There are four different types of legacies that appear in a will:
Specific legacy
This is a gift of a particular asset of personal estate such as 'I give to Cats Protection my Fiat 500 car' or 'I give to Age UK my property known as Smith Cottage'.
If the deceased did not own their Fiat 500 car or Smith Cottage at the date of their death, the legacy will fail. This is known as ademption.
If a testator wishes to ensure that a legacy will not adeem, then their will can be drafted on the basis that the beneficiary will receive a replacement asset. For example, this could be 'any other car that I own at my death' or 'any other property that is my sole or main residence at my death'.
Demonstrative legacy
A demonstrative legacy is a gift of a general nature directed to be paid out of a particular fund. Examples of this could include 'I give to Blue Cross £1,000 from my Barclays account' or 'I give to the Salvation Army £250 from my 600 TUI plc ordinary shares'.
Demonstrative legacies do not adeem as they create an intention. If using the above example, the value of the TUI holding was insufficient at death to pay the legacy, either totally or partially, the balance will be paid to the Salvation Army out of the residuary estate.
General legacy
This type of legacy relates to a gift of an item irrespective of whether the deceased owned such an item at death.
For example, 'I give to the National Trust 600 TUI plc ordinary shares' would be considered a general legacy. This is not to be confused with a specific legacy which would be 'I give to the National Trust my 600 TUI plc ordinary shares' or 'all my TUI plc ordinary shares'.
General legacies do not adeem. If the testator did not own 600 TUI plc ordinary shares on death, the executors would have to buy them for the beneficiary or provide the purchase money.
Pecuniary legacy
A pecuniary legacy is a gift of a sum of money, for example: 'I give £50,000 to the RSPB'.
The testator can direct that the legacy is paid 'free of tax' if it is to a chargeable beneficiary (not a charity), and this will be an additional benefit to the beneficiary.
Pecuniary legacies can abate (be reduced) if the estate of the deceased testator is solvent but there are insufficient assets to satisfy all the legacies after paying the liabilities of the estate,
Statutory interest is also payable on pecuniary legacies which have not been paid before the end of the Executor's Year. Please see the below updated table relating to the interest rates payable.
