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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Succession: The incidence of debts and legacies: Payment of legacies

There is some conflict in judicial approach as to whether the post 1925 rules relating to the incidence of debts also apply to legacies.

Before the passage of the Administration of Estates Act 1925 pecuniary legacies were payable only out of residuary personalty, unless a contrary intention was expressed in the Will. If that was not enough, the legacies abated proportionately. If there was a gift of residuary realty and personalty together, the personalty would be fully used up before using any of the realty. Only if the testator specifically directed that legacies were to be paid from a mixed fund of realty and personalty would the two be taken proportionately.

After 1925 the position appears to be that legacies are still payable primarily out of personalty unless realty and personalty are given together. General legacies will not abate if there is enough residuary estate of either realty or personalty to cover them.