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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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Discretionary Trusts, WillPack, House, Money, Table

Discretionary Trusts

By | Property, Trustees, Trusts | No Comments

The Discretionary Trust is a common Trust for a Testator to use for their children to ensure that they do not inherit directly from their estate. The reasons for this can vary, for example, protecting assets from potential divorce, drinking or gambling issues, or the testators may wish that their assets are distributed in a particular manner or at certain points in their children’s lives that are outside the capabilities of the Will itself. This type of trust is effective because the assets are held and managed by the Trustees to distribute to the beneficiaries at their own discretion, hence the name of the trust and just because a beneficiary is named under the trust does not mean that they are absolutely entitled to any assets – useful where the Trustees may have concerns over how the money may be used.  Where beneficiaries are named under the Trust; this can…

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Missing Persons

By | Trustees | No Comments

Where a client has a close family member who is missing, there are a number of issues that you should be aware of. If a person has been missing for 7 years or more, family members can apply to the courts for a declaration to state that a person is presumed dead. Family may have already completed this, in such case your client will likely not wish to include the missing person (any gift to them in the Will would in fact fail, as they are presumed dead). If no declaration has been made and the client may wish to exclude the missing person completely from the Will. If he was to reappear, the client should be advised of the possibility of a 1975 Act claim. A claim under the act does need to be made within 6 months of a grant of probate or letters of administration and will…

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WillPack

Executors & Trustees

By | Executor, Trustees, Wills | No Comments

Many Testators will choose the same people to act as both their Executors and Trustees, however each role is very different and comes with its own responsibilities so this may prompt testators to consider appointing different individuals for each appointment. Firstly, those who will deal with the administration process of the Estate – the Executors, and those who will manage any assets which are required to be held once the administration of the Estate is complete – the Trustees.   Where necessary and upon the death of the testator, the duty of an Executor is that they shall apply to the Court for a Grant of Probate. This enables the Executor to accumulate the assets and where it is appropriate, liquidate assets to enable distribution, in accordance with the terms of the Will. Before distributions, they must ensure that any debts and liabilities have been settled. The role could include…

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General Discretionary Trust

By | Trustees, Trusts | No Comments

A General/Standard Discretionary Trust has a wide range of uses from protecting assets from the beneficiaries themselves, or third parties seeking money from the beneficiaries. As the assets are held by the Trust, it is out of direct reach of the beneficiaries and is not considered as part of their estate. However, for the Trust to work in this way, there must be more than one beneficiary of the Trust, otherwise the assets are deemed to be owned by that one beneficiary, making this level of protection ineffective. The General Discretionary Trust is useful for making provisions for a dependant, or any other person(s) who could claim under the Inheritance (Provisions for Family and Dependants) Act 1975, without them directly inheriting. This reduces the risk of a successful claim against the estate. This could, however, leave the Trustees in a difficult position of being pressured by this beneficiary. The Trust…

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The Number of Trustees

By | Trustees, Trusts | 2 Comments

When a Trust is included in a Will, clients will often wish for their surviving spouse to act as the sole Trustee. Whilst this is not an issue in most Trusts it can cause complications where the Trust includes land (such as a PPT). A sole Trustee is unable to give a valid receipt any capital money arising from land. This means that a sole Trustee of land is unable to deal with any income from a property or sell the property (for example if they wished to downsize under the terms of a PPT). The Trustee is able to appoint further Trustees themselves, however it should be noted that Testator does not get a say on who this Trustee is and it could indeed be someone who the Testator would not wish to act. This restriction does not apply to Trust Corporations; they are able to act solely without…

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Disabled/Vulnerable Person’s Discretionary Trusts

By | Guardianship, Inheritance, Legal, Trustees, Trusts, Wills | 2 Comments

The Disabled/Vulnerable Person’s Discretionary Trusts These are useful trusts to use when your client has a child or another relative with a disability and who needs constant support. If this person inherits from a Will directly, this may affect what disability benefits they may receive. We can put the assets into a Discretionary Trust with the disabled beneficiary as the Principal Beneficiary. As with any other Discretionary Trust, there must be more than 1 appointed beneficiary. The main reason for this is because whenever a person in receipt of disability benefits receives an inheritance, the Local Authority will want to assess them. This means if they hold over a certain threshold (this can vary) the Local Authority can cut the benefits that person receives. If the estate of the testator is due to pay any IHT. This will need paying before the assets are passed into the Trust, at 40%…

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Flexible Life Interest Trust

By | Inheritance, Legal, Property, Trustees, Wills | One Comment

Flexible Life Interest Trust  Due to more complex estates and greater wealth, greater flexibility is essential to cope with any future changes to the family structure (such as new family members) and changes in the tax regime. The best way to gain the maximum flexibility is by the use of a Flexible Life Interest Trust (FLIT). How a FLIT works The residue of the estate is held on trust for the surviving spouse or civil partner for their lifetime, after which or when the life interest is ended, a discretionary trust will arise in favour of nominated beneficiaries, usually children and issue. Trustees are given a number of powers. They can grant the income of the trust fund to the surviving spouse/civil partner and have the power to grant the capital of the trust fund to them as either absolutely or as a loan, which would be repaid when the…

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Roles of executors and trustees

By | Executor, Inheritance, Legal, Trustees, Wills | 2 Comments

Who are trustees? A trustee is someone who is given legal responsibility to hold property in the best interest of or for the benefit of someone else (the beneficiaries). As the name implies, the trustee acts under a “trust” to do what is best and to act in the interests of the beneficiaries and not themselves. Number of trustees No more than 4 trustees can be appointed to act at once, however reserve trustees can be appointed. If the property of the trust includes land a minimum of 2 trustees must be appointed. Where a Trust is inserted within a Will in favour of a spouse (as a beneficiary) upon first death, it is almost always advisable that a MINIMUM of two other trustees be appointed to act jointly with the spouse. This is in order to prevent any conflict of interest due to the spouse acting as the sole…

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