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Powers to Carry on a Business

By | Business | No Comments

Clause 4.8 of the STEP Provisions (second edition) contain limited powers to allow the trustees to carry on the trading of any business interests which the testator may have at death. Where the testator was a sole trader, through these provisions the trustees have an implied power to continue the business in order that it is then sold. This power is only limited to realising the value of the business and through the implied power; this cannot continue indefinitely. Generally, the trustees running the business would be liable for any debts which they may sustain. If the business is only being carried on to realise the value then through the STEP Provisions the trustees have the right to an indemnity from the estate, which gives precedence to the testators creditors and also the beneficiaries. For this reason, it is recommended to include the Powers to Carry on a business clause…

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Mutual Wills

By | Wills | No Comments

Mutual wills are wills made between multiple parties in which they are making some mutual benefit to the other parties and the parties involved agree that the wills cannot be revoked with the consent of the others. On the death of any of the parties the survivors will be bound by the terms of the mutual wills. Mutual wills are most commonly made between spouses, gifting assets to each other on first death and then over to children on the death of the second. Whilst all parties are alive, they can change their minds at any time and revoke the mutual wills. Once one party to this agreement dies and the others accept their benefit from the deceased’s Will, the agreement not to revoke becomes binding on the other parties. On the face of it, this seems beneficial, however mutual wills have numerous issues. There is no flexibility for the…

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Second Death Gifts

By | Gifting, Inheritance, Wills | No Comments

Many couples making Wills wish to leave bequests of particular items, sums of money, or a share of their estate, but only when both testators have passed away. So how can we ensure this happens? The way to ensure that a gift is only made on second death is to place the gift(s) in both Wills, and ensure there is a condition that states the gift should only be made should the partner/spouse has predeceased the testator. For example, ‘If my wife Susan Smith has predeceased me, I give…’. When making a second death gift, the testator is giving this gift to their partner/spouse on their death as part of the Residue of their estate, therefore on the death of the survivor, the gift is made payable from the survivor’s estate. If the clients have requested a second death gift in their Will, but it has only been placed in…

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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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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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Introduction to Guardianship

By | Guardianship, Inheritance, Intestacy, Legal, Uncategorized, Wills | No Comments

Appointment of Testamentary Guardians The appointment of testamentary guardians is rarely considered by parent, but it is highly desirable that they should consider who should look after their children if both were to lose their lives while their children are under eighteen. The appointment of a testamentary guardian can only be made by a person with parental responsibility. What is Parental Responsibility? The legal definition of Parental Responsibility is the rights, duties, powers, responsibilities and authority which by law a parent has in relation to their child and their property. This includes: Providing them with a home maintaining them Choices about their medical treatment How and where they are educated Deciding their name It does not include a duty to maintain the child financially, all parents have this duty regardless of whether they have parental responsibility. More than one person can have parental responsibility for the same child at the…

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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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