Wills, Trusts, Inheritance and Probate

With increasing financial pressures and decreasing returns on savings, people are becoming more reliant on inherited wealth and fighting for their share if they feel short-changed. That fact, coupled with the increasing number of complex family structures and an ageing population, has resulted in a significant rise in these sorts of inheritance disputes.

Deeds of Variation

If you plan to benefit others from your inheritance, it is worth considering a deed of variation to take advantage of inheritance tax planning.

A deed of variation allows you, as a beneficiary of a deceased person’s estate, to redirect some or all of your interest in that estate to others. The benefit is that it is as if the deceased made the gift, not the beneficiary. This can have advantages for inheritance tax (IHT) purposes.

Ordinarily, if you make a large gift you must survive it by seven years in order for it to fall out of account for IHT in you own estate. But if the gift is capable of being redirected under a deed of variation it will be as if the deceased made the redirected gift and the seven year rule will not apply. The deed of variation must be made within two years of the date of death to be effective.

A deed of variation can be made to a Will or where a person dies without making a Will (intestacy).

A deed of variation may be used to benefit the next generation of your family such as your children or grandchildren who are not beneficiaries under a Will or intestacy. It may be used to benefit someone who was left out of a Will but you feel should receive a benefit.

A deed of variation can be used to reduce the amount of inheritance tax or capital gains tax payable. If a variation means more tax is payable, a copy of the deed must be sent to HMRC within six months of the variation. However if the deed does not mean more Tax is payable there is no need to tell HMRC.

It can also be used to make gifts to charities. An advantage to this is that gifts to charities do not attract inheritance tax. Also, if 10% of a deceased person’s estate passes to charity the rest of the estate benefits from a lower rate of inheritance tax. A deed of variation can be used to vary an estate to achieve this.

We can advise you on the effect of making a variation, and help you prepare the appropriate deed and also to notify HMRC if necessary. The decision to make a deed of variation is usually taken while the deceased person’s estate is being dealt with but we can also assist if the estate has been wrapped up and a decision to vary has been made at a later time.

A child under 18 years old or a beneficiary who lacks mental capacity cannot vary their interest by using a deed of variation.

Lasting Powers of Attorney

Lasting powers of attorney (LPAs) allow you to appoint people to act on your behalf in case you cannot manage certain decisions and responsibilities in your lifetime, usually because of an accident, illness or old age. They are just as important as Wills and relevant to all adults.

Putting an LPA in place is one of the most helpful things you can do to protect your spouses, partners and children, hopefully saving them worry, cost and delay.

Many people combine successful businesses and careers with active social lives, taking skiing and sailing holidays, cycling to keep fit and generally enjoying their hard earned leisure time. The problem is that accidents and illnesses don’t give us polite notice before they happen. They can leave a person, whatever their age, suddenly incapable and with their business partners, colleagues and families left to work out what to do. A lasting power of attorney should ensure that the right people step in at a time of crisis so that the business and family life can keep going.

There are two types of lasting power of attorney

  • property and financial affairs, this allows the people you choose (attorneys) to manage your finances for you if you are mentally or physically incapacitated and to pay for your care
  • health and welfare, this allows the people you choose (attorneys) to make decisions about your health and welfare but only if/when you do not have mental capacity.
  • Lasting powers of attorney must be registered with the Office of the Public Guardian before they can be used.

If you are buying a property with another person, you should consider having a declaration of trust prepared. Before completion, you will need to consider if you would like to own the property as ‘joint tenants’ or as ‘tenants in common’.

Joint tenants means that you will both own the property as a whole. You will not be able to dispose of your share under the terms of your Will. On death, your interest in the property will pass automatically to the surviving co-owner by a process known as ‘survivorship’.

If you own the property as tenants in common, you will each have a divisible share in the property. On death, your interest will pass under the terms of your Will rather than by survivorship. If you do not have a Will, your interest will pass in accordance with a set of rules known as the ‘intestacy rules’. It is therefore important to consider having a Will prepared if you own the property in this way, particularly as these rules are subject to change.

A declaration of trust can record how much of the property you each own. This is of particular relevance if one person will be contributing more than the other towards the purchase price, the mortgage repayments (if applicable) or even home improvements. If you are considering helping your children onto the property ladder, a declaration of trust can protect your money from divorce or bankruptcy.

In the absence of documentary evidence and in the event of a dispute, it will be for the court to determine the extent of each co-owner’s interest in the property, based on various factors. This is a costly and time consuming process. It can also be extremely stressful because of all of the uncertainty. A declaration of trust can prevent such a situation from arising by setting out exactly what has been agreed at the outset.

We can advise you on the whole process and deal with the necessary formalities at the Land Registry to give effect to your wishes and ensure that your interests are protected.

If you plan to benefit others from your inheritance, it is worth considering a deed of variation to take advantage of inheritance tax planning.

A deed of variation allows you, as a beneficiary of a deceased person’s estate, to redirect some or all of your interest in that estate to others. The benefit is that it is as if the deceased made the gift, not the beneficiary. This can have advantages for inheritance tax (IHT) purposes.

Ordinarily, if you make a large gift you must survive it by seven years in order for it to fall out of account for IHT in you own estate. But if the gift is capable of being redirected under a deed of variation it will be as if the deceased made the redirected gift and the seven year rule will not apply. The deed of variation must be made within two years of the date of death to be effective.

A deed of variation can be made to a Will or where a person dies without making a Will (intestacy).

A deed of variation may be used to benefit the next generation of your family such as your children or grandchildren who are not beneficiaries under a Will or intestacy. It may be used to benefit someone who was left out of a Will but you feel should receive a benefit.

A deed of variation can be used to reduce the amount of inheritance tax or capital gains tax payable. If a variation means more tax is payable, a copy of the deed must be sent to HMRC within six months of the variation. However if the deed does not mean more Tax is payable there is no need to tell HMRC.

It can also be used to make gifts to charities. An advantage to this is that gifts to charities do not attract inheritance tax. Also, if 10% of a deceased person’s estate passes to charity the rest of the estate benefits from a lower rate of inheritance tax. A deed of variation can be used to vary an estate to achieve this.

We can advise you on the effect of making a variation, and help you prepare the appropriate deed and also to notify HMRC if necessary. The decision to make a deed of variation is usually taken while the deceased person’s estate is being dealt with but we can also assist if the estate has been wrapped up and a decision to vary has been made at a later time.

A child under 18 years old or a beneficiary who lacks mental capacity cannot vary their interest by using a deed of variation.

Inheritance Tax Planning

Simple inheritance tax planning and advice can limit the tax you pay on your estate. Inheritance tax (IHT) not only affects the very rich, but many other people are liable without realising.
The sooner you find out what your liability is, the sooner you can plan to limit it so that more of your estate will be inherited by your loved ones.

What is inheritance tax?

If your estate exceeds the current IHT thresholds, everything above this that is not left to your spouse or civil partner, will be taxed at 40% upon your death. In most cases, it will fall upon your beneficiaries to pay this.

The current thresholds are £325,000 if you are single or divorced, and £650,000 per married couple. If you are widowed, it is up to £650,000 depending on how much allowance was used when your partner passed away. In July 2015, the Government announced that it would be gradually introducing a new main residence nil-rate band from April 2017, which will help people who want to leave their main residence to a direct descendant (such as a child or grandchild).

When you are considering tax planning, it is important to remember the various lifetime exemptions available for inheritance tax, as well as those planned for in your Will. These lifetime options can result in significant tax savings.

Annual exemption: you can make £3,000 worth of gifts in each tax year (6 April to 5 April) without incurring IHT.If the full £3,000 allowance is not used in one year, the unused part (or the whole) may be carried forward for a year only.

Small gifts exemption: gifts of not more than £250 each may be made to any number of persons in a tax year.If any gift exceeds £250 in value, it will form part of the £3,000 allowance referred to above.

Wedding or civil partnership gifts: gifts to your children (£5,000 limit per gift), grandchildren or great-grandchildren (£2,500 limit per gift) or anyone else (£1,000 limit per gift) can be made on, or shortly before, their wedding or civil partnership ceremony.

Gifts out of income exemption: this is often overlooked, but it can be very useful, if you are able to satisfy the rules laid down by HM Revenue & Customs.In brief, the gifts need to be regular enough to be classed as normal expenditure out of your surplus income.We can give you advice on how this exemption works and the evidence that is required to enable a successful claim to be made to HM Revenue & Customs.

Other lifetime gifts: all gifts made between spouses or civil partners (whether during lifetime or on death) are exempt from IHT. An exception to this is where the recipient spouse or civil partner is not domiciled in the UK, in which case the exemption is restricted to whatever the IHT nil-rate band is at the time of death. In the majority of cases, most gifts to other individuals will be exempt from IHT if you survive seven years after making them. However, there are exceptions to this and, if you are considering making lifetime gifts as part of your tax planning.

When a person dies without leaving a Will, they are described as having died intestate.

In England and Wales, there is a statutory set of rules which apply if you die intestate (the rules are different in Scotland). Your estate would be divided according to this fixed set of rules, irrespective of what your intentions actually were.

If you die intestate, your spouse or civil partner will not automatically receive all of your estate.

If you have children, grandchildren or great grandchildren your spouse or civil partner will receive your personal possessions, the first £322,000 together with half of the rest of the estate. The other half of the estate will go to your children. If your estate is worth £322,000 or less your children will not receive anything. If you’re not married or in a civil partnership, or you have divorced or ended your civil partnership, your children will inherit all of your estate. If, however, you are separated but are still married or in a civil partnership, your spouse or civil partner may inherit, even though you no longer live together.

If you have no children, grandchildren or great grandchildren your spouse or civil partner will receive your personal possessions together with the rest of your estate.

Under the rules of intestacy, all of your children are treated equally. Children from all relationships and legally adopted children will receive equal shares of your estate. Step-children are not treated as your children and therefore will not receive anything irrespective of your relationship with them. They will however be treated as your children if you have legally adopted them. Your children will receive their inheritance when they reach the age of 18 or marry or enter into a civil partnership before they become 18.

If you hold any assets jointly, they will not form part of your estate and therefore will not be subject to the intestacy rules.

When a person dies, their estate has to be dealt with. If there is a Will, the estate is administered according to the provisions within it – if possible.

A Will appoints executors and trustees: the people chosen to deal with their affairs. Those people are not obliged, or indeed may not be able, to take up the role. In this case, other people or professionals have to be appointed.

If there is no Will, a person dies intestate. The estate is administered in accordance with the laws of intestacy. These are the rules that govern who is to receive the proceeds of the estate. The beneficiaries, (those who will ultimately inherit) are able to administer the estate, or again, professionals can be appointed. They will be known as the personal representative(s).

When a family suffers the loss of a loved one, emotions run high. Dealing with the estate can be a daunting task, particularly when an estate is complex, large and varied. There may be assets abroad, various portfolios, businesses and properties to deal with, as well as beneficiaries scattered around the globe.

In all cases, and before the beneficiaries receive their inheritance, the assets and liabilities have to be identified and valued. Inheritance tax forms must be lodged with HM Revenue and Customs, and if necessary, inheritance tax has to be paid. With the experience we have, our team will be careful to minimise inheritance and capital gains taxes wherever possible.

A grant of probate, or letters of administration if there is no Will, may have to be obtained from the court before the assets can be collected. We will draft the documentation required to make the application.

Once the court has granted probate – the official document which confirms that the Will is proven and an estate can be completed; the debts due to and from the estate are paid and received. There may be assets abroad, investments, businesses and properties which need to be sold or transferred. Consideration will be made to any capital gains implications and income tax payable. If required, trusts are set up in accordance with the Will, prior to making the distributions to the beneficiaries. Beneficiaries may also wish to vary the Will so as to manage their own inheritance tax implications.

There may sadly be rifts in the family or claims made against the estate which require more in depth legal assistance which we can help manage and resolve.

Whatever the size or complexity of an estate, our team is specialised, experienced, and sensitive to the family’s needs at such a difficult time.

Our partners regularly act as independent professional trustees for trusts ranging from small trust arrangements with only one asset such as a portfolio of quoted investments to complex trusts holding property, investments and cash. We place great emphasis on our professional, objective and confidential approach and will do everything we can to protect our clients’ interests.

There are a number of trusts that may have independent professional trustees including

life interest trusts – this is where an individual, known as a life tenant, is given the right to receive income only, whilst preserving the capital for others after the death of the life tenant.

discretionary trusts – none of the beneficiaries has a fixed right to any particular share of the trust fund. Instead the trustees have discretion as to which beneficiary benefits and to what extent. Discretionary trusts can be used to protect your beneficiaries from unfortunate relationships, profligate lifestyles etc.
Our specialist lawyers can help you decide on the type of trust which will best suit your circumstances and whether you need to include a trust in your Will to preserve your assets and protect members of your family or whether you need to set up a lifetime trust for loved ones.

We will explain the law to you in plain English and we guarantee that our advice to you will be practical, realistic and suitable for your lifestyle.

The benefits of appointing independent professional trustees are considerable. The specialist knowledge, expert opinion and years of experience mean a far greater level of skill and care in creating the right trust for you. Our personal service and objectivity means we can manage any potential conflicts of interest and spot and solve potential problems at an early stage.

Trusts can be a very effective way of managing your wealth now and in the future. They can hold a wide range of assets from property and shares to family heirlooms. We work with trustees and beneficiaries on the creation, use and variation of trusts.

Setting up a trust
A trust is created when you give assets to people you choose (the trustees) to hold for the benefit of others (the beneficiaries). It can be set up during your lifetime (by using a trust deed) or upon death (by inclusion in your Will) and can be used as a practical tool for inheritance tax planning.

Your chosen trustees have responsibility for managing the assets for the benefit of the beneficiaries according to the terms of the Will or trust deed. In choosing your trustees you need to be confident in them and only appoint people who you trust to take on the role. You may choose to appoint professional trustees and we provide this service for many of our clients.

Administering a trust
Administering a trust is a significant responsibility. We work with trustees on the ongoing administration of trusts, including assisting trustees in setting up trust accounts and trust tax returns.
There are many types of trusts designed for specific situations, but common types are:

bare trusts – often used for trustees to hold assets for a child until they reach 18
life interest trusts – giving an individual (known as a life tenant) the right to receive income only, whilst preserving the capital for others after the death of the life tenant
discretionary trusts – none of the beneficiaries has a fixed right to any particular share of the trust fund but the trustees have discretion as to which beneficiary benefits and to what extent. Discretionary trusts can be used to protect your beneficiaries from unfortunate relationships, profligate lifestyles etc.
Our specialist team will advise you on the type of trust to suit your circumstances, whether you need to include a trust in your Will to preserve your assets and protect members of your family or whether you need to set-up a lifetime trust for loved ones.

We will explain the law to you in plain English and we guarantee that our advice to you will be practical, realistic and suitable for your lifestyle.

As specialist family and lifetime planning lawyers, we help individuals and families with all types of disputes and disagreements surrounding Wills, trusts and inheritance, including probate disputes and remedies.

There has been a rise in the number of disputes about who inherits and who does not. With an increasingly wealthy population and more complex family structures, this is no surprise. Whether you were close to the deceased person or had a complicated relationship, we will always approach your matter with sensitivity and respect, taking time to understand your situation, your feelings, and what is the ideal outcome.

“I really appreciate your guidance, advice and humour during my inheritance claim. Without your knowledge, negotiating and analytical skills, I am sure the claim would have gone to court and the matter would not have been settled by now.” Individual client

If you’re making an inheritance claim or defending one, our experts can help you

We understand the sensitive nature of Will and estate disputes as they often involve close family members who may have conflicting views about their deceased loved one’s true wishes. Our lawyers are skilled at opening discussions with other members of the family or their legal representatives to try to find creative solutions and make sure you get the result you want before it becomes a lengthy and costly dispute.

Our expertise includes:

  • Disputing a Will
  • Court of Protection disputes
  • Disputes involving executors, trusts and beneficiaries
  • Inheritance Act claims
  • Professional negligence in Will writing
  • Challenging a lifetime gift

Too many of us don’t have a Will – in fact only one out of three adults in the UK has one. Everyone should have a Will, particularly if you have children, own a property or business or have significant savings and investments. Having a valid Will is the best way to ensure your loved ones are looked after in the way you want after your death.

Your life is always changing and so should your Will. Whether it’s a change in financial circumstances, buying a new home, getting married, having children or grand-children or getting divorced, it’s important to review your Will regularly to make sure it reflects these changes.

Many of our clients have complex financial structures; they often own businesses or numerous properties, have significant pensions and savings or have complex family structures. We work with them to make sure their Will is drafted correctly so their estate is passed down to the right people after they die.

A Will is a legal document that makes sure your assets (such as property, cash, savings, and possessions) are left to the right people (beneficiaries) when you are gone. It is the best way to guarantee that your family is supported financially and provided for in the way you want.

Many people mistakenly believe that if you do not have a Will, your spouse will automatically inherit but this isn’t always the case. Equally, if you aren’t married, are in a civil partnership or have step-children, they may receive nothing unless you make a Will.

If you make a Will, you can:

Make sure your family is provided for in the way you want provide for your unmarried partner and anyone else you choose, including charities appoint guardians of your choice who will care for any children until they are 18 defer a child’s inheritance until after age 18 and choose trustees to look after their interests reduce the tax your estate will have to pay by careful drafting of the Will. If you die without a valid Will, intestacy rules apply and your estate may pass to someone you don’t want to benefit.

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