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A will is a legal document effective on death, written by a person (the testator) disposing of assets to others in anticipation of their death in accordance with their wishes and intention; it allows the testator to take control of how their assets are to be distributed as well as allowing the testator to choose the executors of their will and guardianship appointments for minor children and it is also an effective tool for tax planning purposes.
Most of us associate will-writing with death and therefore avoid making a will. Unfortunately, death is inevitable and having your will in place provides some certainty and peace of mind whilst simplifying the legal process post-death.
A will also allow Cohabitees or children from a previous relationship to benefit and stops those inheriting from your estate whom you never wish to inherit. If you are charitably inclined, a will lets you direct your assets to the charity of your choice. Likewise, if you wish to leave your assets to an institution or an organisation, a will can see that your wishes are carried out.
In the absence of a valid will, the Intestacy Rules may apply to put your assets at risk of not being distributed and inherited as you wish. This can often create unnecessary difficulty for those that you wished to receive. The court may decide your next of kin or relatives to inherit under the Intestacy Rules which do not take into consideration unmarried partners, distant relatives and close friends and neighbours even if these were dearest than those close relatives allocated under the Intestacy Rules. Those whom you wish to inherit may lose out and those relatives whom you never wanted to inherit may benefit instead
To maximise the likelihood that your wishes are carried out, you want a will that is outlined in writing, reflecting your instructions and signed by you and your witnesses. At The Legal Office, we are highly experienced and will take the time to listen to your needs and then tailor your will accordingly.
Ideal for a single person or perhaps with a partner or spouse whose wishes differ from yours and so do not wish to make a joint will (Mirror will) or perhaps you have children from a previous relationship for whom you wish to make provision for, although a Trust Will may be a better option in this situation.
A life interest will ensure that your children are not excluded from their inheritance. this is particularly useful if you have remarried or are cohabiting with a partner but want your home to be preserved for other beneficiaries usually your children from a previous marriage This also allows for your surviving spouse or Cohabiting Partner to remain in the family home until they die or seize to do so for other reasons.
These are usually for couples who have the same wishes as each other. The estate of the predeceased spouse passes onto the surviving spouse and then to the children. There is an element of trust involved with Mirror Wills as the surviving spouse is free to change their will at any time. This could pose a problem if the deceased spouse had children from a previous relationship and the surviving spouse amends their will leaving the stepchildren out of their will. To safeguard against this, we recommend setting up a Trust Will.
There are several types of Trust Wills. Based on the terms of the trust, your assets are distributed to your beneficiaries, through the trustee who controls those assets. A trust will can help to reduce Inheritance Tax Liability and protect assets from third parties such as bankruptcy and divorce proceedings and help make provision for children from previous relationships. A trust is also a very effective tool for providing funds for minor children or beneficiaries who are not able to manage their own finances, such as adults with learning disabilities. As the trust is written in your will, it stays out of the Disabled person’s estate which not only protects them but also means that their means-tested benefits are protected which may otherwise stop if the inheritance was received outright and formed part of their estate.
We spend our lives making decisions for ourselves. These can be everyday decisions such as what to wear in the morning to more important decisions such as buying a house and investing our money. Often, we take these for granted until we are faced with an unforeseeable event which may affect our ability to make everyday decisions about our health and money. Regardless of your age it is important to prepare for your future, consider those who you can trust to step into your shoes to make decisions when you are not able to do so.
You can grant a power of attorney to those who you trust to make decisions on your behalf , giving you and your family peace of mind knowing that your affairs are in order. A Lasting Power of Attorney (LPA) is a legal document that enables you to appoint one or more people to make decisions on your behalf when you are unable to do so during your lifetime. Previously these matters were dealt The Enduring Powers of Attorney (EPAs) document which has now been replaced by The LPA document. Any EPAs made and signed before the 1st October 2007 can still be used.
Having a Lasting Power of Attorney in place ensures you have control over your finances and decisions related to your health by enabling someone you trust to make decisions as you would for yourself when you are unable to do so because of an illness or accident where mental capacity is lost or perhaps you may not have the physical strength to deal with such matters.
There are 2 types of LPAs. The first LPA is for Health & Welfare, using this LPA enables you to appoint someone to look after your personal welfare decisions such as moving into a care home, medical care and in terms of treatment you may need in hospital. The second type of LPA for Property and Finances allows your appointed person to make decisions on your behalf such as managing a bank or building society account or paying bills, selling your home or collecting benefits or a pension.
You must be over the age of 18 years and have mental capacity when you make your LPA, but you do not need to live in The UK or be a British Citizen. If left too late and you become mentally incapable then the matter will have to be dealt with the Court of Protection which is a specialist court which deals with all issues relating to people who lack the mental capacity to make specific decisions.
The court will either grant the application of a Deputyship appointment made on your behalf or appoint a deputy to deal with your affairs. There are 2 types of Deputies. The first is The Property and Financial Affairs Deputy who can manage your financial affairs on your behalf such as paying debts, applying for any benefits which you may be entitled to and paying for care home fees or selling your property on your behalf. The second type of Deputy is a personal welfare deputy who takes the responsibility of making decisions about your health care needs and medical treatment.
Whether you are looking to register an EPA or need advice on making an LPA or wish to discuss a Deputyship Appointment for a loved one, please contact us for further advice. We offer home and hospital visits if you are unable to see us at the office.
If you wanted to give your money or assets to a friend or family to use for the benefit of a loved one, you could give them the assets outright but could they guarantee that they will only use your assets as you intended? This is when you may consider setting up a Trust Deed. This is a legal instrument in which the rules are clearly set out giving you peace of mind that your wealth is managed according to your wishes for your loved ones.
Establishing a trust can secure your family’s future and make sure they have everything they need to lead a comfortable life such as paying for education fees or day to day living expenses for a disabled person. A trust is also a useful tool to reduce Inheritance Tax and can also protect assets in the event of unforeseeable events such as a divorce or bankruptcy.
If you considering setting up a trust to pass on a portion of your assets to your grandchildren and other members of your family, read on as we answer common questions such as what the benefits of a Trust are, who can be a beneficiary and who the trustee is and so on.
What are Trusts?
Simply put, a trust is an arrangement that enables you to manage your property and assets through a third party (also known as a trustee) to hold on behalf of a beneficiary until they attain a specific age.
The settlor is the person who puts the assets into trust such as property, stocks, and shares, and investments. A settlor can also be a trustee, therefore if you are setting up a trust for a child or grandparent you can also be a trustee of that trust.
A beneficiary is a person or a group of people for whom the trust has been established. You can create a trust for your child, your grandchild, or any other member of your family, a friend, or even a charity.
The trustee is described as the legal owner of the assets included in the trust fund. These individuals are responsible for managing the assets in accordance with the requirements defined in the trust fund. If these assets generate income, then they are accountable for paying income tax, as well. Trustees can also decide how to utilise the assets under their responsibility. It is important to choose your trustees carefully ensuring that they are comfortable with taking on the responsibility as a trustee.
You should appoint at least 2 trustees but no more than four for your trust fund. You may also consider appointing a professional trustee such as a bank or a firm of solicitors, these can, it is advisable to check their fees before making this choice.
There are various types of trusts however the most used are either the Bare Trust or Discretionary Trust. If you are setting up a trust fund, then suggest you consider the following options:
Slightly more complex, this type of trust provides complete control to the trustee on how your assets and related income are managed. This trust offers flexibility and the trustees apply their discretion to decide how and when these assets are provided to beneficiaries.
This trust is useful for providing for unborn children, children with different needs and for different categories of beneficiaries such as a spouse and children. You can choose this option for transferring your assets to your grandchild and declaring their parents as trustees.
A relatively straightforward trust which transfers control of assets to a named beneficiary once they are 18 years or older (in England and Wales). Your assets will be held by the trustee, but they will belong to the beneficiary once they reach the designated age. This is a basic type of trust fund to manage and can enable the smooth transfer of your wealth to your family.
A mixed trust combines elements of different types of trust. If you are establishing a trust for siblings of different ages, then a mixed trust can help you make sure they benefit appropriately from the trust fund once they reach the designated age.
A non-resident trust is one where the trustees are not a resident of the UK. This type of trust can have tax benefits as it enables the beneficiary to pay less income tax.
If learning how to set a Trust appears to be too intimidating, we suggest you pause and consider the benefits of a trust. Here are some primary advantages of establishing a trust for your family:
Consider Setting Up a Trust
Losing a loved one is always a traumatic time and it can be made much worse when legal matters must be dealt with by family members who are already dealing with loss. There are a lot of administrative based tasks that families of deceased loved ones must take care of at a time when it can be quite hard to concentrate. In England and Wales probate is the term used to describe the legal and financial processes involved in dealing with the property, money, and assets of a person who has died.
There is a regulated process to follow when someone has died, we have provided some information for some basic knowledge of what you can expect to see happen in probate.
The legal process for probate is varied and can be easy or very complex to complete, depending on the overall value of the estate the deceased left behind, whether they left a clear will or died intestate (without a will), whether there are any disputes between beneficiaries, and how complex the creditor debts of the deceased were. The person that is appointed to take care of probate for a deceased individual is called the executor; a person might name their solicitor, a close family member, or close friend as their executor within their will.
Sometimes this person can be called the personal representative. If there is no will, a person can petition the court to become the executor. A maximum of four persons can be appointed as an executor. This happens at times between family members who have more than one person that wants to be involved in the probate, which will require the debts of the deceased to be paid prior to the distribution of the remaining assets between the beneficiaries.
When a person dies without a will, their partner or spouse is the first person who would have the right to apply to be the executor of the estate. After that, the deceased’s children could apply, and they would have precedent over the parents of the deceased or the siblings of the deceased, but any of the four could apply and the court would determine the appropriateness of the application.
Depending on the value of the estate and the clarity of the will as it relates to the distribution of assets, straight forward probate in England and Wales can typically take between 6 to 12 months to complete and much longer where there is any dissent between beneficiaries.
Taxes are always a consideration; for example, for s single person, if the inheritance is worth less than £325,000, there is no inheritance tax due, but for amounts in excess of £325,000 there is a 40% inheritance tax rate. Capital Gains tax is also due on any gain at a rate of 28% and estate income tax is due at 20% generally, but there are also tax reliefs and exemptions which can be claimed. Once the value of the estate has been determined and any tax due on the estate has been calculated, this must be paid to HMRC within 6 months of the date of death.
There is no requirement to take on legal representation for an executor if the property can be dealt with and all liabilities covered by the executor without need for insight. However, whilst doing the probate yourself may save money, it could end up costing more and taking longer if it has not been done correctly or if the executor is not aware of the process and procedures surrounding probate. For this reason, most people will use a professional to help them to obtain a Grant of Probate.
The purpose of the Grant of Probate is to ensure the named administrator of the estate will oversee the proceedings in the event of someone’s death. Once the Grant of Probate has been obtained you can start to deal with the affairs of the deceased person such as completing the sale on their property, paying any debts due on the estate, distributing the estate to the beneficiaries is the final step.
For further guidance on obtaining a Grant of Probate contact The Legal Office for a free initial consultation.