We are instructed by an Executor and Trustee of an estate and the Will includes a pecuniary legacy which states “I give free of tax a pecuniary legacy of £1,000 to each of my following great grandhildren xxxxx to be paid when they reach the age of 21 years”.
There are 4 beneficiaries and the sum has been invested since 2015 so has a small amount of interest added on.
There is another clause in the Will that states “All income from property subject to the trust of this my Will shall be deemed to accrue wholly on the day when it is actually received and the Apportionment Act 1870 shall accordingly have no application hereto”
Does this mean that the two legatees who are now 21 are entitled to their legacy of £1,000 plus any interest which is to be apportioned to them? Alternatively, does the income belong to the residuary beneficiaries.
There are no further administrative clauses in the Will or STEP provisions.
The legacies are not contingent upon the beneficiaries attaining the age of 21, the will merely purports to delay payment until that age.
The beneficiaries could have called for payment of their legacies immediately upon attaining the age of 18, as they could then give a valid receipt. If the legacies have been set aside and invested, then I believe the beneficiaries are entitled to any income and capital appreciation arising from that investment.
However, if they are still held within the residuary estate, they will be treated as unpaid legacies and the beneficiaries are entitled to the £1,000 plus interest at the rate applicable to legacies from the end of the executor’s year to the date the individual legacies are fully satisfied.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
There has, I believe, been. a significant discussion in the past on the TDF as to when a gift is contingent versus deferred.
I agree with Paul that the present gift is not contingent but simply deferred in time; the gift has vested but with deferred payment; in which case, the gift carries with it a right to receive income.
If the gift was contingent it would not carry with it any intermediate income; such income would be that of a residuary beneficiary.