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Considerations when appointing Executors or Trustees

By | Executor, Trustees | No Comments

Most testators will usually appoint their surviving spouse or partner, children, close family or friends to act as their executors and trustees. Whilst there is nothing wrong with appointing family members and friends, there are a number of points that a testator may need to be advised of. Personalities Where multiple people are being appointed, they should consider the personalities of those people and relationships between them. It would be highly inadvisable for example to appoint children to act together if it is well known that they do not get along, particularly for appointments as trustees for trusts that may last for a long amount of time, such as a discretionary trust. Location Executors do need to be physically present to deal with the testator’s affairs. Appointing executors who live at the other side of the country or even abroad may not be the best decision if there are other…

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Paying Fees to an Attorney

By | LPA | No Comments

Reasonable Expenses All attorneys are able to claim reasonable expenses they incur whilst acting for the donor. This includes expenses such as postage, travel costs and the cost of an accountant preparing annual accounts. This does not have to specifically mentioned in the Lasting Power of Attorney (LPA) itself but could be included should the donor wish. Professional Attorneys There is debate on whether a professional attorney, such as a solicitor or an accountant, could be paid a fee for their services if there is no express power included in the LPA. The Office of the Public Guardian (OPG) suggest in their PN01 practice note that a professional cannot charge if there is no express power included in the LPA. We would therefore advise that if a professional attorney wishes to charge fees for their services, then a charging clause should be included as an instruction in the LPA. It…

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Intestacy

By | Intestacy | No Comments

Intestacy will occur when a person has not left a valid will, or if their will does not dispose of all of their estate (for example if all of the residuary beneficiaries had predeceased). Any assets that would not pass into the estate will not pass via intestacy. See our previous newsletter for more information on this. The exact distribution under the intestacy rules is set out in S46 Administration of Estates Act 1925. The distribution will vary depending on the value of the estate and what members of family survive. Beneficiaries will inherit the estate after any debts, funeral expenses, taxes and other liabilities have been paid. Spouse is alive – Intestate leaves no issue If the intestate’s spouse survives by 28 days, and there are no surviving issue of the intestate, the surviving spouse will receive the entire estate. Spouse is alive – Intestate leaves issue If the…

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Transferring and Tapering the Residential Nil Rate Band

Transferring and Tapering the Residential Nil Rate Band

By | RNRB | No Comments

Transferable RNRB Any unused Residential Nil Rate Band (RNRB) is available to be transferred to a surviving spouse as long as second death occurs on or after 6th April 2017. On second death, the surviving spouse’s Personal Representatives (PRs) are able to claim both the deceased’s RNRB and the unused RNRB of their late spouse, similar to the procedure used for claiming the transferable Nil Rate Band. This applies even if first death occurred before 6th April 2017. The first to die would not have used any of their RNRB, so 100% of their RNRB will be available to be transferred (unless their estate exceeded the Taper Threshold and some RNRB is tapered away). Whether the first to die owned a qualifying residential interest on their death is irrelevent for the purposes of transferring the RNRB. All that matters is whether the deceased spouse used it or not. Please note…

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Revoking a Will

Revoking a Will

By | Drafting, Wills | No Comments

There are four ways that a will may be revoked. Marriage/Civil Partnership As a general rule, a marriage or formation of a civil partnership revokes any will that a testator made before the marriage or civil partnership under S18 and S18B Wills Act 1837 respectively. There are however some exceptions to this rule. If it appears from the will that at the time the will was made the testator was expecting to be married to, or from a civil partnership, with a particular person and the testator intended that the will should not be revoked by that marriage or civil partnership, the will would not be revoked. It is currently unclear whether a will can be written to be in anticipation of either a marriage or civil partnership to a particular person, for example for a same sex couple who wish to formalise their relationship but currently have not decided…

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Accounts System

Accounts System

By | Admin | No Comments
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What Cannot be Gifted by a Will

What Cannot be Gifted by a Will

By | Gifting, Wills | One Comment

A person’s will can deal with most property that they own at the time of their death. However, there are a number of assets that would not pass into a person’s estate at their death. Life policy proceeds Life policy proceeds may form part of a deceased’s estate and can be gifted by their will. However it is relatively common for these to be placed into trust so that they do not form part of the deceased’s estate. The intentions behind this are: As the proceeds are outside of the estate, they do not need to pass through probate and therefore the beneficiaries can receive the proceeds sooner. By placing the proceeds in trust, those proceeds will not be taken into account when inheritance tax is calculated (unless it is in trust to pay off a mortgage). If life policy proceeds are in trust, clients should contact their policy providers…

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Who can apply under the 1975 Act?

Who can apply under the 1975 Act?

By | Inheritance Tax | No Comments

Whilst any person has testamentary freedom to leave their estate however they see fit, they should be aware that their freedom is slightly restricted by the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). The 1975 Act gives the court powers to order financial provision from a deceased’s estate to benefit certain applicants. S1 of the Act covers who can apply to the court based on a lack of reasonable provision. Spouse/civil partner The surviving spouse/civil partner of the deceased (including a judicially separated spouse). Former spouse A former spouse/civil partner who has not yet remarried or formed a new Civil Partnership (noting that their divorce/dissolution may restrict the ability to apply under the 1975 Act). Cohabitant A person who lived with the deceased for period of at least two years ending immediately before the date when the deceased died and they lived as if they were…

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Inheritance Tax Planning for Unmarried Couples

Inheritance Tax Planning for Unmarried Couples

By | Inheritance | No Comments

The legal position of cohabiting couples varies to that of a married couple and they do not receive some of the benefits that married couples receive. Inheritance tax planning that is common place and simple for married couples may not therefore be the best option when it comes to unmarried couples. A married couple can easily leave everything to each other IHT free and on the death of the second benefit from two Nil Rate Bands (NRB) (and potentially two Residential NRBs). Unmarried couples however do not benefit from either the spousal exemption for IHT or the transferable NRB. The estates of an unmarried couple leaving everything to each other would therefore be considered for IHT on both first death and second death and without the benefit of two NRBs on second death. This could lead to an unnecessarily high IHT charge on second death. Example John and Jane are…

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IPDI vs FLIT

By | Trusts | No Comments

Complex families often come with complex requirements to meet their long-term goals, and matters can be made more difficult when each testator has separate goals or concerns in mind. These goals usually revolve around the inheritance the children are to ultimately receive and when they receive it, and it certain cases, if they inherit at all. Using a Life Interest of the Residuary Estate can cater for most family needs for a number of reasons; On first death, the surviving spouse will be the Life Tenant. They will be entitled to all income generated by the trust and the trust can allow them access to the use of capital at the Trustees’ discretion if desired; All Life Interest Trusts allow the use of the Transferrable Nil-Rate Band (TNRB) between spouses; Each testator can appoint separate beneficiaries from each other; If the Trustees are given the power to advance capital, it…

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