Frequently asked questions
A will enables you to distribute your assets according to your wishes when you die. It's also a means of providing for family members. If you have minor children, you can use a will to appoint a guardian to look after them. You can also use a will to provide legacies or specific gifts to non-family members, such as charity, friends and employees. If you die without a will, the intestacy rules will determine who gets what -- you will have no say whatsoever.
The intestacy rules determine who gets what if a person dies without a will. They provide, for example, that the spouse or civil partner of the deceased gets the first £250,000 of the deceased's assets, plus the deceased's personal belongings and a "life interest" in half the remainder of the assets; the deceased's children get half of the excess assets after the first £250,000, and the remainder on the spouse's death. If the deceased is married without children or is unmarried, then there are further rules that apply.
A grant of probate is a court order that gives a deceased person's executors authority to deal with the deceased person's assets. Ordinarily, the persons named as executors apply to the court for a grant of probate as soon as possible after the date of death. If there is no will, the court can give an equivalent order known as "letters of administration," which gives the "administrator" authority to deal with the deceased's assets.
When a person gets married or enters into a civil partnership any existing will is automatically revoked -- unless it is a will that he or she made specifically in anticipation of the marriage or civil partnership. (NB. This may be particularly significant for someone who is planning a second marriage and who has an existing will benefitting children from his or her first marriage.)
People create trusts because they offer more flexibility and control over the transfer of assets than outright gifts. In a trust, you can separate capital and income, and distribute the two separately. In addition, you can parse out assets over a period of time or create a "life interest", (so that one beneficiary gets to enjoy the asset during his/her lifetime, after which it passes to a second beneficiary). In a trust, you can also control the disposition of assets for many years -- even beyond the grave.
Most trusts will require some degree of administration, which will include the management of trust investments, regular accounting for trust assets and income, the preparation and filing of tax returns, and the processing of any payments or other distributions to beneficiaries.
This overview outlines the inheritance tax, capital gains tax, and income tax implications arising on (i) creation of a trust, (ii) during the lifetime of a trust, and (iii) in subsequent transactions involving trust assets.
A large number of people in the UK own property abroad, and in many cases the succession laws of the country in which the property is located could govern the disposition of that property on the owner’s death. For that reason, it is often a good idea to have a foreign will to deal with any significant overseas assets that you might own.
There is a popular misconception that unmarried couples who have lived together for a long time -- and maybe even have had children together -- will, for legal purposes, be treated as a married couple. The fact is, though, that this is not true.
In selecting a trustee for an estate-planning trust, it is important to remember at the outset that the individual (and/or trust company) you select is someone that you or the trust's beneficiaries are likely to be working with over a period of many years.
For most trusts, the income tax rate the trustees have to pay depends on whether the trust is a discretionary trust (which is able to accumulate income) or an interest in possession trust (which must pay out all income to the beneficiaries).
Here are some ideas about how to find the resources you need in order to set up a trust, put together a broader estate plan (which may include a trust), or, if you are a trustee, to get answers to questions about your obligations and how to carry them out.
- A messy will situation.... help required!
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