Wills Probate And Trusts

Why should I have a Will; what is Probate and should I consider the use of Trusts?

These are questions that may cross our minds every now and again when we hear certain conversations on the television, radio or in general conversation the answer to which can be summarised as follows

Most people understand the need for a Will but for some reason tend to ‘put off’ to another day the making of a Will.

However a Will is a document that can give you control over what happens to your assets after you die rather than the law deciding. Suppose you are in a long term relationship, living with your unmarried partner and your children, and you have not made a Will because it is always something you have always put off until tomorrow. As you and your partner are not married, your partner would have no automatic right to receive your assets and they would in fact pass entirely to your children. Your partner may be able to make a claim under the family provision for dependents rule, but this is likely to result in Court proceedings which are costly, stressful and divisive at a time which is already emotionally difficult for the family.

Guide to Completing the Will Information Sheet 

The Will information sheet sets out the information that you will be asked at your first meeting with a solicitor to prepare your Will.  It is not compulsory that this is completed however it may help you to make decisions on what you wish to include in your Will before the meeting.

1.  You

This simply asks for your personal information.

2.  Spouse/partner

This asks for your partner’s details.  It is important that we have an understanding of your relationship status as you should make ‘reasonable provision’ for any long term partner or spouse.  In the case of married individuals, if you are separated but not yet divorced, please make sure that we are aware of this fact as this will affect our advice to you.

3.  Contact details

These are requested for our use only and will not appear in your Will.

4.  Your Estate

This asks for you to give an approximate value for each of your assets as they stand at the current time and also those of your spouse/partner.  It also asks for any liabilities such as a mortgage/loan/credit cards or any other debts that you may have.

This is requested in order that we can review the inheritance tax position of your estate.  Each person has a ‘nil rate band’ £325,000 meaning that you do not pay inheritance tax on the first £325,000 of your estate. Anything above this figure will pay tax at 40% (unless other relief’s are available). With effective tax planning married couples can utilise both of their individual nil rate bands and not pay inheritance tax on the first £650,000 of their estate. 

Knowing the value of your estate is also useful for potential residential care home planning.  There is much controversy over the payment of residential care home fees and many do not realise that the time you make your Will is the most effective time to plan ahead and protect assets from being used to pay for those fees.

5.  Your Executors

These are the people that will have to administer your estate after you pass away.  They collect in your assets, pay any debts that you may have including the funeral and distribute your assets as you set out in your Will.  You can have up to four Executors.

6.  Guardians

If you have children under the age of 18 then you should appoint guardians to care for them in the instance that both you and your spouse/partner have passed away.

7. Funeral Wishes

It is not compulsory that you set out your funerals wishes in your Will however if you have a preference over cremation or burial or any detailed requests we recommend listing them.

8. Legacies- non charitable.

A legacy is a specific sum of money or item that you may wish to leave to a friend or family member. For example, ‘I Give £500 and my pocket watch to my Godson Joe Bloggs absolutely’.

9.  Legacies- charitable

You may also wish to leave a donation to charity. Charitable donations are exempt from inheritance tax and so can be a useful tool in reducing the amount of tax to pay if you have a taxable estate.

10.  Residuary Estate

After your debts have been paid and the specific legacies under point 8 and 9 above have been paid, the remainder of our estate is known as your ‘Residuary Estate’.  This is usually the bulk of your estate.

If you have a spouse/partner then the usual option taken is to leave the estate to the survivor of you.  You can then make provision in your Wills that after both of you have passed away the estate passes down to your children or other family/friends depending on our circumstances.

This section of the forms gives you space to consider who you would like to benefit from the residue of your estate and in what proportions.

Probate is the general name given to the administration of your Estate after your death.

If you die without a Will your Estate will be dealt with under the rules of Intestacy. These rules are governed by the law and therefore there is no flexibility. There are only certain people who can be your administrators and the distribution of your Estate has to follow a strict list. Your administrators may need to apply to the Court for a Grant of Letters of Administration.

If you die with a Will your Estate will be administered by your Executors. It is a much easier process and what you have provided for in your Will is what the Executors have to do. There is a modicum of flexibility in the administration. Your Executors may need to apply to the Court for a Grant of Probate.

There is however a third option and this option can occur when there is a problem with the Will itself in that either no provision has been made for Executors predeceasing you and/or beneficiaries have predeceased you with no substitute’s name.

Should this third option arise your administrators (or possibly Executors) may have to apply to the Court for a Grant of Letters of Administration with Will annexed. The parts of the Will that are valid can be dealt with as per the Will but the invalid parts will be dealt with under the Intestacy rules.

We would recommend that Wills are reviewed every 3-5 years to ensure that this third option does not arise and that any changes in circumstances have been accounted for.

Assistance with the administration of an Estate is a service we offer. We can contact all the asset holders, complete the application to the Court (you would still be required to be the named Executor/Administrator and sign the documentation) and finally close all accounts and distribute the assets accordingly all on your behalf.

Please give us a call on 01775 722261 if you require any further information.

Trusts are very useful tools in fairly specific cases. These can be:

• in second marriages where one parent wants to ensure that their child(ren) from their first marriage receives property but also wants to ensure that their spouse has a house to reside in
• to look after infant children
• for tax reasons
• to provide for family members with disabilities and/or who cannot manage their own affairs

The above list is not exhaustive. If you feel that a trust may be of use or you are unsure what benefit it can be to you please give us a ring on 01775 722261