1. How many trustees are required to operate a trust?

A minimum of two but a maximum of four trustees are required to operate a trust. This means that on first death the surviving spouse cannot act solely – a further trustee will need to be appointed to act with them – this does not have to be done through the will but surely the Testator will want to be the person making this choice.

2. If a client has a business do they have to mention it within their Will?

If they wish the proceeds to fall and pass through the residue there is no need to mention the business. However if they wish to pass the business as a legacy the type of business needs to be clarified. If it is a Sole Trading Company or a Limited Company then it can be included within the Will. If a partnership then if there is an existing Partnership Agreement in place this will providedetails of how the partnership is distributed on death of one of the partners. This will take precedent over what is included within the Will therefore there is no need to mention the Partnership. With a Shareholding, Articles of Association need to be considered. It may state that shares cannot be transferred on death therefore only the proceeds of sale can pass through the Will.

3. If a client has equity release on a property can they still do a protective property trust will?

It depends on what type of equity release the client takes. There are two types. 1. If the client signs over their whole property to the equity release company and the company then gives the client a lump sum of money back to spend then a ppt CANNOT be done. This is because they have signed the property over and therefore they have nothing in their name – so they cannot give something away that does not belong to them. 2. The other type of equity release is when the equity release company give the clients the equity they want and to secure this take a charge against that proportion of the property (payable on second death) and therefore the property is in the name of the clients still – so the ppt deals with my share and interest in the property known as therefore the ppt deals with the clients share and interest less the charge by the company in type 2 equity releases then a ppt can still be done. What is imperative here is that the clients ensure they tell the ifa dealing with the equity release that they have this type of will and ensure that the ifa works around the will so that the wills work.

4. If a client has foreign assets what are the best options?

It would be advisable that they make a Will in the relevant Country if their assets are immovable. You will need to discuss how both the foreign Will and English Will can be written as there are two options.

5. What is a discretionary trust and when should one be used?

A discretionary trust is when you have two trustees looking after the contents of the trust and paying out the capital and income at their absolute discretion. Therefore any thing can be included into a discretionary trust – e.g. – shares/cash/a property. A discretionary trust is a clause within the will. We offer three types of discretionary trust. These are, the nil rate band iht discretionary trust will, the disabled discretionary trust and the standard discretionary trust. Normally a letter if wishes is drafted from the testator to the trustees, telling the trustees how to benefit the beneficiaries of the trust, however this is just a guide and it is ultimately at the trustee’ s discretion. EG – if a mother has three children and one on the three is going through a long and messy divorce then it would be a good idea to put that child’ s share into a discretionary trust so that none of the assets in the trust will come into the divorce settlement and get into the hands of the ex spouse. EG – if a father wants to benefit his nephew with some money from his estate but the nephew is not good with money and is likely to blow all in inheritance on alcohol and drugs then the money can be put into a discretionary trust and managed by the trustees and paid out at their discretion – i.e. when he needs it for rent or to buy a house (something useful!) As we can see the discretionary trust can be a useful tool in estate planning, however the trustees will needed to be chosen properly and there always needs to be a minimum of two.

6. What is a giftover?

When you skip a generation because that generation has predeceased the testator/testatrix. i.e when child dies grandchildren inherit.

7. What is a non mutual severance?

A non mutual deed of severance is used when one joint owner of a property wishes to sever the joint tenancy but the other joint owner can not/will not do so because they are mentally incapable or just unwilling. We will send the severance forms out as normal – this will then be served by the client on the other joint owner. The notice of severance must be sent to the other joint owner recorded delivery, the recorded delivery slip must be kept as proof of sending – the Land Registry will require this. We have to prove that this person received the severance form and the onus of proof is on the person serving the severance.

8. What is a PET?

PET stands for potentially exempt transfer. This relates to inheritance tax and works on the following principal. If you give something away in your lifetime and survive this by seven years, then as along as you do not reserve your benefit in this (i.e. if you own student house and convey this over to your daughter but carried on collecting the rental income you would have reserved a benefit in that asset) then this will pass free on inheritance tax. If you did reserve your benefit in it then the Inland Revenue would include the value of this gift in your estate for inheritance tax calculations. The seven year rule works on a tapered level. Therefore if you died 5 years after you had made the gift then the tax payable would be less than 2 years, and you have to survive the whole seven years to make it a PET.

9. What is a Solvent estate?

A solvent estate is an estate that has sufficient assets to meet all funeral, testamentary & administrative expenses, IHT and all debts and liabilities.

10. What is the difference between a ppt and a right of residence?

A right of residence just gives someone the right to live in the property for a pre determined amount of time. A life interest (PPT wills) is when that person has the right to live in the property, but also has the right to sell the property and buy another property and any subsequent profit they can have an income from and upon their death the property passes through the testators provisions made in their will. Therefore depending on how many powers the testator wants to give away will depend on whether they give a life interest or a right of residence in the will.

11. What is the effect of a deed of severance?

A deed of severance is used mainly when you have an IHT will or a PPT will. The effect of a deed of severance is that it allows each owner of the property to pass their share of the property via the terms of their will. If two owners of property are not tenants in common then they will be beneficial joint tenants and this means that on the death of one joint tenant the other will get the whole property by survivorship. When a deed of severance has been signed then depending on whether the land is registered or not : Registered land – we send a signed copy to the land registry and they record the restriction on the land register. They will send confirmation back to us when this has been completed and we will send this onto your client. Unregistered land – we do not send a copy to the land registry as there is nothing to record the restriction on so we keep a signed copy with the deeds of the property.

12. When is a disabled discretionary trust needed?

This can be used when a beneficiary is disabled and claims state benefits so that any inheritance they have is managed by chosen trustees and does not jeopardise their right to claim benefits.

13. When should I use the life interest of residue clause?

This is when you want to give someone a life interest in your whole estate but do not want them to have it ultimately. EG- when you have a couple who both have their own children from previous marriages who they want to benefit from their estate but they want their partner to have some benefit from their estate during their lifetime. This way the partner can continue to live in the property and can have an income from any residuary assets but on their death it passes to their children. It is not recommend if the estate is substantial as it will be seen on second death as an interest in possession and the value will be taken into tax calculations on death of the partner.