Category Archives: Trusts

Vulnerable relatives

The importance of the right advice when it comes to vulnerable relatives

When it comes to protecting vulnerable individuals, it is important that people obtain the right advice. There are a range of options, with tax and inheritance implications, where the right guidance can ensure vulnerable individuals are both protected and provided for.

Who might be considered a vulnerable person?

A vulnerable person can be classed as someone who:

  • Isn’t mature
  • Isn’t financially sensible
  • Lacks capacity to deal with financial affairs
  • May be good with money but has their finances ‘means tested’ for benefit purposes.

An example scenario

‘Sarah’ has learning disabilities. She used to live with her parents, but decided she wanted to live independently so moved into sheltered housing. This gave Sarah her independence but also provided her with the support and supervision she needed as and when required.

To pay for her accommodation, Sarah received benefits, Local Authority funding and Personal Independence Payments (PIP).

Sarah has a huge passion for steam engines. She lives, breathes and dreams of steam engines, and will do all she can to go and see them. This passion has seen her travel across the country on various occasions to see famous engines.

Sarah’s parents encourage this passion, and upon their death would like to leave her some money so she can continue to enjoy the thrill steam trains give her. They also want to leave money to Sarah to help maintain her and ensure she is looked after, but don’t want this inheritance to impact on the means tested benefit Sarah receives.

What options do Sarah’s parents have?

It’s only right that Sarah’s parents seek advice from a professional who could advise them of the best routes to take and why.

Some routes the parents SHOULDN’T consider include:

  • Leaving all of the money to Sarah’s brother. By not putting the money into a Trust for Sarah and leaving the responsibility on her brother to ‘see her right’ can lead to problems for Sarah. Firstly, the parents are relying on the brother’s integrity to provide for his sister. Secondly, this leaves the inheritance they left their son at risk of any issues that could affect his wealth. Such issues as divorce, creditors, being spent etc.
  • Create a Deed of Variation. This can have tax implications, but also be classed as ‘deprivation’ with regards to the care Sarah receives in sheltered housing. The Deeds of Variation would be included in the means tested benefit which could result in Sarah receiving a reduced payment – or losing this benefit altogether.

So, what should they do?

In this scenario, the best option for Sarah and her parents would be to place any inheritance into a Discretionary Trust. Ideally a Disabled Discretionary Trust, as this would protect Sarah’s means tested benefits. There are also tax advantages available to Sarah if this is the route chosen by her parents.

Services from legalmatters during Covid-19 pandemic

Here at legalmatters, we continue to do everything we possibly can to service our existing and new clients during these very difficult times.

Our ability to provide remote services makes us stand out from the crowd.  This means that you can deal with your will, power of attorney, probate, trust and tax advice etc all over the phone or by email and documents are sent to you by post.  We are also advising our clients on signature processes bearing in mind social distancing measures.

Meanwhile, the office continues to operate with minimal skeleton staff for the protection of our staff, clients and visitors, enabling us to still process physical documents for our clients.  If you do find that you need to call into the office for instance to have documents witnessed when it is otherwise difficult for you to arrange that with family and friends then do please get in touch.

If you would like to speak to one of our expert lawyers about protecting a vulnerable person after your death, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

Enjoyed this post? Why not sign up to legalchatters, our free news, views and updates service direct to your mailbox. Or Like Us on FaceBook.

Stepchildren in your Will

What do I need to consider when I have stepchildren?

Family structures are complex in the 21st century. Increases in second marriages over the past decade has led to more blended families and testators having to consider stepchildren.

Whereas people marrying for the first time have fallen from 176 thousand marriages in 2012 to 159 thousand in 2017, remarriages have held firm at a five year average of 37 thousand up to 2017, the most recent figures available, according to the Office for National Statistics (ONS).

As more people cohabitate and blend their families, what do people need to consider when making a Will?

What to consider when writing a Will involving stepchildren

It is important to understand that inheritance laws in England and Wales do not automatically recognise stepchildren in intestacy law. This means that if you die without a valid Will your estate will not necessarily be inherited by your stepchildren.

The only way to ensure your express wishes regarding your estate are considered is to write a valid Will.

English and Welsh law offers ‘testamentary freedom’ which allows the testator the right to leave your property and belongings to whomever you choose. If you fail to write a Will, your estate will automatically pass to your spouse and biological children. By writing a valid Will, you are able to specify who will inherit and how much they will receive.

If you are looking to create complete fairness and equality in the amount biological and stepchildren inherit, a Will is crucial.

A valid Will can also avoid contentious probate issues arising after your death. If you die and your property is passed to your children’s stepparent, animosity or concern may develop, but your Will and estate planning considerations can help to pacify any feelings of concern. Afterall, if a Will passes the entirety of an estate to a spouse, then your children may be disinherited after your spouse dies.

Adding a Trust in your Will could allow your spouse the freedom of living in the property whilst also providing certainty that your children are provided for in the future.

Asking a professional to draft a valid Will and Trust has never been so important, especially when living through such uncertain times. Rest assured that the services provided by legalmatters are efficient, easy and individualised to the unique needs of each testator.

Services from legalmatters during lockdown

Here at legalmatters, we continue to do everything we possibly can to service our existing and new clients during these very difficult times.

Our ability to provide remote services makes us stand out from the crowd.  This means that you can deal with your will, power of attorney, trust and tax advice etc all over the phone or by email and documents are sent to you by post.  We are also advising our clients on signature processes bearing in mind social distancing measures.

Meanwhile, the office continues to operate with minimal skeleton staff for the protection of our staff, clients and visitors, enabling us to still process physical documents for our clients.  If you do find that you need to call into the office for instance to have documents witnessed when it is otherwise difficult for you to arrange that with family and friends then do please get in touch.

If you would like to speak to one of our expert Wills and Probate lawyers, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

Enjoyed this post? Why not sign up to legalchatters, our free news, views and updates service direct to your mailbox. Or Like Us on FaceBook.

Skeleton staff

Legalmatters continues to support its clients during trying times

Here at legalmatters, we continue to do everything we possibly can to service our existing and new clients during these very difficult times.

Our ability to provide remote services makes us stand out from the crowd.  This means that you can deal with your will, power of attorney, trust and tax advice etc all over the phone or by email and documents are sent to you by post.  We are also advising our clients on signature processes bearing in mind social distancing measures.

Meanwhile, the office continues to operate with minimal skeleton staff for the protection of our staff, clients and visitors, enabling us to still process physical documents for our clients.  If you do find that you need to call into the office for instance to have documents witnessed when it is otherwise difficult for you to arrange that with family and friends then do please get in touch.

You can ring us on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Life Interest trust

Protecting your assets with a Life Interest Trust

Leaving someone a life interest in your Will means they will have the benefit of the asset, for example a property, for the rest of their life following which it will pass to a beneficiary chosen by you.

There may be times when it is better to leave someone a life interest, rather than give them an asset outright. By setting up a trust in your Will, you can arrange for a loved one to have use of the asset for as long as they want or need, then give it to a third person. There are two main reasons why someone might wish to proceed in this way.

To prevent the ‘sideways disinheritance trap’

The so-called sideways disinheritance trap occurs when someone with children from a previous relationship remarries. If their estate passes to their new spouse when they die, then their children may receive nothing. This can happen either because their new spouse makes a Will leaving the estate elsewhere, the new spouse fails to make a Will meaning that the estate passes to their relatives (this does not include step-children) or because the new spouse uses all of the funds, for example for care home fees.

To protect assets from care home fees

If a couple leaves all of their assets to each other, then there is a risk that the last to die will use up all of the funds in paying for care home fees. The local authority will not provide financial support until the value of a person’s assets, to include any home, falls below a set threshold, currently £23,250. This means that very little from the joint estate may be left to pass on to any children.

Using a life interest trust to protect assets

By including a life interest trust in a Will, rather than simply leaving the whole estate to a spouse, the sideways disinheritance trap can be avoided.

You can leave your new spouse the right to live in a jointly owned property for the rest of life. They would still be able to move house if they wanted, and retain a life interest in the new home. But on their death, your interest in the property or other assets would pass to your chosen beneficiaries as detailed in your Will. To pass only a life interest in a property, it must be owned as tenants in common and not as joint tenants, otherwise the property automatically becomes solely owned by the other joint owner on the death of the first to die.

Similarly, by leaving a spouse the right to live in a property for the rest of their life, but not passing them your share outright, you can prevent your half of the property being included in local authority calculations for any care home fees they may incur.

It is advisable to seek professional advice to ensure that your assets are adequately protected and that they will ultimately pass to your choice of beneficiary.

If you would like to speak to one of our wills and probate experts, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Help with will writing or administration

Administering an estate when the Will creates a trust…

When someone dies leaving a Will that creates a Trust, it can have implications for the person dealing with the administration of the estate.

A Will may leave property or assets to a Trust so that an individual may benefit from them during their lifetime without actually owning them. For example, the deceased may have wanted their partner to be able to continue to live in their home, but might want it to pass eventually to children. Or they may want to leave money to children for their maintenance and education.

Estate administration and Will Trusts

The need to set up a Will Trust doesn’t alter the need for an executor to obtain probate. In some cases, where the assets fall below a certain threshold, probate might not be required.

Setting up a Will Trust

The executor is responsible for creating the Will Trust. They will ensure that assets are properly transferred to the trust and that the trustees named in the Will have access to them and are aware of their obligations under the terms of the Will.

Once the assets have been transferred, the trustees will be responsible for looking after them and distributing them to the beneficiaries as specified.

Types of Will Trust

A Life Interest Trust gives a beneficiary the right to benefit from an asset during their lifetime. This could include maintenance payments or living in a property. Once the beneficiary has died, the assets pass in accordance with the terms of the original Will.

A Discretionary Trust gives the trustees the right to distribute funds to named beneficiaries as they see fit. For example, there may be a request to fund education or provide a lump sum towards the purchase of a home.

Money held in Trust for a Minor will be looked after by the trustees until the child reaches the age specified in the Will. This doesn’t have to be 18 – it may be 21 or 25 or even older if the deceased wished.

A Nil Rate Band Trust may have been included in a Will as part of Inheritance Tax (IHT) planning. While it is no longer a requirement, older Wills may still contain this type of trust, which transfers assets amounting to the maximum sum the deceased could give under a Will without being liable for IHT.

Help with Will drafting and administration

Creating a valid Will that does exactly what you want and makes the best use of assets in the light of IHT and other considerations can be complicated.

Dealing with the administration of a Will and setting up of a Will Trust may also have tax implications. Obtaining professional advice means that you can be sure that assets are maximised.

To speak to one of our expert probate lawyers at legalmatters, call us on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Starting a family

Why you should make a Will when you start a family…

When you’re expecting a baby there’s a long list of things to do to get ready. Making a Will isn’t usually at the top of the list, and for many people it isn’t even something they think about at all. But in reality, it’s an important job that could seriously impact your family’s future.

Nobody wants to think about a situation in which children lose their parents, but covering every eventuality means that once you have children you can relax and enjoy life safe in the knowledge that you have drawn up plans for their future care should the worst happen.

When parents don’t make a Will

If anything happens to you and you haven’t made a Will, then those left behind will not necessarily know what your wishes were with regard to your children’s upbringing.

The authorities will have the right to place your children with the guardian they decide upon, and there could be a delay in finalising this, which could be even more unsettling for all involved.

Failing to plan and talk things over with family members could also cause disagreement between them.

As far as financial provision is concerned, this will be governed by the Rules of Intestacy, and you will have lost the opportunity to appoint your choice of trustees to look after the money you leave and decide how it should best be spent.

Writing your Will when you’re a parent

Writing a Will allows you to clearly set out who you would like to care for your children should you die. You can also make financial provision for your children, choosing the age at which you would like them to inherit any money you leave them. For example, you may decide that you don’t want them to be given a large sum of money at 18, and that you would prefer them to inherit it when they are older and more settled in life.

You will appoint trustees to administer the money until that time and leave instructions for how they can use it for your children as they grow up, for example a private education or money towards the purchase of a home.

The trustees will also be able to pay money to your children’s guardian, for everyday expenditure such as food, clothing and school expenses.

Appointing trustees

Choose people whom you trust implicitly and whom you believe are capable of carrying out your wishes as well as looking after the money that you leave. This fund will eventually be inherited by your children so it is important that it is properly managed.

If you would like to talk to one of our expert wills and trusts lawyers, call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Client Testimonial

Client Testimonial…

When you lose someone you love it is always a difficult time. Having to deal with the paperwork involved in administering an estate after a death – and when you’re grieving – can be extremely upsetting.

That’s why at legalmatters we will always try to make the process as pain-free as possible for you – and why we’re always delighted to hear from a client when we’ve helped a family or an individual through such a stressful time. So thank you Jane for your kind words.

“Thank you and Megan, and all in the office staff for making my journey – sorting my dad’s estate through yourself and legalmatters – a professional, reassuring and stress free time. It’s been a pleasure and I would highly recommend you to friends.”

UK Inheritance Tax

What Inheritance Tax liability do non-domiciled residents have in the UK?

When someone is classed as being domiciled outside of the UK, Inheritance Tax will only be payable on their UK assets.

A person’s domicile is usually their home or permanent place of residence.

However some people may claim the place that their father was born as their domicile, or if their parents were unmarried, then the place of their mother’s birth.

Even if someone was born, educated and works in the UK, it is still possible for them to be a so-called ‘non-dom’, ie. not domiciled in the UK. There are rules requiring an annual remittance to be paid to HMRC each year from the seventh year of residency onwards, but by way of benefit non-doms can avoid paying tax on foreign income or gains, provided the money is not brought to the UK.

Inheritance Tax benefits for non-doms

This benefit also extends to UK Inheritance Tax liability. Property outside of the UK can be excluded when calculating Inheritance Tax liability if the deceased was classed as a non-dom at the time of their death. For those classed as domiciled in the UK, Inheritance Tax is payable on all assets, wherever in the world they may be situated.

Property excluded from Inheritance Tax payments

  • Property situated overseas
  • Property situated overseas and held in trust where the settlor was not domiciled in the UK
  • Foreign currency bank accounts
  • British government securities, national savings and War savings certificates

How to benefit from non-dom status

If you have non-dom status, then by setting up an excluded property trust such as a discretionary off-shore trust can protect your assets from UK Inheritance Tax.

This can be beneficial for those who may have lived in the UK for more than 15 out of the previous 20 years, as it will mean that they are considered as UK-domiciled.

By setting up an excluded property trust, assets will not attract Inheritance Tax even if the settlor then acquires UK domicile.

To talk to one of our experts about tax planning, call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Using Trusts in Wills

The different uses of trusts within Wills…

Using your Will to set up a trust allows you to set out exactly who you want to benefit from your assets and protect your money from being spent where you wouldn’t want.

When leaving money or property in a Will, there is sometimes a risk that it may not end up where you meant it to be.

For example, a jointly owned property left to your spouse may be at risk of being sold to pay for care home fees, or money may be left to someone who at present is not in a position to use it wisely.

Setting up a Will trust allows you to dictate in detail who gets what, and when.

Protecting your share of a house

You may well want your spouse or partner to be able to continue to live in your shared home for as long as they want, but if they simply inherit it, then should they need to move to a care home, the whole value of the house will count as their own. This would then be taken into account when assessing their entitlement to help with fees.

Your solicitor will be able to draw up a Will allowing you to leave your share of your home to your children or other beneficiaries, but with your spouse or partner still able to live there as long as they wish. This means that your share of the house will ultimately pass to your children or other beneficiaries.

Passing your home to your children

Similarly, if you’ve remarried during your life, you may want your new spouse to have the benefit of your shared home for the rest of their life, but after that you want it to pass to your children.

A trust in your Will can make this possible, preventing the possibility that your share in your home be left by your spouse to someone other than your children.

Leaving a gift in trust

Setting up a trust allows you to leave money to someone under 18, to a person who is not able to manage their own affairs or to a recipient of state benefits, which might be withdrawn if they were to inherit a large cash sum.

Trustees will be in charge of the money, giving it to the beneficiary in accordance with your wishes, for example for living expenses or continuing education.

Leaving a life interest in assets

You can set up a trust via your Will so that a person receives income from the assets in your estate, but when they die, the capital is passed to the beneficiary of your choice. This allows someone’s funds to live on but prevents them from leaving the main capital under the terms of their Will.

Ask one of our specialist team at legalmatters to help you draw up the Will that allows you to leave your assets exactly as you wish. Call us to discuss your Will on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.

Protecting your children

Will my stepchildren inherit my assets when I remarry?

A second marriage can be very complicated when it comes to making sure your family inherit exactly what you want them to have.

The first thing to know is that any previous Will you have made becomes invalid when you marry, unless it was specifically made in contemplation of the marriage.

If you and/or your new spouse have children, you both need to sit down and work out what assets you have and who you would like them to be ultimately passed on to.

If you don’t make a Will

When someone dies without making a Will, their estate passes under the Intestacy Rules, which give all personal possessions plus the first £250,000 to the spouse. Any sum over and above £250,000 will be shared, with 50% going to the spouse and 50% shared between any children.

Stepchildren are not included at all. This can mean that if your spouse inherits your estate and then dies without writing a Will, your children would not be entitled to anything.

If you do make a Will

If you make a Will leaving everything to your spouse, with the understanding that they will then leave your children your assets when they die, you have no guarantee that this will actually happen.

As time passes, they may change their mind and decide to leave their estate elsewhere, or they may fall into debt or need funds for care home costs.

The way to avoid this is to have a Will drawn up so that your spouse has a lifetime interest in your property and assets, but on their death the capital passes to your children.

What to do about your Will when you remarry

Because any previous Will becomes void on marriage, you should sit down with your new spouse and decide who you want to inherit. Its particularly important when family situations are complicated, for example with different sets of children and stepchildren, to get expert help in drawing up a Will that includes the necessary trusts.

It is also important that Wills are unambiguous to avoid disputes after someone dies. If possible, you should talk things through with any children and stepchildren so that they understand what your wishes are and what will happen to your estate after you die.

A specialist Trusts and Probate lawyer from legalmatters will be able to put your requirements into a valid Will and this should avoid any arguments arising at a later date.

If writing – or updating – your Will is one of your 2019 New Year’s Resolutions, don’t put it off. Speak to one of our expert lawyers at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

Finding our posts interesting? Why not sign up to receive legalchatters, our regular news, views and update service straight to your mailbox. Or Follow Us on FaceBook.