Will disputes: how to contest a will

Posted on By Liz Skinner

An FT article in January 2024 blamed a ‘boom in asset prices’ and an increase in dementia for a surge in inheritance disputes reaching the Courts in England and Wales.

someone signing their last will and testament

This matched an earlier report, called the UK Inheritance Disputes Report 2022, published by IBB Law. It found that three in four people are likely to experience a will, inheritance, or probate dispute in their lifetime.

So, what causes will disputes, and how do you challenge a will?

Will disputes

Relatives might want to challenge a will for various reasons. They may feel they’ve been treated unfairly or that they’ve not received what they were promised. Often there’s a feeling of being entitled to inherit assets when someone, particularly a parent, dies.

Second marriages can cause will disputes too, when the children of the first marriage feel they’ve been treated less favourably in the will than the children of the second marriage.

There is also increased awareness about financial abuse of the elderly/vulnerable, whether that’s by a relative, friend or carer. Often this leads to will disputes, when family members find they’ve been unexpectedly cut out of someone’s will, in dubious circumstances.

Freedom of disposition

England, Wales and Northern Ireland have ‘freedom of disposition’, which means people are entitled to leave their assets, in their wills, to whoever they want. This compares with other jurisdictions, including Scotland and most European countries, where the law gives close relatives a fixed share of the estate.  

The only limit on the English freedom of disposition is something known as the 1975 Act. This allows you to bring a claim against someone’s estate if you were not left ‘reasonable’ provision in the person’s will. This claim is easier if you were married or in a registered partnership with the person who died. It can also be brought by other family members (usually children) or by anyone else who was financially dependent on the deceased.

The position is very different if someone dies without a will, known as being intestate. Here the law divides the estate between the deceased’s close family, prioritising the deceased’s spouse/registered partner and children. Otherwise, parents, siblings and cousins can potentially benefit.

How to challenge a will

There are, however, only a very limited number of grounds for challenging someone’s will and it is harder than you might think. ‘It’s not fair’ isn’t actually grounds for challenging a will.

If a 1975 Act claim isn’t possible, you can challenge a will if you believe that the person who wrote the will (the testator) didn’t have the mental capacity to do so. As the Mental Capacity Act 2005 contains an assumption of mental capacity, if you want to challenge a will on these grounds, you have to prove the testator didn’t have capacity.

An alternative challenge can be brought if the testator was being unduly influenced by someone else. This might be because they’d fallen under the influence of a carer or neighbour. The most common form of undue influence is between spouses and family members.

There are also formalities that a will must comply with, so you can bring a challenge if (for example) you think it wasn’t signed correctly. Again, you’ll have to find evidence to support your case.

You need legal advice on the process for challenging a will and evidence to support your challenge. The costs of a court application can be extremely high, and it can take years to get to court. You should see if you can discuss things between you and whoever is named as heirs in the will. Most will disputes are settled out of court.

How to avoid a challenge to your own will

The best way to avoid challenges to your own will is to a) tell your loved ones what you plan to put in your will, even if you fear it won’t be what they want to hear, and b) get a suitably qualified advisor to write it. Many will disputes arise because the person making the will didn’t let their family know what they were planning to put in their will or drafted their own will incorrectly.

Jo Summers TEP, Partner, Jurit Law

What are the STEP Standard Provisions?

Posted on By admin

If you have a will, there is a high chance that they will include mention of the ‘STEP Standard Provisions’. But what does this mean?

The STEP Standard Provisions are a set of ready-made clauses that can be inserted into a will. These clauses provide protections and powers that enable the executors or trustees to effectively deal with the estate.

Since they were first published in 1992, the STEP Standard Provisions have become an important element in the drafting of wills, with will drafters incorporating them into countless wills and settlements.

Please note that this article refers to the England and Wales STEP Standard Provisions. There are separate Provisions that cover the law of Northern Ireland.

What is the benefit of the STEP Standard Provisions?

The STEP Standard Provisions give the executors of the will a number of technical and routine provisions and powers to help them to administer the estate properly. They are written in non-technical language, avoiding legal jargon, so they are easy to understand.

Why is this relevant to me?

Your will is an important document that sets out what should happen when you die. A well-written will can provide peace of mind that your loved ones will be provided for after you’ve gone. With such an important document, it is essential that you fully understand everything contained within it.

What are the different versions?

The England and Wales STEP Standard Provisions were first published in 1992. Since then, STEP has published two new editions: the Second Edition in 2011 and the Third Edition in November 2023. The new editions recognise changes in law.

What changed in the Third Edition?

Trust and will legislation has changed since the publication of the Second Edition in 2011, so the STEP Standard Provisions needed to be updated and modernised.

The most significant amendment is the standardisation of the clauses on trust corporations, which take into account wording from the terms and conditions of trust corporations.

Do I need to change my will if they refer to an older edition?

No, you don’t need to change your will if it refers to the First or Second Edition. These editions still remain valid. You should, however, review your will periodically to make sure it remains up to date. When you do this, the edition can be updated accordingly.

How do I know if the STEP Standard Provisions have been used in my will?

If your will includes the STEP Standard Provisions, there will be a statement included as follows (or similar):

‘The Standard Provisions of the Society of Trust and Estate Practitioners (XXX Edition) shall apply’.

If any of the ‘Special Provisions’ are also included, this will be clearly stated, noting which apply.

A qualified will drafting professional should explain the STEP Standard Provisions when they draft your will. If your will includes any of the Special Provisions, each of these should be explained to you so you understand what is included and why. You can ask your will drafter for a copy of the STEP Standard Provisions when you make your will. Alternatively you can find these at www.step.org/step-standard-provisions

Who should I speak to about making/updating my will?

It is essential to think carefully about who you choose to write your will. Although anyone can write a will, there are some factors you can check that your will writer has to give you peace of mind. These include:

  • Specialist accreditations: are they a member of STEP (a full member can use the letters ‘TEP’ after their name) or a another reputable specialist body?
  • Qualifications: Do they hold any specialist qualifications such as STEP’s Advanced Certificate in Will Preparation or the STEP Diploma?
  • Have they told you who regulates them and which relevant professional bodies they are members of? Are they signed up to an ethical code?
  • How much experience do they have in this specialist area?
  • Insurance: Do they have professional indemnity insurance (PII)?
  • Terms of Business: Have they given you a contract that sets out the service they will provide for you? Are the costs transparent?
  • Complaints: Have they told you who you can complain to if something goes wrong?

You can search for a STEP member here.

How to prevent an older person being the victim of predatory marriage

Posted on By Lydia Brita
older woman and carer look out at the sea

Predatory marriage is one in which one party is vulnerable and has been induced to enter into it by the other party who will gain financially from it.

It happens when an older person is targeted either by a male or female predator. It is not a gender specific issue.

Under the law in England and Wales, such a marriage would revoke any earlier will, unless such a will was made in contemplation of the marriage.

Although a predator may be looking for financial reward, it is often not the sole motive. The predator is often clever, cunning and charming, and uses coercion, control and ‘gaslighting’.

A typical case of predatory marriage is illustrated by the story of Joan Blass. Joan was 91, with severe dementia and terminal cancer. After her death in March 2016 Joan’s family found that a much younger man, aged 68, had secretly married her five months previously. This is a common theme. Often family members do not discover that the victim was married until after their death.

Warning signs

Often predators will move into the victim’s home. They try to allay friends and family’s fears by asserting that they are a carer. They can often convince the police, doctors or social services that they are acting in the best interests of the victim. Often a victim is compliant and will have been controlled by the perpetrator to give the ‘right answers’ to public services.

According to government guidance issued in 2022, potential indicators of financial abuse include:

  • A change in living conditions
  • A lack of heating, clothing or food
  • An inability to pay bills or an unexplained shortage of money
  • Unexplained withdrawals from an account
  • Unexplained loss or misplacement of financial documents
  • The recent addition of authorised signers on a vulnerable person’s signature card
  • Sudden or unexpected changes in a will or other financial documents

Often perpetrators will have access to the victim’s bank account by use of a secret PIN number. The victim is often induced to:

  • Change a will
  • Amend a Lasting Power of Attorney or
  • Make financial or property transactions in favour of the perpetrator.

If a solicitor suspects that a client’s instructions are the result of coercion or pressure, they cannot act unless they have satisfied themselves that the instructions are clearly the result of the client’s wishes.

Steps to avoid the issue

If friends or family are concerned about potential predatory marriage then it is possible to lodge a caveat. It needs to be made clear that it is a caveat against a marriage relating to Section 29 of the Marriage Act 1949.

The procedure is relatively simple once a solicitor is aware of it. The problem is that although the relevant form can be obtained from any local Superintendent Registrar, it is very difficult to locate it. The form cannot, for example, be found on the government’s Form Finder website.

Another option is to seek injunctions against the perpetrator, either to prevent a marriage or to prevent contact.

Although legal powers to protect vulnerable older people exist and are effective, they are expensive to implement. The Mental Capacity Act powers can only begin if it is established that the victim lacks capacity to make decisions about contact or marriage.

Conclusion

Practitioners, families and friends of victims need to be alert to the possibility of predatory marriage and financial abuse. They should not be lulled into a false sense of security and think that the victim ‘could never get married because they lack the capacity to marry’. The capacity to marry is a relatively low threshold. As the case of Joan Blass shows, lack of capacity is not always identified by wedding registrars. Be vigilant, be alert.

Stephen Lawson, Head of Contentious Probate at Nicholson Jones Sutton

Probate fee changes in England and Wales

Posted on By Liz Skinner
will, probate

Are you applying for probate in England or Wales? You should be aware of changes to the cost of applications as of 26 January 2022.

What is probate?

In England and Wales, if someone has died, their next of kin, or those named in the will, need to obtain a legal document called a grant of representation, which gives them the legal right to deal with any property, money and possessions. This is known as probate.

The process and terminology differ across the UK – see ‘Elsewhere in the UK’ below.

You can find more information about probate in our article ‘What is probate?’

What are the changes?

The UK government announced in July 2021 that it planned to change the probate fee system. It consulted on the plans, explaining that it would introduce a single fee to cover the cost of delivery without making a profit. The proposed plans were officially enacted in December 2021.

As a result, for estates over the £5,000 threshold, the fee as of 26 January 2022 is £273. This cost is the same whether you apply yourself or you are paying a solicitor to act on your behalf.

As before, there is usually no need to apply for probate if the estate is worth less than £5,000.

Previously the fees were £215 for personal applications, and £155 if you applied via a solicitor.

What is the impact?

While the new fee is a lot more reasonable than earlier proposals, the removal of a lower ‘solicitor rate’ may discourage the use of a probate professional. This could result in more errors, possibly leading to delays or contentious probate claims being made later on.

To avoid these issues, it may be prudent to engage the services of a professional to administer the estate, which would ensure the correct estate searches and checks are carried out.

If you would like professional advice on dealing with probate, you can talk to a TEP, who are experts in inheritance and related issues: https://advisingfamilies.org/uk/find-a-tep/

Elsewhere in the UK

The legal document is called ‘confirmation’ in Scotland and ‘grant of probate’ in Northern Ireland and the process in each country differs slightly from that in England and Wales. You can find out more here:

The threshold in Northern Ireland is £10,000, with an application fee of £261 for estates over the threshold.

In Scotland, for ‘small’ estates with a gross value of (currently) £36,000 or less, executors are entitled to free assistance with obtaining confirmation from the local Sheriff Court. A fee is currently only charged for estates above £50,000, with £266 charged for estates between £50,000 and £250,000 and £532 charged for estates exceeding £250,000.

I’d like to give money to my family or charity before I die. What’s the best way to do this?

Posted on By Joanna Pegum
family group

Here are some of the most common questions from our clients about how best to donate their money and assets:

Modest gifts

You can give away £3,000 worth of gifts each tax year (6 April to 5 April). This is known as your ‘annual exemption’. You can carry any unused annual exemption forward to the next year once.

You can give as many gifts of up to £250 per person as you want during the tax year, as long as you have not used another exemption on the same person.

More people are using these allowances, often to help people out of tight situations through reduced incomes. Keeping a record of such gifts is vital for tax purposes.

It can also benefit your family to make a larger gift now if your asset may increase in value, putting any future gain in the hands of the recipient.

Deathbed Gifts

We have also seen use of so called ‘deathbed’ giving, when people are near to death and know they will not need funds.

If you die and your estate is worth more than the basic Inheritance Tax threshold, your estate may qualify for the residence nil rate band (RNRB) before any Inheritance Tax is due. The person will need to leave some property to their descendants.

The maximum available RNRB in the tax year 2024 to 2025 is £175,000. The RNRB will gradually reduce for an estate worth more than £2 million, even if a home is left to your direct descendants. The RNRB reduces by £1 for every £2 that the estate is worth more than the £2 million threshold. For those who are in a marriage or civil partnership, using the RNRB on first death may be prudent planning.

‘Deathbed giving’ is sometimes advisable in seeking to keep the value of your estate below the £2 million threshold. You need to take into account the effect of the gift on your ordinary Nil Rate Band. We recommend you seek advice on this.

Surplus Income Gifting

Unlike other forms of lifetime gifting, this has no limit. You must be able to prove that the income, expenditure and amount you are regularly giving away is a conscious decision. It must be surplus income, not eat into capital.

Gifting to good causes

People may wish to give charity, the arts, museums, universities, and community amateur sports clubs. Such gifts are exempt from inheritance tax and do not adversely affect your tax position on death as they do not eat into your estate’s ‘nil rate band’ or annual exemption. The ‘nil-rate band’, which is currently £325,000, means that it is taxed at 0% (‘nil’) unless there are lifetime gifts or trusts.

An extra benefit of gifts to charity is that you can claim Gift Aid. Charitable causes can claim an extra 25p for every £1 you give. It will not cost you any extra.

Ask your employer or pension provider if they run a Payroll Giving scheme, so you can donate straight from your wages or pension before tax is deducted.

Assets fat with gain

Valuable items which will make a large profit when sold are an excellent choice for gifting to charitable causes. They are treated as neither a gain nor a loss. For example, historical jewellery collections could be donated.

More controlled charitable gifting

Some people choose to donate on a more personal, controlled, level by creating their own trusts and foundations. This could be a charitable trust, charitable company or Charitable Incorporated Organisation. Setting up lifetime foundations and trusts enables you to set the focus of the charity and work alongside other trustees who will then be able to continue the work after your death.

 Trusts

Although immediate cash gifts can be helpful, for some people, retaining a degree of control is equally important. A trust is the perfect vehicle. It is a mechanism which splits the responsibility for the management of administration of assets from the right to use or benefit from the assets. Trustees control and beneficiaries benefit.

There are many types of trust, but there is almost certainly one which will suit your wishes.

Mandy Casavant is a Partner with RWK Goodman

You’ve got a will… but is it valid and up to date?

Posted on By Joanna Pegum
woman

Many people make a will and think to themselves, ‘I’m ok, I’ve got a will!’ and then don’t give it much further thought. But the problem is, your will can get out of date unless you review it regularly.

As a specialist inheritance dispute lawyer, I only tend to see people when things have gone wrong – really I am a last resort. But I would much rather they didn’t go wrong in the first place. A lot of problems would be averted if people take the time to make sure their will is valid (i.e. get it checked over by someone qualified) and review it regularly.

Let me give you three examples I have come across:

The successful businessman

A very successful businessman owned his own limited company jointly with his brother. He made a will leaving his shares in the company to his brother. They built up their successful company together. For tax reasons, the brothers changed the status of their company – they stopped trading as a limited company and instead carried on as partnership. But my client didn’t think to change his will. This meant that when he died unexpectedly, there were no shares to leave in accordance with the terms of his will, and the brother lost out on a considerable sum.

The single mother

A single mother had two children and left her estate to them. She then had another child later in life and failed to update her will. When she died unexpectedly, her third daughter got nothing and had to make a claim against her sisters.

The homemade will

Another successful businessman made his own homemade will. He included a clause to say his company had to make payments of £75,000 a year to his wife – which it could afford. Unfortunately he didn’t realise that a gift in a will relating to a company is invalid, and has no effect. His wife lost her maintenance for life.

So the message is clear: review your will regularly, ideally using a qualified advisor who can ensure it will achieve the desired effect. That way, it’s unlikely I’ll be needed!

Stephen Lawson TEP is a Partner and Head of Litigation at FDR Law LLP, Frodsham, UK

Probate v confirmation: a comparison of the English and Scottish procedures for executors

Posted on By Joanna Pegum
train leaving Scotland for England

If you are the executor for a friend or relative’s estate, there are some substantial differences to consider, depending whether the estate is in England or Scotland.

The differences reflect the different legal traditions in the two jurisdictions – common law in England, which originated in the Ecclesiastical courts of the Middle Ages, and civil law in Scotland.

Different terms are used

Different terms are also used. The document the court issues for the executors is called probate in England where there is a will; and confirmation in Scotland, whether or not there is a will.

In Scotland, the person who handles the estate is always called an executor. If they are appointed in a will, they are an executor nominate; where there is no will, an executor dative; but both kinds of executor need to seek a grant of confirmation.

Sometimes the Scottish and English terms are different even though they are describing essentially the same thing. The English say real and personal property, while the Scots say heritable and moveable; the English say life interest and remainder, while the Scots say liferent and fee; and the English say administration of estates, while the Scots say executry administration.

What are the real differences?

In England, probate tells the world that the executors named in it are entitled to deal with the assets of the estate because they are named in the will.

In Scotland, confirmation effectively transfers the estate assets to the executors so they can administer them, subject to the terms of the will. Scottish executors step into the shoes of the deceased person (in a legal sense), and they (and only they) can deal with the person’s assets and enforce their rights, for example calling in any debts the estate is owed.

When executors in Scotland apply for confirmation, which uses a form called C1, they must include a complete list of the deceased’s assets in the UK, together with their values. Along with the will, this becomes a public document when lodged in court.

This is not required in England, where the only information that is public is the total value of the estate, both gross and net.

In Scotland, the Sheriff Court issues confirmation, which is a copy of Form C1 with the court order attached to it. The court issues certificates of confirmation so executors can send the confirmation to all asset holders simultaneously. Unlike the office copies of probate, issued in England, these are specific to each asset, and include a description and value as stated in Form C1.

Both probate and confirmation were well established long before estate duty (or inheritance tax) was introduced, and they double up as a tax return for the estate assets.

What happens if other assets are discovered later on?

In England, a person or organisation receiving an office copy of probate has no way of knowing how the gross value of the estate was made up, or what value was given for their asset. Because of this, English executors can deal relatively easily with additional assets that may come to light later, though of course they are required to report them to HMRC where inheritance tax  is payable.

In Scotland, however, executors will usually need to apply to the court for an eik (a Scots word for an addition) or supplementary confirmation, which details the additional assets. Executors need to report all applications for an eik to HMRC before the Sheriff Court will accept them, even if no tax is payable and the original Form C1 did not have to go to HMRC.

Occasionally executors can deal with additional assets of lower value without the need for an eik, but they generally have to inform HMRC, and may be required to produce written evidence that they have done so.

Will this hold things up?

If English executors omit or undervalue an asset in the probate application and the inheritance tax form, which is known as IHT400, they will still be able to deal with the assets by producing the original grant of probate or an office copy.

Scottish executors who omit details of an asset will not be able to deal with it until they have told HMRC and obtained an eik to confirmation.

The Scottish requirement to include a list of all the estate assets in Form C1 makes it simpler in cases where inheritance tax needs to be paid. In England, the IHT400 and supplementary forms request exact details of the estate assets, and English executors have to complete all the forms in full.

As Scottish executors have already set out all the assets and values in Form C1, HMRC accepts inheritance tax returns which simply show the total value for each category of asset, and can refer to Form C1 for the detail.

Your advisor will be able to help you through this process.

Ian Macdonald TEP is Head of Private Client at Wright Johnston & Mackenzie, Glasgow.

‘One day, all this will be yours’: passing on the family farm

Posted on By Joanna Pegum
farmer and cows in countryside

It can be a very proud moment for a parent to look around a farm and to say to their child, ‘one day, all this will be yours’.

Family farms are often passed from one generation to the next and the value of land means that farms can have a considerable value, even if at the time cash is tight. Often two or three generations of the same family work together on the same farm.

But sometimes, unexpected things happen: parents get divorced and remarry, or family arguments drive a wedge between parent and child. In these circumstances, a parent may change their mind and make a new will, leaving property in different shares or, perhaps, leaving it to a new partner.

Can I change my will?

Anyone is generally free to change a will at any time. When making a will under English and Welsh law, a person is entitled to be capricious, whimsical or unfair if they wish to act in that way. Sometimes a new will is made just to reflect a change in circumstances.

An individual is perfectly free to make a promise to leave a property to someone – only to change their mind later. This situation is quite common.

So what’s different for family farms?

Family farms, however, face a unique situation when it comes to owners changing their minds. For example, a property-owning farmer may say to his daughter: ‘one day, all this will be yours’. He promises this on many occasions over a long period of time, and so the daughter continues to work on the family farm and turns down opportunities to work elsewhere (perhaps for a higher wage). This encourages her to stay working on the farm for a low salary precisely because one day the family farm will become hers.

If the farmer later decides to change his mind, this starts to stray into a more complicated legal situation.

If a property owner makes a promise to someone (for example to leave them the farm), and that person relies on that promise and acts to their detriment (for example by turning down the opportunity to work elsewhere for a higher wage), then the property owner can be held to that promise – even if they make a will to the contrary.

This legal principle is known by the slightly unusual word ‘estoppel’.

Sadly, there have been numerous recent cases that have gone all the way to trial in precisely these circumstances: a property-owning farmer has made a promise to leave the farm to a particular beneficiary, only to change their mind later. These are some of the saddest cases to come to court, since they reflect a tragic breakdown of family circumstances.

Try to resolve things amicably

If you find yourself in this situation and promises have been made and then broken, a good lawyer should take steps to try to resolve any family dispute amicably, without the worry, risk and expense of a trial.

Many people embark on a process of mediation in the hope that a family relationship can be salvaged and the work of the farm can continue. Statistically, mediations have a very high prospect of success: in the region of 85 per cent of cases referred to meditation settle, with considerable benefit for family members so that they can meet again around a kitchen table rather than at in court.

Don’t make promises you can’t keep

The best defence, however, is to avoid this sort of situation arising in the first place. It may be tempting as a short-term fix to offer to leave a farm to one beneficiary, rather than to someone else. Sometimes these promises are made on the spur of the moment or in the heat of an argument. These promises can, however, have serious consequences for the future of the farm. In short, promises should never be made unless they can be kept.

Stephen Lawson TEP is a Partner and Head of Litigation at FDR Law LLP, Frodsham, UK

Are you a client of Universal Wealth Preservation?

Posted on By Joanna Pegum
warning sign

STEP has received an unprecedented number of enquiries regarding Mr Steven Long and the companies of which he is a Director, namely Universal Tax Solutions of Dencora House, 34 White House Road, Ipswich, Suffolk, IP1 5LT, which traded as Universal Wealth Preservation. Associated companies include Universal Asset Protection Ltd and Universal Trustees Ltd.

Mr Steven Long, Mrs Melanie Long and Universal Trustees Ltd act as Professional Trustees. Universal assisted clients with drafting and managing trusts, wills and lasting powers of attorney (LPAs), as well as providing secure storage of original documents.

STEP suspended Mr Long’s membership on 1 November 2017, and he was permanently excluded on 5 October 2018, following the completion of the disciplinary investigation into a number of the complaints received.

Universal Asset Protection entered into compulsory liquidation in May 2018, with the business premises of Universal Wealth Preservation having closed several months previously. We do not know nor can we speculate why the business ceased trading.

Clients contacted STEP after they experienced great difficulties in contacting Universal, with no responses to emails, letters or phone calls.

We have been advised by clients that they have been concerned about the management of their trusts, with delays in estate administration and payments from the trusts being made, in addition to being unable to ascertain the whereabouts of their assets, or retrieve original wills and LPAs held in secure storage.

Universal clients now face the realistic prospect that they are unlikely to retrieve original documents or to recover cash assets.

STEP is aware that Suffolk Constabulary is now investigating, and has seized all documents that were held at Dencora House.

We understand from media reports in December 2018 that Steven Long was sentenced to a prison term for contempt of court for refusing to disclose the whereabouts of client assets. This is a civil matter and is not related to the investigation by the Eastern Region Special Operations unit. We understand that criminal investigations are still underway.

In October 2023, we became aware of media reports that two men had been charged by the police in relation to the collapse of Universal Wealth Management.

We understand that Steven Long, 56, of Onehouse, Stowmarket, was charged with three counts of fraud by abuse of position, contrary to section 1-4 of the Fraud Act 2006 and Ray Simpson, 72, of Miranda Do Corvo, Portugal, was charged with one count of the same offence.

Steven Long appeared before Westminster Magistrates’ Court on 8 November where he was charged with three counts of fraud. He did not enter a plea for any of these charges and his case was transferred to the Crown Court. He is due to appear in Southwark Crown Court on 6 December.

Ray Simpson was not able to attend Westminster Magistrate’s Court on November 8 on health grounds. His case was adjourned until 6 December.

What should you do now?

STEP is advising Universal clients to:

  • Seek independent legal advice from an experienced trust and estate practitioner on your options, which may include how to make an application to the courts to replace Mr and Mrs Long/Universal Asset Protection Ltd as trustees, making new wills and LPAs
  • Check whether Lasting or Enduring Powers of Attorney have been registered with the Office of the Public Guardian – call the OPG on 0300 456 0300
  • If not in possession of an original will, make a new one without delay. In situations where someone has already passed away, we understand that Probate Registries are aware of the situation with Universal and registrars will accept a Rule 54 application for a copy of the will to be used. In circumstances where the Universal directors are appointed as executors, registrars will accept a Section 116 application to appoint new executors.
  • Contact the Land Registry to ascertain in whose name your property is registered. Call the Land Registry on 0300 006 0411. We understand that the Land Registry is aware of the issues with Universal.
  • If appropriate, consider whether to make a report to Action Fraud quoting ‘Operation Ardent’
  • Many clients will require Universal Trustees Ltd to sign forms that release them as trustees. In such circumstances, clients’ legal representatives (solicitors and barristers) only can submit a written request for up-to-date contact details to be released to them. Such requests should be made via ardentenquiries@ersou.pnn.police.uk.
  • If concerned by marketing information received or direct approaches from other firms advising you to use their services, consider taking advice from Trading Standards/Citizens Advice Bureau.

STEP has produced an article on what to look for when choosing a trustee.

You can find a full Q&A on Universal here.

If you have any queries, please contact standards@step.org.

Can the gifts I made during my lifetime be challenged after my death?

Posted on By Joanna Pegum
gift in the post

Making lifetime gifts to reduce the value of your estate on death for inheritance tax purposes is a useful way to preserve wealth down the generations.

HMRC allows a variety of exemptions including an annual allowance of £3,000, gifts worth less than £250, wedding gifts, gifts to help with living costs, and gifts from surplus income. Gifts between spouses, gifts to charity and some gifts to political parties are also exempt. Any gifts that do not qualify for these exemptions are known as Potentially Exempt Transfers (PETs) and will affect the donor’s nil-rate-band if the donor dies within seven years. If the value of any PETs made in the last seven years of life is above the value of the nil-rate-band, then the recipient is liable for the inheritance tax due on the gift. It is therefore important to take tax and legal advice before making gifts.

Earlier gifts

When you die, the gifts that you made during your lifetime can be called into account on distribution of the estate by including a ‘hotchpot’ clause in your will. This clause will direct the executors, before distributing the estate, to take into account any gifts you made during your lifetime (from the date of the will or a specified earlier date) that are worth over a specified amount. This can often cause arguments between beneficiaries, however, particularly if you were not transparent about gifts during your lifetime.

Gifts of personal possessions can also cause conflict if you have promised  someone that they will inherit certain items on death, but then give them away during your lifetime. If these items are specifically mentioned in your will, then these gifts will fail on death.

It is therefore vitally important that if you are considering making lifetime gifts, you should properly document who is to get what, preferably by deed, sign it, and get it witnessed to avoid any confusion on your death. At the very least, you should keep a record of gifts that you have made during your lifetime and sign the record. It is good practice to keep any documents about lifetime gifts with your will, so if there are any challenges, the executors will have all the information they need. It will also assist with completing the account for inheritance tax.

How can gifts be challenged?

A lifetime gift can be set aside on your death if it can be shown that you were unduly influenced into making the gift, or that you lacked the mental capacity to do so.

There are considered to be two types of undue influence:

  1. Actual undue influence, i.e. overt acts of improper pressure or coercion.
  2. Presumed undue influence – this arises from the relationship of trust and confidence between the donor and the recipient.

Lawyers are seeing an increasing number of challenges to gifts on the basis of undue influence, so again, it is important to clearly document your intentions when making gifts to ensure they are not challenged on your death.

If you are concerned about the tax or other implications of making lifetime gifts, you should speak to a qualified practitioner, who will be able to provide you with advice and recommendations based on your specific circumstance.

Andrea Jones TEP, senior associate, and Paula Myers, Partner and National Head of Will, Trust and Estate Disputes at Irwin Mitchell Private Wealth, Leeds.

What happens if there is a dispute over the wording in a will or trust?

Posted on By Joanna Pegum
argument

There is a long history of courts deciding disputes over words in wills and trusts, and  what the court looks for in every case is what the person who wrote the document actually meant by the words used. They will consider:

  • What normal and natural meaning do the words have in the context of the document?
  • Looking at the document, is there any indication as to what meaning the words were meant to have?
  • Is there any other evidence that throws light on the context of the words or the meaning intended (though not all such evidence can be used)?
  • Can the words be shown to be clearly contrary to what the person meant? If so, the document may be capable of being altered (rectified) to reflect what was intended.

The judge will consider the words and any relevant evidence and will come to a decision.

What role do I play?

If you are one of the executors, or one of the trustees, your concern may be only to ensure that you do the right thing and that the argument is resolved. If that is the case, then you should not take sides, but only take the necessary steps to ensure the argument is heard or resolved.

However, if you are pressing for one interpretation over another, then you will need to act positively to ensure your argument is heard. Do not rely on the executors or trustees to argue your case for you.

Will we have to go to court?

No. These days there are many ways of avoiding things going to court. Parties can enter into a mediation, at any stage, so that they can try and agree things between them. Or they can ask a skilled person, or even a judge, to give an early indication of the likely outcome, so they can then try and agree. This is known as an Early Neutral Evaluation.

It is possible that after an agreement is reached, a court may need to approve the decision taken, for example on behalf of children. However, that is a much easier process than arguing it all out before the court.

What about all the costs?

Sometimes it is considered that as the argument needed to be resolved, the costs can be paid from the estate or trust.

However, the modern tendency is to order the party who is perceived to have lost the argument to pay all the costs. That can be a very significant sum, so there’s a very good reason to try and resolve the argument early on.

Richard Dew TEP, Ten Old Square Chambers, Lincoln’s Inn, London.

Laws that protect vulnerable people in Jersey

Posted on By Joanna Pegum
older woman and carer look out at the sea

In Jersey, two laws brought into force in recent years have radically changed the approach to estate planning for vulnerable people. They are the Capacity and Self Determination (Jersey) Law 2016 (the Capacity Law), and the Signing of Instruments (Miscellaneous Provisions) (Jersey) Law (the Signing Law).

Highlights of the Capacity Law include lasting powers of attorney (LPAs) and statutory wills, which are for those who lack capacity to make a will themselves.

Lasting powers of attorney

The new law empowers Jersey residents to plan ahead and set out how they would wish for their affairs to be organised, if they are unable to do so for themselves.

For the first time, a Jersey resident can grant an LPA, which, in addition to health and welfare issues, can be used to deal with their property and financial affairs if they lose mental capacity.

The Capacity Law expressly provides for the recognition and enforcement of LPAs that have been created and registered elsewhere in the ‘British Islands’.

Jersey’s States Assembly is anxious for all residents to create LPAs, and intends them to be much simpler than those in use in England and Wales, with an online system available for users. The States Assembly is aware that simplification and accessibility should not be at the cost of safeguards against abuses of LPAs, and recommends taking professional advice for anyone creating one.

Making a will on behalf of someone else (a statutory will)

For the first time, statutory wills are now available in Jersey. The island’s Royal Court now has the power to direct that a will may be executed on behalf of a person lacking testamentary capacity. However, any such applications to the Royal Court cannot include immovable property outside the island, such as a home in England.

Execution of documents

In addition to the Capacity Law, the Signing Law has also come into effect.

The Signing Law is the result of uncertainty in Jersey law concerning the effectiveness of signatures put to documents on behalf of physically incapacitated persons.

The new law ensures that vulnerable islanders, by reason of physical incapacity, are not deprived of their rights and will ensure that they can execute wills, powers of attorney, LPAs and affidavits.

These developments will empower the vulnerable in the island’s population and those who support them.

Donna Withers TEP is Head of Probate and Wills at Bedell Cristin, Jersey

Can the courts make a will for someone who doesn’t have mental capacity?

Posted on By Joanna Pegum
elderly man in snow

In England and Wales, the Court of Protection has the power to make a decision on a person’s behalf regarding their property and affairs, if they lack the capacity to do so (using the test for capacity set out in the Mental Capacity Act 2005).

The Mental Capacity Act expressly states that the Court of Protection can order that a will (or codicil) can be executed on behalf of a person lacking capacity. This is known as a ‘statutory will’. While the court has this power, no-one else does, so that a will executed by a person’s attorney or deputy without the court’s approval will not be valid.

When is it appropriate to ask the court to make a will on somebody’s behalf?

There are a number of circumstances where this would be necessary or desirable; for example:

  • Where someone has not made a will before they lost capacity and the intestacy rules would not make appropriate provision for their family and dependants;
  • Where someone has made a will but their circumstances have changed, so the will no longer makes appropriate provision for their beneficiaries; and/or
  • Where there are doubts about the validity of a will made by the person before it was confirmed that they no longer had capacity, and it is thought desirable for the court to make a further will in their lifetime, which may help avoid litigation after their death.

Who can make an application to the court?

Anyone can make an application, although most are made by a person’s appointed attorney or deputy, a beneficiary under an existing will or the intestacy rules, or someone seeking to become a beneficiary under a proposed statutory will.

How does the court make its decisions?

Once the court has established that a person does not have capacity, then it will consider whether or not to make the statutory will on their behalf.

It applies the same criteria as any other decision relating to a person’s property and affairs, and asks whether it would be in that person’s ‘best interests’ to execute the will on their behalf.

In reaching a final decision the court will take into consideration a variety of matters, including evidence of a person’s past wishes and feelings, their testamentary intentions and the views of their friends and family.

Mark Lindley TEP is a Partner in the private client team at Boodle Hatfield LLP, specialising in disputes relating to wills, trusts and mental capacity

What is a deceased estates notice?

Posted on By Joanna Pegum
man reads newspaper

If you’re acting as the executor of a will, before you distribute the estate to beneficiaries, and after you have gained grant of probate (or confirmation in Scotland), you will need to consider claims from creditors against the estate of the person who has died.

How can I tell if the deceased had hidden debts?

For most estates, even if you think you’re familiar with the affairs of the deceased, you can’t be sure that all creditors have been identified.

Many people now conduct much of their financial affairs online, and this poses a growing risk for executors of a will. Even if you had a close relationship you may be unaware of the deceased’s online accounts, including shop and credit cards.

As an executor, you’re liable for debts that belonged to the deceased, so you may have to pay these once they’ve been claimed and proved. You are covered, however, if you place a deceased estates notice in The Gazette and in a newspaper that’s local to where the person lived.

You can find deceased estates notices that have been placed in the London, Belfast and Edinburgh Gazettes here, as well as the latest list of newspapers by district. You can do this via The Gazette or contact newspapers direct.

Which laws does a deceased estates notice relate to?

In the UK, this protection from creditors and potential beneficiaries comes from a statutory advertisement that is referred to within the Trustee Act 1925 in England and Wales and the Trustee Act 1958 in Northern Ireland, as well as the Confirmation of Executors (Scotland) Act 1823.

While it’s not a compulsory notice, and not every executor places one, it’s recommended as an act of due diligence, and for the executor’s peace of mind.

How does a deceased estates notice work?

Once you’ve placed the deceased estates notice in The Gazette and in a newspaper, claims can be made for a limited period, namely for two months and a day.

After this time, you’re considered to have made enough effort to locate creditors and potential beneficiaries before distributing the estate. As the executor, you will not be held liable for any unidentified debts after this time.

Is placing a deceased estates notice essential?

It’s not a legal requirement to place a deceased estates notice, but it is advisable, and most solicitors place them as a matter of course (in a 2016 Gazette survey, 80 per cent of probate professionals always placed one if acting as professional executor).

If you don’t place a notice, and a creditor subsequently comes forward after the estate has been distributed, you may have to pay an unidentified debt, for whatever that amount may be.

How much does a deceased estates notice cost?

See the latest pricing for placing a deceased estates notice in The Gazette and in a newspaper local to the deceased here.

You can recoup the cost of the notice from the estate before assets are distributed.

When should I place a notice, and how do I do so?

You can place a deceased estates notice once you have at least one of the following as proof, where applicable:

• Grant of probate
• Letter of administration
• Death certificate

To place a notice in the Gazette, you’ll first need to register and then go to Place a deceased estates notice. If you don’t want to publish your personal address for claims, you can use a PO Box forwarding address.

For more information on what to do when someone dies, see The Gazette’s probate checklist.

I am unhappy with the personal representatives administering an estate. What can I do?

Posted on By Joanna Pegum
Annoyed

As a beneficiary, you have the right to challenge the personal representatives (often known as ‘executors’) of an estate if you have concerns as to whether they are administering it properly.

A personal representative may be liable for the mismanagement of the estate, a breach of trust, or a breach of their fiduciary duty. Assets held by to personal representatives on trust for the beneficiaries of the estate and there may also be other express or implied trusts on which they hold the estate.

How can I establish if they are doing something wrong?

In order to establish whether something has gone wrong, you need the relevant information. As a beneficiary, you are entitled to receive copies of the estate accounts. If your request is declined by the personal representatives, then provided a grant of probate or letters of administration have been issued, an application can be made to court for the personal representatives to fulfil their obligations.

What can I do about it?

If you discover that a personal representative has not been administering the estate appropriately, and you have exhausted all other avenues of possible settlement, you could consider issuing proceedings against the personal representatives for the estate to be restored on the basis that they have acted in violation of their duties to the beneficiaries.

You should consider whether the act complained of is a devastavit (breach by the personal representative of their duty to administer the estate), a breach of trust, or a breach of fiduciary duty, and whether the personal representative is covered by professional indemnity insurance or has assets in their own name to render a claim commercially viable. There may be an exculpatory clause in the will that the personal representative is able to rely on.

In certain cases it may be that an application for the removal of the personal representative is necessary, and this again would involve a court application.

Seek advice

If you are considering taking action against a personal representative you should seek professional advice from a qualified practitioner who specialises in contentious estates. They can consider your case, examine all options and advise on the best course of action.

Caroline Miller TEP is a Partner and Head of the Private Client Team at Wedlake Bell in London, UK.

Could my will be challenged by friends or relatives after my death?

Posted on By Joanna Pegum
family on bench

Under the laws of England and Wales, an individual has complete testamentary freedom. This means that you have the right to leave your estate to whomever you choose.

Certain classes of family members and dependants can, however, potentially challenge your will after your death under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act), if they feel that inadequate provision has been made for them.

On what grounds could someone make a 1975 Act claim?

In order for someone to commence a 1975 Act claim, they would need to show that they have maintenance needs and the provision they have received from your estate is not reasonable to meet those needs.

Where, for example, your children are grown up and self-sufficient, their ability to use the 1975 Act is limited: just because they feel unfairly treated, does not mean that they are necessarily entitled to a bigger slice of the pie.

How much could they claim?

The level of provision that a claimant bringing a claim under the 1975 Act can hope to receive from your estate will depend on whether they fall within the category of spouse or civil partner, or one of the other categories, which includes: former spouses or civil partners, your children, someone you treated as a child, or someone who you maintained prior to your death.

Your spouse or civil partner could expect to receive from the court ‘such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that is required for his or her maintenance’.

For all other categories of claimant, they could expect to receive such provision as would be reasonable for them to receive for their maintenance only.

How can I avoid my will being challenged?

The best way to avoid your will being challenged after you die is to consult a professional advisor, who can consider your circumstances and ensure you have done everything reasonable to prevent this eventuality.

Caroline Miller TEP is a Partner and Head of the Private Client Team at Wedlake Bell, in London, UK

What is a discretionary trust, and when would you use one?

Posted on By Joanna Pegum
woman looking thoughtful

A discretionary trust means trustees have the discretion to decide who benefits from the trust, from a list of potential beneficiaries.

They can also decide when payments are to be made, how much, and how often.

Discretionary trusts are very flexible and can have many uses. For example you might not know how much your beneficiaries might need in the future, so you can leave that responsibility to the trustees.

Personal injury trusts

Another good use for a discretionary trust is a personal injury trust, which can be set up by, or on behalf of, someone who has received compensation from a personal injury claim so that they don’t lose eligibility for their benefits.

Protecting other members of your family

Before 2007, when the law changed, it was common for spouses to make wills leaving the inheritance tax allowance (currently £325,000) to a nil-rate band discretionary trust, so the surviving spouse or civil partner could make use of their allowance after the first spouse died.

While this is no longer necessary, thanks to the transferable inheritance tax allowance between spouses or civil partners, it is useful to include such a trust in your will to provide for other members of the family. If there are assets which are likely to increase in value at a faster rate than the inheritance tax allowance, these could be included in the trust to mitigate inheritance tax on the estate of the surviving spouse/civil partner.

The main disadvantage of a discretionary trust is that any income which is produced from trust assets is taxed at a higher rate of income tax (currently 45%); however, beneficiaries who are basic rate tax payers can claim a tax rebate.

Taxes on trusts

If the value of the trust exceeds the inheritance tax allowance, there may be inheritance tax to pay when any assets are transferred to the beneficiaries (exit charge) and on each ten-year anniversary of the start of the trust (principal charge). The calculations for the exit charge and principal charge are complex, but the rate of tax is lower than the rate of inheritance tax and the maximum rate of tax payable is 6%. See Can I really use a trust to avoid inheritance tax? for more information.

Discretionary trusts are often set up by a will, but they can also be set up during someone’s lifetime. If the gift into trust is under £325,000 and no other gifts have been made, there will be no immediate lifetime inheritance tax charge.

It is worth noting that the inheritance tax residence nil-rate band, which came in to effect in April 2017, cannot be claimed if the deceased’s residence passes into a discretionary trust. This is because it must pass to direct descendants and cannot pass into trust (see What is the Residence Nil-Rate Band? for more information). However discretionary trusts are still useful tools to consider as part of estate and trust planning.

Tina Wong TEP is a Solicitor at Pothecary Witham Weld in London

Divorce and the effect on wills in Scotland

Posted on By admin
divorce, will

Finalising a divorce is a vital time to bring your personal affairs up to date – particularly your will, power of attorney and potentially your title deeds.

Many people assume that divorce will automatically invalidate a will, power of attorney or Survivorship Destination, but that is only part of the story.

Although the law has tried to accommodate the likelihood that people will not wish their ex-spouse or civil partner to benefit from their estate, the legal treatment of existing arrangements can potentially give rise to a further set of complications, which can easily be avoided by carrying out a review with a qualified advisor.

Changes to Scots Law

Under Scots Law prior to November 2016, a divorce had no impact on a will, but recognition of the change in families and relationships has resulted in recent changes to modernise Scots Law and bring it more in line with other parts of the UK. Now, like the rest of the UK, an ex-spouse or civil partner is treated as though they have died before the granter of the will. In other words, the will is not automatically revoked but instead it is read as it stands, but ‘missing out’ the former spouse or civil partner.

Why do you need to review your will?

Although a step in the right direction, this can leave your will in a bit of a mess, for example:

  • an appointment of your former spouse or civil partner as executor, trustee or guardian of children will fail, unless the will specifically states otherwise;
  • if the will does not provide for an alternative executor, an appropriate person (usually another beneficiary) will have to apply to the Court so that the estate can be administered;
  • if you have made legacies solely to your ex-spouse or civil partner, these will fail and they will fall into the residue of estate; where there is no substitute beneficiary, the estate may be intestate and will have to be claimed by eligible family members.

As a result, you will need to undertake a review of your personal affairs on divorce or you run the risk of a complex estate, which is not administered as you would have wished.

Dara Richards is a Private Client Associate, Notary Public and Solicitor for the Elderly at Ledingham Chalmer

What is probate?

Posted on By Louise Polcaro
will, probate

In England and Wales, if someone has died, their next of kin, or those named in the will, need to obtain a legal document called a grant of representation, which gives them the legal right to deal with any property, money and possessions. This is known as probate.

The process and terminology differ across the UK – see ‘Elsewhere in the UK’ below.

If they left a will

If the deceased left a valid will, this will explain where their possessions, money and property should go. You will need to locate the original will, which might be stored in the person’s home, bank or with their solicitor or legal advisor.

If there is a will, contact the executors named, who will be responsible for obtaining the grant of probate. If you are an executor yourself, you’ll need to complete a probate application form and inheritance tax form which can be submitted online to the central probate registry.

You can either do this yourself, or instruct a qualified advisor to act on your behalf.

When the grant of probate is obtained, the assets may be sold, resulting in a lump sum to go to the beneficiaries, i.e. those named in the will. Before the estate is distributed, all debts and expenses should be paid. If inheritance tax is due, this will also need to be paid.

If no will was left

If there is no will, the deceased has died ‘intestate.’ The next of kin, or if there is none, the legal advisor or person appointed by the court, will need to apply for a ‘Grant of Letters of Administration’ before the estate can be distributed. If the grant is given, they are known as ‘administrators’ of the estate.

The deceased’s spouse or civil partner will usually inherit the estate in this case. However if there is none, a set of rules known as the rules of intestacy will determine who is to benefit from the estate.

Probate fees

In England and Wales, there is usually no need to apply for probate if the estate is worth less than £5,000. There is an application fee of £155 for estates over the £5,000 threshold, with a £60 fee added if you apply yourself rather than via a solicitor.

Elsewhere in the UK

The legal document is called ‘confirmation’ in Scotland and ‘grant of probate’ in Northern Ireland and the process in each country differs slightly from that in England and Wales. You can find out more here:

The threshold in Northern Ireland is £10,000, with an application fee of £261 for estates over the threshold. An extra £65 personal application fee is charged if you apply for the grant yourself, without using a solicitor.

In Scotland, for ‘small’ estates with a gross value of (currently) £36,000 or less, executors are entitled to free assistance with obtaining confirmation from the local Sheriff Court. A fee is currently only charged for estates above £50,000, with £266 charged for estates between £50,000 and £250,000 and £532 charged for estates exceeding £250,000.

Can you change a will after someone has died?

Posted on By admin
man looking concerned

Following the death of a friend or loved one, it may be necessary or beneficial to change the will. This may be in order to increase the size of a gift to someone, redirect it or even to adjust the will to take advantage of recent tax changes.

In the UK, changes can be made by a simple document called a Deed of Variation.

Common reasons for making a Deed of Variation

Some common reasons are listed below:

  • Someone in the family has been overlooked
  • A beneficiary has not been provided for adequately
  • Someone may have a valid claim against the estate
  • To reduce inheritance tax
  • To move assets into a trust
  • To resolve any discrepancies within the will
  • To give gifts to charity

How do I make a Deed of Variation?

Making a Deed of Variation is fairly straightforward, as long you do it within two years of death and all of the relevant beneficiaries contained within the will agree to the changes.

In theory, to vary a will you can just write a letter. It does, however, need to include a number of elements to ensure it meets the requirements of the Inheritance Tax Act and the Taxation of Chargeable Gains Act. A checklist is available here.

If the variation means there’s more inheritance tax to pay, you must send a copy to the UK’s tax authority, HM Revenue and Customs (HMRC) within six months of making the deed.

Minors who are beneficiaries cannot consent to a deed of variation so the beneficiaries may need to go to court to obtain consent on their behalf. Once the deed has been consented to and executed by the beneficiaries, they will not be able to claim their inheritance back.

If you are unsure about any aspect of varying a will, speak to a qualified advisor, who will ensure all requirements are met and prevent any disputes from arising.

It’s never too soon to make a will

Posted on By admin
young man with cat

What have you got planned for later life? A cruise might be nice, or a cottage by the sea, but what about money? Do you know if you could afford a care home? Have you made a will? Do you know who would care for your family?

If your answers are no, you’re not alone. Apart from having a pension, research from savings organisation NS&I has shown that over half of us have not made any further financial plans.

More than a third haven’t made provision for long-term illness, nursing or care home fees, either for ourselves, or for other family members. Another third have thought about it – but haven’t put any plans into place.

Even such a basic step as making a will seems to elude most of us, even though almost everyone agrees it’s important.

Many people feel that they are too young to make a will, even those in the 45-64 age bracket.

It seems to be the big steps in life that finally prompt people to take action, notably getting married and having children.

However, it’s worth thinking of your family at every stage in life. If you die without making a will, they can be put under enormous strain trying to work out your wishes. They may face higher tax bills too.

If you don’t make a will, standard rules known as the intestacy rules will apply, and your estate could be divided up in ways you’d never have wanted.

For example, if you had been married and separated, but never got divorced, your ex-husband or wife would automatically benefit, even if you had spent many years with a new partner. If you had not married, but lived with a partner, your parents or siblings would inherit, and your partner may get nothing.

‘Many people assume their possessions will simply pass automatically to their partner or children, or believe their assets are too insignificant to need a formal arrangement’, says Emily Deane TEP from STEP.

‘But if you die without making a will, the intestacy rules will be applied, and this may not be what you want,’ she added. ‘The only certain way to ensure that your partner or relatives inherit in line with your wishes is by making a will.’

The donor’s dilemma

Posted on By admin
mother thinking of handing over house

If you are thinking about transferring your house to your children during your lifetime, you should first consider the seven Ds…

  1. Divorce

If any of your children were to divorce then there would be a risk, however remote, that any assets in their name, including your house, could be taken into account in the divorce settlement.

  1. Debt

In the event of any of your children getting seriously into debt or becoming bankrupt then there would be a risk, however remote, that their creditors may seek to force them to sell your dwelling-house in order to discharge the liability.

  1. Death

If any of your children were to die before you without making appropriate provision in their will in relation to your dwelling-house, then there is a risk that their share of your house would pass to an in-law. Indeed, the problem may be compounded if your son-in-law or daughter-in-law should subsequently remarry.

  1. Disagreement

You may subsequently want to sell your house and apply the sale proceeds to buy another house. There is a risk that your children will not agree with your request. In addition, there is a risk that your children may wish to sell your house without your agreement and seek to have you put out of your own home.

  1. Deliberate deprivation

Health Trusts/local authorities have rules against deliberate deprivation of assets. If it can be proved that you deliberately deprived yourself of an asset in order to get government help towards nursing home fees, then the value of your house could be clawed back from your children. There is no time limit on this, although the longer the period of time between your transferring ownership and going into a nursing home, the less likely it is that the transfer will be challenged.

  1. Deprivation feeling

It is very important that you should try and envisage how you would feel if you have given away ownership of your house and other assets to your children. Will you feel deprived? Will you feel out of control? Will this feeling cause you to lose sleep and wish you had not done it?

  1. Doubt

If you are in doubt about what you are doing, it is better to postpone any action until such time as you are sure.

A qualified advisor can talk you through your options, ensuring all angles have been considered.

Peter M Thompson TEP, Thompson Mitchell Solicitors, Portadown, Northern Ireland

Who should I appoint as my child’s guardian?

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family

If you die and your child is under 18 then it is common for the surviving parent to take guardianship of your child – although they must have parental responsibility.

If there is no one else with parental responsibility to look after your child, then the court will make the decision for you and it could be a complete stranger. This is why it is so important that you nominate a guardian for your child in your will.

What is a guardian?

A guardian is someone who you name in your will to look after your child until they reach the age of 18. It would usually be someone who you trust implicitly with your child’s well-being and who already has a close relationship with them. Since it is largely impossible to know how or when you will die it is prudent to name a backup guardian in case the circumstances of your first guardian have drastically changed when the time comes. If you have separated from the child’s second parent it is sensible to name the same guardians in your wills to avoid any dispute if you both pass away.

It is important to note that if a surviving parent is alive with parental responsibility, care of the child will always pass to them, regardless of guardianship nominations in your wills.

What are their responsibilities?

They will basically be acting as a parent for your child until he or she reaches the age of 18. They will be responsible for their health, safety, welfare and education and will have a legal duty of care towards them.

How do I appoint a guardian?

The most common way to appoint a guardian is through your will, although it can be written on a separate note as long as it contains clear instructions and is signed and dated. That said, it is best to use your will so that you can synchronise your appointment of guardians together with who your estate should pass to. For example, you may instruct that your estate passes to your children unless they are minors in which case the guardianship clause kicks in and the money will be held by the guardians as trustees for the children until they reach 18. Your guardians can use the money held in trust to pay for the children’s everyday living expenses, education and well-being. The objective is that the guardian will not be out of pocket for the children’s expenses but the money must be used for the best interests of the children and not for the guardians’ benefit.

Who should I appoint?

It is completely up to you who you appoint as guardian, but in most cases it will be a family member or close friend. Ideally it should be someone who already has a close relationship with your children. Other considerations may include:

  • Location: ideally you don’t want to have to uproot your children from their friends and school, so if you have family in the area, it may make more sense to appoint them over someone who lives on the other side of the country.
  • Age/health: an older relative may not be able to care for your children in the long term
  • Suitability: Are their values similar to your own? Can they offer stability? If they already have a family, would they be able to manage the additional responsibility?

Should I ask them first?

It is a good idea to discuss the appointment with the guardian first. There could be a valid reason that you haven’t thought of why it would be impossible or impractical for them to be a guardian at a later date. For peace of mind it is best to obtain their consent first.

Who should be executor of my will?

Posted on By admin
couple

An executor deals with the instructions in your will when you die and handles the finances and any tax liabilities that arise. It can become complicated if you have numerous assets and property, so it is sensible to appoint someone who is fairly astute, although they can always seek help from a professional if necessary.

Who can be an executor?

Anyone who is over 18 years old can be an executor of a will, and it is fine for them to be an executor and a beneficiary of your will. You can appoint up to four executors to act, however they must make decisions jointly so it might be simpler to appoint fewer. Ideally, though, you want more than one, in case that person is incapable of acting when the time comes. You could alternatively appoint professional executors such as your solicitor or accountant, but do bear in mind that they will charge for their time spent.

Who should I choose as executor of my will?

Most married couples tend to choose their spouse as their executor, which makes a lot of sense since you should trust your executor implicitly. However there could be a scenario in which both of you are in an accident together, so you would need a second executor to step in.

Some people may appoint their children, either to act as replacements for their spouse or to act jointly with their spouse so that the family can make decisions together. If you feel that your children are currently not mature enough to act as executors you should not appoint them. It is risky to appoint your children on the basis that it is unlikely anything will happen to you until later when they will be old enough to act: an eligible executor (right now) should always be appointed. That said, in a scenario where the executors are young or inexperienced they can always consult a legal advisor about the probate procedure. Having some professional help may also ease the emotional burden for them.

If your estate is quite sizeable you may wish to appoint a professional executor such as a lawyer or accountant who will be accustomed to this kind of work. They will be able to handle the probate paperwork and tax matters. Again, it will the ease the burden from family members, but you may want to check their charging methods are reasonable before formally appointing them.

How do I appoint them?

The only thing that you need to do is state that you would like to appoint them as your executor and put their full name and current address in your will. If you appoint more than one, you should state that you would like them to act jointly. As mentioned before, you can also make them a beneficiary in your will but they must not be a witness to you signing your will as this may invalidate their gift.

Should I tell them?

In most situations it is advisable to tell your executors that you have appointed them and let them know where the original wills are stored. There is nothing wrong with giving them a photocopy of your will for their own reference. It is also sensible to keep a note of their new addresses should any of your executors move so that they can be located when needed.

What are my duties as executor?

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If you have been informed that you are an executor, then sadly that probably means that a friend or relative has recently died.

That person has named you as the executor in their will, either alone, or with others, to carry out their wishes and to administer their estate. This is all the money and property that they have left behind. You will be required to pool all of their assets, pay any debts and taxes, and distribute the remainder, in accordance with their will.

What should I do next?

You may be required to register the death with the Register’s Office, if the family has not already done so. You will need a death certificate from the doctor or hospital to take to the Register’s Office. You are then in a position to arrange the funeral. Check the will first, in case it includes any funeral instructions, or details of any pre-paid plans. If not, you may wish to involve family members, who will probably have a good idea about their funeral wishes.

Once the funeral has been arranged, you might want to consult a legal advisor, and find out if the deceased had other legal documents or property you were unaware of, and to find what you need to do to obtain a grant of probate.

If the estate is sizeable or complex, you might instruct the advisor to take on the probate paperwork for you; but it’s your job as executor to sign it. The cost of the legal fees will be deducted from the estate, once the legal work has been completed. You may wish to get a couple of estimates before instructing an advisor, to compare prices.

How do I obtain a grant of probate?

If you decide to obtain the grant without the help of a legal advisor, you need to prepare the paperwork first. You will need to obtain the probate application form from the probate registry or online and then check the deceased’s financial records for:

  • Banks and building society accounts
  • Investment portfolios
  • Other sources of income, e.g. from an employer, pensions or benefits
  • Insurance policies, e.g. life, car or medical
  • HM Revenue & Customs (HMRC) details
  • Debts, including from credit cards, loans or hire agreements
  • Utilities eg gas, water and electricity, as well as council tax
  • Business contracts and agreements
  • Arrange temporary insurance on any assets such as house and car

You will need to write to each of these organisations with the date of death, enclosing a certified copy of the death certificate, and requesting a date of death balance.

Once they have replied, include all the figures in the probate application form. Send the completed form, together with the death certificates, and the fee, to the local Probate Registry to request the grant of probate.

What about inheritance tax?

The probate application form should calculate whether any inheritance tax is due, and this should be paid as quickly as possible from the available assets. If there is not enough cash available, the probate registry will accept payment following the grant of probate, when you are in a position to close the deceased’s accounts and sell any property.

What do I do with the grant of probate?

When you receive the grant of probate, send an official copy to each organisation requesting them to close the deceased’s accounts, and send the balance to you as executor (you will need to open a temporary account on behalf of the estate).

If there might be unknown creditors that the deceased owed money to, advertise the death in the local paper and the London Gazette to give any creditors or claimants 28 days to get in touch. You have then covered yourself legally, if one pops up at a later date.

When you have accumulated all the money, you can pay the creditors and expenses such as bills, funeral expenses, taxes and probate costs, and any tax due. Next you can pay each beneficiary in accordance with the will instructions, and obtain a receipt from each one.

You will be required to draw up some estate accounts which show the money coming in and out of the estate and obtain a signature to the accounts from each residuary legatee (people receiving the residue of the estate after specific gifts have been paid out).

Finally you can close the bank account, once all payments have cleared. Keep the records safely for 12 years.

What about claiming money back from the estate?

You may need to organise a funeral and pay other costs before probate is granted and you, and anyone else who is named in the will, can inherit the estate. You can claim back some of these costs from the estate. They are:

  • Costs associated with the funeral
  • Probate Registry fees
  • Estate agent fees
  • Costs for appointing professionals such as valuers or solicitors
  • House clearance fees
  • General house or garden maintenance
  • Postage costs
  • Travel costs
  • Inheritance tax that becomes due before probate has been granted

You are not allowed to charge for your time. You may not be able to reclaim interest from the estate on your money that you use to pay for a funeral. Find out more by visiting the gov.uk site.

Getting help

If, at any point in the process, you need help or advice, you can talk to a qualified advisor, who will be able to talk you through what you need to do.

Will my power of attorney be recognised abroad?

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If you are moving abroad, you should consider whether any planning you have undertaken will be valid in your destination.

If you have taken the step of setting up a Lasting Power of Attorney (LPA) or an Enduring Power of Attorney (EPA), you may have to revisit it if you decide to move abroad to work or to retire, or if you own property or assets overseas.

In any of these cases you will need to take specialist legal advice to make sure that the right documentation is in place in the event that you lose capacity.

What problems could arise?

You should bear in mind that not all jurisdictions have the same approach to mental capacity. Depending on the particular circumstances, a number of questions may arise:

  • Which country’s courts will have the jurisdiction to be able to make orders in respect of your property and finances?
  • Will the jurisdiction you are moving to be able to recognise and enforce either:
    • the orders of the court of your jurisdiction; or
    • an LPA or EPA that is valid in your jurisdiction?

If you have been well advised, then you will hopefully have signed a similar power of attorney document in the foreign jurisdiction where the property or money is situated. It is much simpler to be able to deal with assets abroad using an equivalent power of attorney in that other jurisdiction.

If you haven’t taken the step of having another foreign power of attorney in place, then if your LPA or EPA has been registered with the relevant authorities, in some circumstances it may be acceptable to be used in the foreign jurisdiction. Foreign advice would have to be taken as to its acceptability or otherwise. Even if the LPA or EPA is recognised abroad, there may still be local requirements that will have to be met before it is used. Lawyers or notaries in those jurisdictions would have to give advice as to what is required.

In some countries, the LPA or EPA may have to be translated into the local language in order for it to be used and some jurisdictions will require an ‘apostille’ to be affixed to it by the Foreign Commonwealth office so that it can be used. This is a certificate attached to the document that confirms that the signature, seal or stamp on the document is genuine.

Planning ahead

If you are thinking of moving abroad to either work or retire, then you should consider taking advice on what would happen to any assets that you own abroad, should you subsequently lose your mental capacity. It is always advisable to plan ahead as no one knows what the future may hold. In all circumstances where advice or the law of a foreign jurisdiction is needed, it should be obtained from a legal practitioner who is suitably qualified in that jurisdiction.

The test for mental capacity differs throughout various foreign jurisdictions. They each have their own approach in the way that they define mental capacity as well as the various forms of representation that can be used like an LPA or EPA. Sometimes these are referred to as continuing or durable powers of attorney in other jurisdictions. The differing powers can be revoked by incapacity, marriage or divorce, so specialist advice will always need to be taken in respect of the jurisdiction in which the relevant power is to be used.

TEPs are well qualified to give specialist advice in these complex interjurisdictional situations. There are over 20,000 STEP members across the globe, so there is always someone who can help with the difficult cross-border issues that can arise.

This article does not apply to health and welfare issues that may arise if you are moving or retiring abroad as there may be additional or different issues that may arise. Again, specialist advice will be needed.

Patricia Wass TEP

How can I make sure my disabled child is provided for when I die?

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Providing for our loved ones when we die is one of the most compelling reasons to make a will. If you have a disabled child this is even more important, as they will have specific and often costly needs that need special consideration.

The term ‘disabled’ can encompass a number of different disabilities. These could be physical and/or learning disabilities. People can be vulnerable for all sorts of reasons and careful thought should be given to the provisions that should be included to benefit them in a will.

What are the key considerations?

  • Where will they live?
  • What financial benefits are they already receiving?
  • What help are other family members providing?
  • What care plans are in place?
  • While it may be difficult, it is also important to think about your child’s life expectancy and medical prognosis.

When all the above factors have been thought about carefully, a will can be drawn up and a number of options can be looked at to ensure that appropriate financial provision is included.

Option 1: Making an ‘absolute gift’

The will can include what is known as an ‘absolute gift’. This means that your child will receive a financial benefit that is unrestricted and that will belong to them to do with as they wish.

Provisions are usually made for trustees to look after that money on behalf of your child until they reach the legal age of majority (18), but after that the money will belong to your child without any restriction. Before choosing this option you should think about whether your child is likely to have sufficient capacity when they reach adulthood to make decisions about how they use that money.

The gift would, in time, form part of your child’s estate, so you also need to think about whether your child is likely to have sufficient capacity at the appropriate time to make a will.

If your child is receiving means-tested benefits, you should bear in mind that by giving an absolute gift, this would be taken into consideration in calculating benefits, which may then be lost. This therefore needs careful consideration to ensure that your child isn’t disadvantaged by your decision.

Option 2: Using a life interest trust

Another possible option is to use a ‘life interest trust’. This would mean that trustees appointed in your will would look after the money you have set aside for your child during your child’s lifetime. The trustees would usually invest this money and the income produced on the investments would be available for your child for the remainder of their life. When your child passes away, the remaining money would be passed onto other individuals, who you name in your will.

Bear in mind that the income your child receives will be taken into consideration when they are assessed for any means tested benefits (the capital will not be taken into consideration).

In certain circumstances, and depending on the wording of your will, the trustees can sometimes make a ‘one-off payment’ of capital to your child, for example to pay for a holiday, or buy some equipment. The amount of capital that can be used for these purposes can be restricted by the wording used in setting up the trust.

Option 3: Using a discretionary trust

Another option to consider is a ‘discretionary trust’. The trustees would look after the assets (property, money, etc) within the trust and they are given absolute discretion to use both the income and the capital for your child’s benefit. There can also be other beneficiaries (perhaps other children and grandchildren) who will be able to benefit from the trust.

If you set up this kind of trust in your will, you would be asked to provide a letter of wishes addressed to the trustees that you have chosen, which sets out how you would wish them to make decisions about the assets in the trust.

On the death of your disabled child, any assets remaining in the trust can be distributed to the other beneficiaries.

Tax consequences

When setting up any sort of trust in a will, you should take advice on the tax consequences of the various options to ensure that you understand the advantages and disadvantages of any choice that you make.

There is a particular sort of trust that can be advantageous to use, which is called a ‘Vulnerable Beneficiary Trust’. This trust is recognised by HMRC and gets special tax treatment.

The definition of a ‘vulnerable beneficiary’ and the various tax consequences are clearly set out on the GOV.UK website.

In these trusts the vulnerable beneficiary (the disabled child) is entitled to receive the benefits from the trust during the remainder of their lifetime. Only a small amount of assets in the trust can be used for the benefit of someone else while the disabled person remains alive. The other beneficiaries would be entitled to what remains in the trust after the death of the disabled child.

When the disabled child dies it should be noted that the assets in the trust will be treated as part of their estate for inheritance tax purposes before they are distributed to the remaining beneficiaries of the trust.

Relying on your other children

You may be considering relying on your other children to look after their disabled brother or sister after you have died, so you don’t plan to leave anything to your disabled child in your will. This is a dangerous option and not one that is to be recommended.

You may feel that your disabled child already receives means-tested benefits and so doesn’t require anything else. The state may take a different view, however, and it leaves your estate open to a claim being made under the Inheritance (Provision for Family and Dependants) Act 1975 for reasonable financial provision to be made from the estate for your disabled child. This would be costly and not in the best interests of anyone. It is always best to make some provision for a disabled child, rather than to leave them out of the will altogether.

Some other considerations

When giving instructions for your will, you should give special thought to the choice of trustees and guardians for your child, as they will have onerous duties and responsibilities after you have died.

You should also think about where the child will live and what practical arrangements will need to be in place. If they are to remain at home, your other children may have to wait a long time for their inheritance until after your disabled child has died and the property has been sold.

Finally, it should be noted that you can set up a trust to benefit your disabled child in your lifetime, as well as by will. This enables grandparents and other close relatives to benefit your child either during their lifetime or by leaving gifts in their wills that can be added to the trust for your child.

This is a complicated area of law, and if financial provision needs to be considered for your disabled child then it would be strongly recommended to take specialist advice from a qualified practitioner who will be able to discuss the family circumstances to ensure the right option is chosen.

Patricia Wass TEP

Things to consider when making a will

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It’s very easy to put off making a will. No-one likes to think about their own mortality, and it can be tricky working out who should inherit what, whether it’s property, money or possessions.

Let’s break it down into stages to make it more manageable.

Who gets what in your will?

Who would you like to benefit from your will? You could make a list of people that you would like to inherit from you such as your spouse or partner, children, other family members, friends and charities. The people that benefit from your will are called beneficiaries.

How much do you own?

Have a think about what you own, including money in bank or building society accounts, property, pensions, life assurance and possibly a business. Try to estimate the value of these assets. You may also have cars, furniture or jewellery that have significant or sentimental value, which you may like to leave to someone in particular. You should also consider your digital assets. You can make all this clear in your will.

What about specific gifts in your will?

You could start thinking about specific items or amounts of money to leave to your beneficiaries, such as ‘my wedding ring to my daughter’ or ‘£1,000 to my son’. These are called specific gifts. You can leave the remainder, known as ‘the residue’, to your other beneficiaries. Because you won’t know how much you will have left, divide it into shares. For example ‘I leave the family home to my wife, and the residue of my estate is to be divided in equal shares between my children’.

Will you have to pay inheritance tax?

The inheritance tax allowance is currently £325,000 for an individual, or £650,000 for a couple who are either married or in a civil partnership. If you live with your partner but are not legally civil partners, then he or she will not qualify from this allowance after you die.

Anything over this threshold will usually be charged at 40% for inheritance tax. You can leave everything to your spouse or civil partner free of inheritance tax.

The Residence Nil Rate Band gives you an additional allowance of £175,000 (frozen until 5 April 2026) to be used against your home, provided you leave it to your children or grandchildren. This allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death. It’s best to take professional advice, if you are unsure, because it is a complicated matter and there could be other reliefs or allowances available to you.

There is an unlimited relief for a spouse/civil partner if both are UK domiciled (or transferor non-domiciled).

If it is a gift from a UK domiciled to a non-UK domiciled spouse/civil partner (the non-UK domiciled spouse/civil partner can elect to be treated as UK domiciled for IHT purposes) then it is £325,000.

Do you have any vulnerable family members?

If you have young children, you can appoint a legal guardian in your will to ensure that if something were happen to you and your partner, they will be looked after by someone you trust implicitly with their well-being.

If you have a family member with disabilities, or mental health issues, who you need to provide for after your death, you should speak to a professional about setting up a trust. This can be managed by someone that you trust after you have gone, and you can leave specific instructions or wishes about how they should manage it. (For further information, read ‘How can I make sure my disabled child is provided for when I die?’)

Who can help me make a will?

As specialists in inheritance and succession planning, members of STEP, who are known as TEPs, draft wills and trusts, administer estates, act as trustees and advise families on how best to preserve their assets for future generations.

Choosing a professional to help you to deal with such important and often sensitive issues can be difficult. Many aspects of planning are non-regulated, meaning anyone can write a will, for example, regardless of training or expertise. With a TEP, you’re in safe hands.

The risks of not making a will

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It’s very easy to put off making a will, as no-one likes to face up to their own mortality.

But there may be serious implications for your family if you don’t make one. Your home and property may not be distributed according to your wishes, and you risk depriving family members of their inheritance and even their home.

Possible consequences of not making a will

Some of the consequences of not preparing a will include:

  • Your estate may be distributed under the intestacy rules, which favour close family
  • Step children and unmarried partners may be overlooked
  • Your partner may be left homeless
  • Your children may be left with no legal guardian
  • Your family may face additional distress at a difficult time
  • Your money may go to the government
  • Family disputes may arise
  • Legal action may be required, which can be very expensive
  • Your family may face a higher bill for inheritance tax
  • The law is regularly changing, and it may not favour your family

Your will is an important document, so it’s worth using an experienced professional to make sure it’s drawn up properly. It will cost a few hundred pounds or so, but you’ll get an estimate first, so there’s no need to worry about fees mounting up.

The greatest advantage of using a professional is the peace of mind it will bring you. A professional will construct your will the way you want, to suit your individual needs, and will ensure all your wishes are carried out following your death.

There will be no technical mistakes, so you can rest assured there will be no expensive and upsetting disputes for your family to deal with when you’re no longer around.

I don’t believe it! Common excuses for not making a will

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I have been working as a solicitor for more than 30 years. With every day that passes I begin to feel (and possibly look) like Victor Meldrew from the classic TV programme, One Foot in the Grave. I find myself frequently saying ‘I don’t believe it!’.

Sadly, I deal with inheritance disputes, and even more sadly, I see families falling out about the estate of a family member who has died. What is all the more tragic is that many of these disputes would never arise if people made a formal will to set out their wishes.

From love to war

I recently represented the long-term partner of a very successful businessman. They had been together for over 20 years. He knew that he was dying of an incurable disease. He had advice from a solicitor that he should make a will, but he refused to sign one. When he died without a will, none of his estate went to his long-term partner, but instead went to the children of his former wife.

To say that disagreement erupted between family members was an understatement. Court proceedings had to be commenced for reasonable financial provision under the Inheritance Act 1975. The close family who one year were sharing Christmas dinner around a dining room table found themselves the next year arguing around a lawyer’s table.

All of this could have been avoided if he had made a carefully considered will – making provision for the partner he loved.

Protecting your business

Another successful businessman was in partnership with his brother. They both received professional advice that they should make wills and that they should be updated from time to time. Although they both made a will to ensure the continuation of their business, they failed to update their wills when their business was changed from a limited company to a partnership. This meant that when one of the brothers died unexpectedly, the provisions in the will about company shares became invalid.

Expect the unexpected

A wealthy man sadly had a history of failed relationships, with a variety of children by different partners. He found it ‘too difficult’ to work out the provision that he wanted to make for each of his children and former partners. He thought he would live for many years and spend most of their inheritance before he died and he said that they could ‘fight about what was left’.

Unexpected things happen. This man died, unexpectedly, shortly after he retired, leaving a large estate for his children to do exactly as he had predicted – namely fight about what was left.

Everybody dies, so make a will!

The story that I get from so many clients is that their loved one ‘never thought that they would die’. As I said at the outset of this article – I just don’t believe it!

When I give advice that people should make a will I do this not from self-interest, but because I genuinely hate to see families fall out at such a sad time.

If things do go wrong then a good lawyer can tell you about the pragmatic steps that can be taken to resolve a difficult situation without causing needless and undue family disharmony. Many advisors will not charge for initial telephone, or personal, advice – advice that can be priceless.

Talk to a TEP – find an expert near you

Stephen Lawson TEP is a Partner and Head of Litigation at FDR Law LLP, Frodsham, UK

Getting divorced? Make sure you review your will

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Divorce

With all the other issues to think about when going through a divorce, updating your will can easily fall between the cracks.

But while divorce does not automatically revoke your will, it can leave it in a bit of a jumble. This is because the will remains valid, but it will be read as though your ex-spouse is not in it. So any provisions that include your ex-spouse will be excluded from your will and any gifts made to your ex-spouse will fall back into your estate to be divided among the other beneficiaries.

And don’t forget that in the days/weeks/months leading up to your divorce, your will is still valid. So if you die prior to the decree absolute, your spouse will inherit in accordance with your will. If this is not what you would want, you may wish to think about reviewing your will as soon as you are aware that you are going to get divorced.

Another thing to be aware of is what happens if you re-marry. Marriage or civil partnership automatically revokes any previous wills, so you must make a new will at this point too.

Key points to consider when reviewing your will

Below are some points you may wish to consider:

  • Did you appoint your spouse as executor? If so, you will need to consider who you would like to instruct in their place. You may appoint more than one executor.
  • Did you leave the bulk of your estate to your spouse? If so, if you don’t amend your will you will effectively die intestate and it will be distributed in accordance with the intestacy rules. You will need to amend your will to reflect who you would like to leave your estate to.
  • You will need to consider your inheritance tax liability. Married couples benefit from a transferable nil-rate band, enabling them to transfer up to £325,000 tax-free to their spouse on their death. You may therefore need to consider your tax planning strategy in light of your divorce.
  • You may wish to appoint a guardian for your children in your will in the event that something happens to you and your divorced spouse.

I’m getting divorced in Scotland. Is this different?

As of 1 November 2016, Scottish succession law was amended in relation to divorce and wills so that it echoes the position in England and Wales and Northern Ireland – see the article ‘Divorce and the effect on wills in Scotland’. Unlike in the rest of the UK, however, in Scotland your will is not automatically revoked on remarriage, and there are different rules in relation to inheritance, with a spouse/civil partner and children entitled to a ‘legal right’ to inherit a set portion of your estate.

Seek advice

Divorce and remarriage can make providing for your loved ones a little more complicated, so it is always wise to speak to a qualified advisor to ensure all angles have been considered.

Related articles

Can I leave everything to charity in my will?

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Many people choose to leave money or other assets to charities when they die. Where a charity is particularly important to you, or where you feel your relatives are sufficiently well off, you may wish to leave most or all of your estate to charity.

In many countries, including Scotland, it’s not possible to do this, as set quotas must be reserved for certain relatives.

In England & Wales and Northern Ireland it is possible to leave your whole estate to a charity. However, you will need to make sure you provide for any close family and dependants that rely on you. If you don’t, and they bring a claim, a court can award them some of your estate if it decides it puts them in financial difficulty.

Make sure your family know your intentions in advance to avoid delays, legal costs or distress.

Avoiding disputes with your family

If there is any possibility that your will may be challenged, you should consult a professional advisor, who can ensure you have done everything possible to prevent this eventuality.

The following four steps are also all advisable:

  1. Tell your family why you are leaving everything to charity, and not to them.
  2. Write a letter to accompany your will explaining your reasons, and also why the charity is important to you.
  3. Get a doctor’s certificate confirming that you were of sound mind when you made the will. This way it can’t be challenged on grounds of mental incapacity.
  4. Make your intentions clear to your will advisor in writing.

Plan for the long term: choose your charity with care

Your chosen charity might have been wound up, or merged with another one, by the time you die. To play it safe, you could name a second and perhaps a third as a back up. Alternatively your will advisor could add a clause into your will to direct the legacy to a similar organisation.

If you are leaving a large amount of money to charity, think about setting up a charitable trust in your will. An advantage of this is that you can simply indicate how you wish the funds to be used (for example, ‘for medical research’), but leave it to the trustees to decide over time which projects should be funded.

Get advice

As mentioned above, if you decide to leave everything to charity you should speak to a qualified advisor, who will help ensure all relevant issues have been taken into consideration.

10 tips to help you get started as a trustee

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So, you’ve been made a trustee – what now? The key word is trust. You have been entrusted to look after assets on behalf of a beneficiary or number of beneficiaries.

With great power, however, comes great responsibility. As trustee you are accountable for keeping those assets safe, possibly investing those assets and making sure that they last for the lifetime of the trust or are used to benefit those listed in the trust deed.

The risks and responsibilities of being a trustee can be a daunting prospect, especially if you’re not familiar with the obligations of this role. It is worth having a conversation with an advisor who can help to point you in the right direction or assist with the day-to-day management of the trust.

Ten tips to get you started

1. Follow the terms of the trust deed

This may be in the form of a will trust (assets left on trust when somebody dies) or in the form of a settlement deed (a trust created during someone’s lifetime). This will advise you as trustee not only of who should benefit, but also of any powers or limitations – for instance, restrictions on investment of the trust funds. Trustees’ legal duties are laid out under the Trustee Act 2000 (England and Wales)/Trustee Act (Northern Ireland) 2001.

2. Check whether there is a letter of wishes

Although not legally binding, a letter of wishes often gives a personal insight into the reasons behind the trust and provides a greater perspective than the deed alone. It might be that one of the beneficiaries is particularly vulnerable and before distributions are made to them, extra care needs to be taken to ensure that it is used as intended.

3. Find out the tax treatment of the trust

Different trusts have different tax reporting obligations and are subject to different tax rates depending on the wording of the settlement and the underlying beneficial interests. It is worth obtaining advice in this regard, as it will be your duty to deal with the tax compliance issues – or the financial penalties for failing to do so. But panic not, if you do not feel that you can competently register the trust with His Majesty’s Revenue and Customs ‘HMRC,’ complete trust tax returns or keep up with the ongoing changes to tax regulations, then as trustee you can delegate this function to a suitable professional (whose charges would be a direct expense, who can charge their services directly to the trust).

4. Keep clear and detailed accounts

You should keep accounts to clearly record the split of assets and that the correct entitlements are paid from the right source. For instance, some beneficiaries are only entitled to the income of a trust, which would mean that they would receive the dividends and interest generated on stocks and shares but would not have any entitlement to the stocks and shares themselves, nor the sale proceeds of these. Preparing accounts can reduce the possibility of disgruntled beneficiaries later down the line. It can also provide a clear record to HMRC of those funds taxable to Income Tax or capital taxes such as Capital Gains Tax and Inheritance Tax.. Again a qualified advisor can help with this.

5. Consider whether investments should be actively managed

Delegate your investment management function to reduce risk and provide diversification where appropriate. Where a Discretionary Fund Manager is employed to help with the trust funds, an investment policy statement will need to be drafted to ensure that the investment manager is aware of any restrictions, the risk profile of the family and the need to balance the interests of the beneficiaries.

6. Make sure property is insured

Where there is a property, you will need to make sure that it is insured and that the insurers are noting the trustees’ interests. Arrange for periodic visits to ensure that the property is maintained and not becoming neglected or dilapidated. If there is a life tenant (a beneficiary entitled to stay at the property), see that they are upholding any duties imposed under the trust, which might include meeting the costs of repair and insurance.

7. Diarise important dates

For example, the specific dates when beneficiaries become entitled (known as vestings), i.e. upon attaining a certain age; ten-year anniversaries (for the purposes of periodic inheritance tax charges in particular trusts); and agreed distributions from the trust.

8. Hold regular meetings

In order to make informed decisions in the best interest of the beneficiaries, it is advisable to hold regular meetings with your co-trustee(s), advisor, investment manager, independent financial advisors and where appropriate, beneficiaries. You would be advised to minute your decisions in order to document that you have made the necessary considerations.

9. Be proactive

Don’t just sit on the money until the end of the trust’s life. Be proactive to find out what the needs of the family are, if any, and whether the trust can assist. Additional considerations may need to be made where vulnerable beneficiaries are to receive funds. You may need to make enquiries about any benefits that they may receive (which can be disrupted if personal savings thresholds are exceeded).

10. Just ask!

Importantly, if you’re unsure or need assistance with the performance of your duties in your new role, just ask!

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Cheryl Farnham TEP is a Director of Trust Group in Somerset, UK 

Planning for your baby’s future

Posted on By admin

Congratulations on the arrival of your little bundle of joy! Having a baby is an amazing experience, but it can also be a bit bewildering. It takes time to adjust to your new role as Mum or Dad: suddenly you are responsible for a tiny human being, and the overwhelming feeling is the need to protect and provide for them.

Getting some key documents in place can give you real peace of mind.

Make a will

Making a will is an important first step to ensure that your family will be looked after, whatever happens. Within your will you can appoint a legal guardian for your child in case you should pass away before they grow up, and you can also ensure the financial security of your child and leave instructions as to any possessions you wish to pass on. A will can also take future babies into account, although you’ll need to update it. If you die without a will, your estate will be distributed according to legal rules known as the rules of intestacy. This may not be what you want for your child or partner.

Appoint a guardian

If your child is under 18 when you die, the surviving parent will most likely be the guardian, as long as they have parental responsibility. However, if there is no one with parental responsibility, the court will decide on a guardian, and may appoint a complete stranger. This is why it is so important that you nominate a guardian for your child, either in a will or in a separate document. The guardian would usually be someone that you trust implicitly with your child’s wellbeing.

See ‘Who should I appoint as my child’s guardian in my will?’ for further information.

Set up a trust fund

You may have some money set aside for your child in your will, but you wouldn’t want them to inherit this money before they are mature enough to handle it. If so, you can set up a trust, which will look after the money until they reach a specific age. Many parents choose the age 21, but you can choose any age you like. When your child reaches that age, the trust will come to an end, and they will receive the money.

Make a power of attorney

If you lose mental capacity because of illness, an accident or for any other reason, having a lasting or enduring power of attorney in place can protect both you and your family. This document gives an individual(s) of your choice the legal authority to look after your wellbeing and/or finances if you are unable to look after yourself. You can nominate a trusted family member or friend, and feel safe in the knowledge that your best interests and your child’s will be taken care of if you are unable to make decisions. This kind of power of attorney must be made while you have full mental capacity. It does not have to be used until it is needed.

Take out life insurance

Life insurance is definitely worth considering. This can give you peace of mind that if you/your partner were to die, the surviving partner or your child would receive a lump sum that could go towards supporting their needs during what is bound to be a very difficult time. You can never be too financially prepared.

What next?

The above gives just an overview of some important areas to consider. For help deciding what is best for you and your family, speak to a qualified advisor.