, if you leave a joint gift of 5 paintings to your two children.

As with property, both of your two children are the co-owners of the five paintings and are entitled to shared possession of them. This means that both of your children should be able to enjoy the paintings, but this may be difficult if they live a significant distance away from each other.

At this point, there are a number of options. They could:

  • agree to divide the paintings between them;
  • keep the entire collection together and take turns to look after and enjoy it; or
  • sell the collection and divide the proceeds between them.

The best outcome is if your children can come to an agreement between themselves as to how the paintings are to be divided. If, however, they cannot agree between themselves, it is possible for one of them to make an application to court for the division of the paintings. Such an application can only be made by someone with an interest in at least 50% of the items in question, so if three people had inherited the paintings (and therefore owned a third each), no one could apply to court on their own.

As with property, if you are concerned about how your beneficiaries will divide property amongst themselves you can set out your suggestions in an accompanying letter of wishes. However, it is important to remember that anything included in a letter of wishes will not be binding on your executors, and if they are also the beneficiaries that will increase the problem. For more information on a letter of wishes, please see our Letter of wishes page.

Making a joint legacy of the residuary estate

While it is a good idea to set out precisely who will inherit any items of high financial value, it is common to leave items that have significant sentimental value to the beneficiaries but which have little or no monetary value (e.g. photographs, trinkets, everyday jewellery etc) to the residuary estate. These items will typically be distributed by your executors, either using their own discretion or aided by a letter of wishes from you.

If you have given thought to who you would like to inherit specific items setting this out in a letter of wishes can be helpful for your executors. It is often the distribution of these items that can cause the most anxiety for beneficiaries, and disputes can quickly escalate.

If you decide to leave your residuary estate to two or more beneficiaries, it will be divided equally between them unless you say otherwise. If one of the specific gifts fails for any reason, that share will be divided proportionally among remaining beneficiaries of the residue (please see our page Failure of gifts for more information).