If you’re getting organised with estate planning and you're in the process of making a Will, you may be thinking about who to leave an inheritance or gift to when you pass away.
Who you include as a beneficiary in your Will is completely your choice. When making a Will, you might wish to leave specific gifts to selected people or charities. Perhaps you’ll divide your estate (property and assets) among a number of people. Or maybe you'll decide to leave everything to one significant person.
This article provides some options to consider when making a Will.
What is a beneficiary?
A beneficiary is the term used for the person, or people, named in a Will, to be gifted items or receive an inheritance from an estate when someone dies. A beneficiary may either be one person, a group of people. A beneficiary can even be an organisation like a charity.
When making a Will, the terms ‘gift’ or ‘bequest’ are used to refer to what a beneficiary receives from the estate after the Will-maker dies.
Making a Will: Who should I leave a gift to?
When making a Will, there are no prescribed rules or formulas for who to leave the estate to. The same goes for specific gifts or bequests. How you wish to allocate your estate after you pass away is completely up to you.
Some people choose to leave specific items of value (either sentimental or financial) to a nominated beneficiary, or beneficiaries. For example, when writing your Will, you might nominate specific items to particular individuals, such as your car; a specified amount of money or percentage of your bank account; a particular family heirloom or piece of jewellery; or a particular collectible.
If you are writing a Will and considering beneficiaries, you also have the option to leave a part or all of your estate to a charity of your choice. A gift to a charity nominated in your Will may be money, property, or stocks and/or shares.
To learn how to leave a gift to a charity in your Will, read our article on making a bequest to charity, here.
Making a Will: Who should I leave my estate to?
Any part of your estate not gifted as a specific bequest then forms your residuary estate.
Those making a Will, who have a spouse or children, commonly leave them the largest share of inheritance, which is usually the residuary estate.
The residual estate may be left to one person or divided among several people. The split does not have to be even, but you must specify who gets what percentage. For example, if you wish to divide your estate equally between all your surviving children, your Will might state:I direct my Executor/s to divide my Residuary Estate equally between my children <full names of children> as shall survive me.
When should I change who I include in my Will?
A Will should be reviewed every few years, as a person’s circumstances may change over time. If there is a significant change to your personal or financial circumstances - like a change in your relationship or if you have, children - making a new Will allows you the opportunity to allocate your estate to people who are currently significant in your life.
You should also update your Will if you buy or sell a major asset like a house or car. Any items that you’ve listed as specific bequests will need to be updated if they are no longer in your possession.
If a beneficiary predeceases you (dies before you), making a new Will allows you to choose a new beneficiary, or re-allocate their gift among other beneficiaries. If you don’t make a new Will when a beneficiary dies, any items gifted to the deceased person will be added to your residuary estate.
To learn more, visit the Bare Law website or chat with our estate team for a free consultation, on 1800 959 371. This article is not legal advice. You should speak with a legal professional for specific advice on your personal or financial situation.