Planning what happens to your estate after you’re gone is one of the most meaningful decisions you can make. But what is a bequest? A bequest is a gift left in a Will; a way to ensure your loved ones are cared for and your values live on. Whether it’s a cherished heirloom, a sum of money, or a donation to a cause close to your heart, a bequest allows you to leave a lasting impact.
Many people include bequests in their Wills to support family members, honour friendships, or contribute to charities that have shaped their lives. It’s a personal and thoughtful act that reflects what matters most to you. By understanding how bequests work and the ways to structure them, you can create a Will that protects your legacy and provides for the people and causes you care about most.
Read on as we explore the different types of bequests and how to incorporate them into estate planning.
How do bequests work?
Bequests are legally documented in a Will, ensuring that an individual’s wishes are followed after their passing. When drafting a Will, a person (the testator) specifies their bequests, listing beneficiaries and the assets or amounts they will receive.
The executor of the Will is responsible for administering the estate, which includes fulfilling the bequests. This process involves gathering assets, paying off any debts, and distributing the estate according to the instructions in the Will. If a bequest cannot be fulfilled (for example, if the asset no longer exists), alternative arrangements may be outlined in the Will.
It’s important to note that bequests differ from general inheritances. While a bequest refers to a specific gift named in a Will, an inheritance is the broader term for assets passed down, whether through a Will or intestacy laws when no Will exists.
Common reasons for leaving a bequest
People leave bequests for personal, financial, and philanthropic reasons. Some of the most common motivations include:
- Providing for loved ones: Many people want to ensure their family members are financially supported after their passing.
- Leaving a legacy: Bequests allow individuals to pass down wealth, heirlooms, or property to future generations.
- Supporting charities: Charitable bequests enable individuals to contribute to causes they care about, often leaving a lasting impact beyond their lifetime.
- Did you know that you could leave as little as 1% of your estate to Uniting in your Will, which means those closest to you inherit the remaining 99%?
- Honouring a personal or family tradition: Some people include bequests as part of a long-standing practice of giving or supporting particular organisations.
- Tax and estate planning advantages: While bequests themselves may not be tax-deductible, they can be structured to minimise financial burdens on beneficiaries.
Different types of bequests in Wills
There are several types of bequests that individuals can include in their Wills. Understanding the differences can help in structuring an estate plan effectively.
Specific bequests
A specific bequest refers to a gift of a particular asset, such as a house, jewellery, artwork, or shares in a company. For example, a Will might state:
“I leave my diamond necklace to my daughter, Emma.”
General bequests
A general bequest is a gift of money rather than a particular asset. This ensures the beneficiary receives a specified amount, regardless of what assets are available. An example would be:
“I leave $50,000 to my nephew, James.”
Residuary bequests
A residuary bequest involves leaving the remainder of an estate after all debts, taxes, and other bequests have been fulfilled. For instance:
“I leave the remainder of my estate to my spouse.”
Charitable bequests
A charitable bequest is a gift left to a non-profit organisation. These contributions can provide financial support to charities and may be structured as specific, general, or residuary bequests.
Percentage bequests
A percentage bequest designates a portion of an estate rather than a fixed amount. This can be beneficial as estate values fluctuate. An example is:
“I leave 20% of my estate to Uniting.”
Are bequests tax-deductible in Australia?
Are bequests tax deductible in Australia? The short answer is no—bequests left to charities are not tax-deductible. Unlike donations made during a person’s lifetime, which can often be claimed as tax deductions, bequests in a Will do not provide tax benefits to the donor. However, charities receive bequests tax-free, meaning they receive the full amount gifted.
How to leave a bequest in your Will
Understanding how to leave a bequest starts with deciding what you want to give and to whom. Whether it’s a specific asset, a sum of money, or a percentage of your estate, clear instructions help ensure your wishes are followed. Working with a solicitor can provide legal clarity and peace of mind for you and your beneficiaries.
At Uniting we have a Will Planning Checklist that can be downloaded from our website to guide you through the Will writing process.
Choosing the right bequest type
Decide whether a specific, general, residuary, or percentage bequest is most appropriate. This depends on financial goals and how assets should be distributed. The best type of gift you can nominate to Uniting in your Will is a percentage and/or residual gift because both keep their value over time.
Drafting your bequest with legal clarity
Bequests should be clearly worded to avoid misinterpretation. For example:
“I give and bequeath to Uniting (Victoria and Tasmania) Limited, ABN 81 098 317 125 (or its legal successor), for its General Purposes <or state purpose>.” Please check our bequests page for more information.
Updating your Will to include a bequest
Wills should be reviewed periodically and updated to reflect changes in financial situations or personal wishes. This can be done by creating a new Will or adding a codicil (a legal amendment).
Are bequests taxable in Australia?
Australia does not have an inheritance tax, meaning beneficiaries do not pay tax on money or assets received through a bequest. However, certain assets, such as investment properties or shares, may be subject to capital gains tax when sold. Consulting a financial advisor can help minimise any tax liabilities.
What is bequest value? How to determine it
When planning your estate, you may wonder, what is bequest value? Simply put, bequest value refers to the worth of a gifted asset at the time of the testator’s death. Some assets, like real estate or stocks, may appreciate or depreciate over time. Estate executors work with professionals to assess valuations and ensure fair distribution.
FAQs about bequests
What is the difference between a bequest and a gift?
A bequest is a gift designated in a Will, while a gift is given during the donor’s lifetime. Gifts may have immediate tax implications, whereas bequests are distributed after death.
Can I change a bequest after making my Will?
Yes, bequests can be modified by updating your Will or adding a codicil. Seeking legal advice ensures these changes are properly documented.
Can a bequest be challenged?
Yes, bequests can be contested if a person believes they have been excluded from a Will. However, since 2017 the law states you must meet the Eligible Person criteria. This is done by evidence given on oath proving the fact that the person applying to challenge the Will is an Eligible Person. While a husband, wife or child can easily prove their eligibility, for the other categories it may be a difficult task.
What happens if my chosen beneficiary is no longer alive?
If a beneficiary passes away before the testator, the asset may be redistributed according to the Will’s terms, passed to contingent beneficiaries, or absorbed into the residuary estate.
What circumstances usually lead to a person dying without a Will?
The most common reason people die without a Will, or dying intestate, is due to inaction.
- Thinking that they don’t have sufficient assets to justify making a Will
- Being fearful of discussing death
- Intending to make a Will but simply never getting around to it
- Being unable to decide what to do in the Will so doing nothing (for example, not being able to decide who to appoint as guardians of children).
- The administration of an intestate estate requires someone to take responsibility to see it through (because no executor of the Will is appointed).
