Gift Overs in the Northern Territory (NT)
Updated on Jan 10, 2023 • 5 min read • 135 views • Copy Link
Gift Overs in the Northern Territory (NT)
A will-maker (testator) leaves bequests in their will to their chosen beneficiaries. This process allows the testator to ensure that those they love are taken care of in the future. A bequest might be for a specific item such as shares or personal property. The testator can also bequeath the “residue”, encompassing everything that is not otherwise given as a specific gift from the deceased estate. It is best practice for the testator to specify that if their beneficiary dies before they can inherit, that bequest is handed on to a nominated secondary recipient. This type of arrangement is called a “gift over”. This article explains the practice of including gift overs in a will in the Northern Territory.
What are Gift Overs In The Northern Territory?
Sometimes a chosen beneficiary is no longer around to receive their inheritance. This is typically because they predeceased the testator or died before the estate was distributed. Under the Wills Act 2000, a beneficiary can only inherit from a will in the Northern Territory when they outlive the deceased by thirty days.
No one wants to consider that their family members, and especially their children, will predecease them, but the reality is that life is uncertain. It is important to make redundancy arrangements within your will, just in case. In addition to the possibility that a beneficiary may predecease the testator, there is also the potential for a beneficiary to decline a bequest. This may occur, for instance, if the beneficiary had a fraught relationship with the deceased or if they have a moral objection to benefiting from the will for some reason.
How To Include A Gift Over In A Will In the NT
A testator can account for these situations by nominating a second recipient to inherit as a substitute beneficiary. A gift over refers to the fact that the other beneficiary “takes over” the gift from the original recipient. An example of the phrasing of a gift over might be:
I give [e.g. “my diamond bracelet”] to the following beneficiary as survives me [e.g. “my daughter, Elizabeth Anne Darcy”]. If the above beneficiary predeceases me, I give my property to the following beneficiaries as survive me in equal shares: [e.g. “my niece, Mary Kelly Bennett”].
A substitute beneficiary can be one individual or a class of people such as children or grandchildren. For instance, a testator might leave some shares to their son, with an allowance for the shares to pass on to their grandchildren if the son cannot inherit.
A testator should think seriously about their gift over arrangements to take into account likely eventualities. It may not be enough, for instance, to leave everything to a spouse with a gift over to the children. If the whole family dies in an accident, how would the estate be distributed after such a tragedy?
Conditions For Gift Overs
The testator can attach further contingencies to a gift over so that the second recipient only inherits under certain conditions. Contingencies can be conditions precedent (where something must occur before the beneficiary can inherit) and conditions subsequent (where the beneficiary only retains the bequest if they follow the conditions).
In the example given above of a gift over to a grandchild, a testator can make the gift contingent on the grandchild reaching a particular age. Such a condition is common when the grandchild is a minor child when the testator executes the will. When there is a contingency on a gift over, the gift typically does not take effect until the conditions are met. Any conditions attached to a gift over must not be offensive, contrary to public policy, or federal or Northern Territory law.
Doctrine Of Lapse
In many jurisdictions in Australia, a failed gift is subject to the doctrine of lapse. Under a doctrine of lapse, an estate is partially intestate if the will does not completely dispose of all the assets of the deceased estate. Consequently, the intestate part of the estate is distributed according to intestacy law, which may not accord with the deceased’s wishes. However, in the Northern Territory, the Wills Act 2000 makes special provision for failed dispositions. When a disposition is wholly or partly ineffective, the undisposed part of the property reverts to the residual estate. However, this will not apply if the testator made a contrary intention clear in their will.
Making provision for a gift over is an important consideration when writing a will. When a beneficiary is unable to inherit, there should be provision in the will to make someone else the gift recipient. Please contact or call 1300 636 846 to talk to our experienced solicitors with any questions about gift over provisions in the Northern Territory. The team can provide assistance with any succession law matters, from contesting a will to dealing with missing beneficiaries.
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