Abatement of Specific legacies

The Will leaves specific legacy items, car to A, House to B and C equally, Jewellery to D, Shares to E, then residue to F but there are no general or pecuniary legacies. There is not enough residue to pay debts, administration and funeral expenses, so F gets nothing. In what order do the specific legacies abate to cover the shortfall?

There is no protected wording in the Will for any of the legacies to have priority.

As these are individual items given by the Will it may not be fair for the Executor to dispose of just one or more items and leave the others intact to pass over to the beneficiaries, who are not related. House is to be sold so that is the obvious starting point where cash will be available. How does the Executor decide?

Roger Baldwin
Baldwin Wyatt Solicitors, Burnley

Unless the will provides otherwise, the specific legacies will abate in the same proportion.

I.e. if the total value of the specific legacies is £500,100 and the distributable estate is £400,080, the beneficiaries each receive 80% of their entitlement. They can pay cash in to enable them to take the gift, or they can agree to it being sold and receive the balance of the proceeds.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Isn’t paragraph 6 of AEA 1925 Part II Sch 1 relevant?

To discharge the expenses shortfall, both devises and bequeaths are available rateably according to value at date of death.

Malcolm Finney

Thank you both. I understood the AEA legal position that all are liable to abate pro rata, but where these are in specie assets the practical position was the difficult point to advise the Executor if he could choose.

I like Paul’s suggestion of offering the beneficiaries the chance to make up the shortfall personally (pro rata of course) and keep their inherited assets intact. If not enough is raised to clear the required amount then, strictly, all of them would be sold. That would have been very upsetting for some beneficiaries who had a closeness to the specific asset yet limited funds of their own.

In this estate those other specific assets are of much smaller value compared to the house value, so in the end the house beneficiaries have generously agreed to make up all the shortfall alone from the sale and solve the problem.

Roger Baldwin
Baldwin Wyatt Solicitors, Burnley

If some of the beneficiaries only had paid in their pro-rata share of the cash deficit, I believe that it would only have been the gifts to the “dissenting” beneficiaries that would have to be sold. Those who had paid up would be entitled to take the asset(s).

If the disposal of any of the assets for the dissenting beneficiaries had failed to meet their share of the shortfall, then I believe the other beneficiaries would have had to make up the shortfall.

That the specific devisees have agreed to fund the shortfall for the other beneficiaries sounds like a good solution (although they may need to look carefully at their individual IHT positions, if the amount for the other beneficiaries exceeds, say, the small gift or annual allowances)

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals