Contents of Wills—annuities
Contents of Wills—annuities

The following Wills & Probate guidance note provides comprehensive and up to date legal information covering:

  • Contents of Wills—annuities
  • Classification of annuities by Will
  • Methods of providing for annuities by Will
  • Commencement
  • Duration
  • Payable out of income or capital
  • Arrears
  • Interest on arrears
  • Statutory order for payment of debts

An annuity is a sum of money payable periodically, out of personal estate. Savery v Dyer (1752) Amb 139 (not reported by LexisNexis®). It is personalty Parsons v Parsons. An annuity is a legacy and a bequest of such a capital sum as may be necessary to produce the amount of the annuity.

Annuities are sometimes useful if a drip-feed approach is required. They are essentially, legacies payable by instalments for the lifetime of a beneficiary.

The Will should provide if:

  1. the executors have the power to purchase the annuity from the estate's capital assets

  2. the executors set aside a sum from income to fund the purchase of the annuity

  3. the executors set aside a sum from both capital and income to fund the purchase of the annuity

  4. the annuity is purchased during the executors' lifetimes, if they have the funds to do so, the deferred annuity being vested in trustees on death

Depending on the method chosen, there will be differing tax considerations, both capital and income.

Annuities may be created:

  1. inter vivos by deed

  2. by Will

  3. by or under statutory powers

Classification of annuities by Will

An annuity given by Will is a legacy of money payable by instalments, each of which is a separate legacy or a series of legacies payable at intervals.

An annuity given by Will may be classified as: