Gifting your personal possessions: matters to consider

Gifting personal possessions
You might decide to leave all of your personal possessions to your partner. Or you might decide to gift certain items, or collections, to specific people. We look at the different considerations when gifting personal possessions in your Will.

What are personal possessions?

Under Section 55(1)(x) of the Administration of Estates Act 1925 as amended by Inheritance and Trustees’ Powers Act 2014, personal possession – or ‘personal chattels’ – are  defined as

“tangible movable property, other than any such property which—

consists of money or securities for money, or

was used at the death of the intestate solely or mainly for business purposes, or

was held at the death of the intestate solely as an investment:”

So this definition excludes the categories specifically named and in addition, it excludes intangible property such as digital assets.

It is therefore important to carefully consider whether your possessions fall within this definition or not. If you gift all your personal possessions to someone and you own something that doesn’t come under this definition, it will fall into the residue of your estate.

An example of something that is not a personal possession is a collection of stamps that you purchased solely as an investment, in the hope to sell them at a later date. These would come under the exclusion “held at the death of the intestate solely as an investment”.

Another example of something that is not a personal possession is cryptocurrency such as Bitcoin (see our main article on leaving cryptocurrency).

If you hold assets that don’t fall under the statutory definition of personal chattels, you can either gift them specifically, or amend the statutory definition to include those items.


One issue with gifting personal property is that the gift can adeem – that is, it can fail if you no longer own the property at the date of your death.

An example of this is if you gift your Rolls Royce to your son in your Will, which you later sell and replace with a Jaguar. Even if you used the exact money from the sale of the Rolls Royce to purchase the Jaguar, the gift to your son fails. You can get around this by including substitute wording, such as:

“my Rolls Royce car or any other car that I own at my death”.

Ways to gift

There are various options for gifting personal possessions.  For example:

  • An outright gift of all personal possessions to one beneficiary such as a spouse or civil partner; or a gift to them save for anything you have specifically gifted elsewhere in the Will.
  • A gift to one or multiple persons with a request to distribute in accordance with a letter of wishes. This provides flexibility – you can change the letter of wishes. The letter is not binding but it would be unusual for that person not to comply.
  • An outright specific gift: “I give my Rolex watch to my son Henry” (or, with a substitute gift, “I give my Rolex watch or any other watch I own at my death to my son Henry”)
  • A category of gifts: “I give my collection of Darlington Crystal Vases to my daughter Sarah” (thereby allowing the collection to grow before your death)
  • A collection to multiple beneficiaries (who you can name specifically, or who might be a class). For example, “I give all my jewellery to my children living at my death, to be divided among them as they agree.” With a gift like this you need to consider what would happen if the children don’t agree. For example, you could specify a mechanism for them to choose (oldest first, taking it in turns), or you could specify someone to make a binding decision if they cannot agree within a certain time period (such as a year).
  • Individual items or a collection of items to your trustees to be held on trust.


Whether you are gifting a specific item or a group of items, you need to ensure that the description is certain. A gift, for example, of ‘my painting’ will obviously fail if you own more than one and it is unclear which you are giving! Similarly a gift might fail if you describe it as one thing when it is actually another.

Requests to distribute

A gift to a particular individual (who we will call the ‘original beneficiary’) with the request to distribute in accordance with a letter of wishes is a flexible way to manage your personal possessions. You can change the letter of wishes as often as you like during your lifetime, without any formalities.

The letter is not legally binding – the original beneficiary could in theory keep the gift and refuse to comply with the request. However, this can be a positive point if the original beneficiary is a close personal friend or family member who knows how you would want them to act (and the letter of wishes can further assist with this). It gives them the flexibility to consider whether to distribute based on the potential beneficiary’s circumstances at the time of your death.

Consider also that whilst the Will becomes a public document on grant of probate, the letter is also confidential, so you can gift personal possessions discretely.

Inheritance tax issues with a request to distribute

From an Inheritance Tax (IHT) perspective, if the original beneficiary is not exempt for Inheritance Tax purposes, there will be no additional liability when they later distribute, provided that (a) there is a valid request to distribute in your Will and (b) the original beneficiary makes the distribution within 2 years of your death. (Section 143, IHTA 1984.)

However, if the original beneficiary is an exempt beneficiary for IHT purposes (e.g. a spouse or civil partner) there may be additional IHT if the redistribution is to a non-exempt beneficiary and your estate exceeds your Inheritance Tax allowances. Additionally it will reduce any transferable nil rate band available to the survivor. You may therefore wish to consider whether the gift should be made after 2 years of death.

In this case, the gift is treated as an absolute gift to the new beneficiary by the original beneficiary. This is known as a Potentially Exempt Transfer (PET). If the original beneficiary then survives for seven years, there is no Inheritance Tax consequence. If they die within 7 years, the gift will fall into the value of their estate for IHT purposes (if they survive for between 3 and 7 years, the rate of IHT is tapered.

Alternative you could ensure the original beneficiary was a non-exempt beneficiary, or you could omit the request to distribute in your Will if you were confident that they would comply with your letter of wishes.

Inheritance tax with a letter of wishes but no request to distribute

If the gift is made to an original beneficiary with no request to distribute in your Will, it is treated as an outright gift for IHT purposes (even if you leave a separate letter of wishes requesting that the original beneficiary distribute). If the original beneficiary is a spouse, the spouse exemption applies – no IHT is payable. Therefore this may be a better option where your spouse or civil partner is likely to survive for 7 years as the spouse exemption applies on the original gift, and the subsequent distribution does not reduce the transferable nil rate band available for the survivor.

Inheritance Tax on gifts of personal possessions

If your estate is subject to Inheritance Tax, this is considered to be a testamentary expense that will be paid along with other expenses such as funeral expenses.

You can amend the default position to make a gift of a personal possession subject to IHT but this means that either the recipient has to pay the tax from their own funds, or the gift must be sold to cover the bill. Generally therefore it is unwise to amend the default statutory position.

Capital gains tax on gifts of personal possessions

Any gain in the value of your assets is disregarded on death. Beneficiaries are deemed to have acquired the asset for its market value at the time of death (Section 62(4) of the Taxation of Chargeable Gains Act 1992). For Capital Gains Tax (CGT) purposes it does not matter if the asset increases in value between the time of death and the time your Personal Representatives physically transfer it to the beneficiary.

If however there is a later distribution by the original beneficiary, this is a disposal for CGT purposes if the item has increased in value since death (once any exemptions and reliefs have been applied). Note however that gains will be reduced or eliminated altogether by the annual CGT exemption and chattels exemption. If, despite these exemptions, it appears that a substantial gain may be an issue, it may be appropriate to make a variation.

Costs of looking after and transferring personal items

In some cases there may be costs involved for the trustees in taking care of and transferring personal possessions to your beneficiaries. You may state in your Will that such costs are paid from the estate – otherwise they will be the responsibility of the beneficiary. These include the costs to insure an item, store it and repair it, together with any cost incurred in packing and transporting it where relevant. However, if the beneficiary only has the right to select an item, your estate will bear these costs.

Consider that if you gift to one person with a request to distribute, it may not be clear who the final beneficiary will be. In such cases, you may wish to leave the default position as it is, i.e. the beneficiaries responsible for the costs.

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