- What is the difference between a will, a trust and estate planning?
- What happens if someone dies without a will?
- What is a grant of probate or grant of letters of administration?
- What does an executor have to do, and can I refuse to act?
- How can we plan to reduce inheritance tax on our estate?
- What is a lasting power of attorney (LPA), and when should I put one in place?
- What happens if someone loses capacity without a lasting power of attorney in place?
- Can a will be challenged, and on what grounds?
- How are assets held abroad dealt within a UK estate?
- Do unmarried couples have any rights over a home they share?
- What is a trust, and when is one actually useful?
- How often should we review our wills and estate planning?
- How long does an estate administration take?
1 – What is the difference between a will, a trust and estate planning?
A will is a legal document which sets out who will inherit your assets when you pass away and who your executors are. Executors will manage the distribution of your estate in accordance with your will.
A trust is a formal arrangement where individuals or a trust corporation (as trustees) will hold and manage assets for the benefit of someone else or a number of potential beneficiaries.
Estate planning is a wholistic approach to organising your affairs which includes a review of financial matters, tax planning, your will, lasting powers of attorney, trust arrangements etc in consideration of trying to reach the best potential outcome in your lifetime and on your death for your beneficiaries.
2 – What happens if someone dies without a will?
If someone dies without a will, the distribution of their personal belongings and assets will follow the rules of intestacy. A flowchart of how the estate will be distributed under the current intestacy provisions can be found here: https://www.birketts.co.uk/app/uploads/what-happens-if-you-dont-make-a-will-1.pdf
3 – What is a grant of probate or grant of letters of administration?
A grant of probate or letters of administration is a court issued document which gives the executors (where there is a will) or administrators (where there is an intestacy) formal authority to collect in the assets of the estate and deal with the administration of the estate. Not all estates require a grant. The time it takes for the court to issue a grant very much depends on the type of application which was made but it can take 12 weeks or more for processing times.
4 – What does an executor have to do, and can I refuse to act?
An executor is the individual or trust corporation who has been appointed under a will to deal with the deceased’s estate after they pass away. It is possible to refuse to act (renounce), and it is possible to reserve your powers as an executor however, this decision must be made promptly and from the outset of the process to avoid problems from arising later in the administration of the estate.
Understanding an executor’s duties can be found here: https://www.birketts.co.uk/legal-update/what-are-an-executors-duties/
5 – How can we plan to reduce inheritance tax on our estate?
There are numerous ways you can mitigate inheritance tax on your estate, through utilising tax-free allowances, exemptions, reliefs and certain trust structures. Our Private Client Advisory Team can assist with assessing which exemptions and tax reliefs apply to your estate.
6 – What is a lasting power of attorney (LPA), and when should I put one in place?
An LPA is a formal legal document in which you to appoint individual(s) or a trust corporation to deal with your financial and/or health and welfare affairs in your lifetime in the event that you become unable to make these decisions yourself however, a trust corporation cannot be appointed for health and welfare affairs. There is no set time to put an LPA in place however, it is best to consider putting an LPA in place once you are an adult and have the mental capacity to do so.
7 – What happens if someone loses capacity without a lasting power of attorney in place?
It will be necessary to apply to the Court of Protection to appoint a deputy, who can be an individual or trust corporation. A deputy will be responsible for dealing with your financial and/or health and welfare affairs however, as above, a trust corporation cannot be appointed for health and welfare affairs. Our Court of Protection Team are able to provide further advice on this and assistance with making an application to the court.
8 – Can a will be challenged, and on what grounds?
Yes, a will can be challenged on many grounds some being that the will does not contain the proper legal formalities; the person who created the will lacked capacity at the time, and/or they did not understand and approve the contents of the will. In order to successfully challenge a will, you will need to obtain evidence to support your claim, and our Private Wealth Disputes team can assist you with the process.
9 – How are assets held abroad dealt within a UK estate?
Assets held abroad may or may not fall to form part of the deceased’s UK estate. A review of all the circumstances at death would be required to correctly ascertain the position with such assets. It is important to take advice from a lawyer who has experience in advising on estates with international elements.
10 – Do unmarried couples have any rights over a home they share?
Yes, however, this depends on how the home is owned and the couple’s conduct. Even if the property is legally owned by one partner, the other may have beneficial rights over the home if they can demonstrate that either they have made financial contributions towards the purchase price and/or mortgage, there has been a common intention that each party would have an interest in the property, or there has been an express declaration of how the home is owned.
11 – What is a trust, and when is one actually useful?
A trust is a formal arrangement where trustees will hold and manage assets for the benefit of someone else, a group of people or a charity. Trusts are helpful in various situations, they are frequently used to hold assets for minors or vulnerable individuals who require further assistance, or where you want to preserve assets for children from a previous relationship. Trusts can also be used very effectively in wider estate planning.
12 – How often should we review our wills and estate planning?
There is no set time to review your will and estate planning however, we recommend doing so every two years or if your circumstances have changed and/or where you have changed your mind as to the contents of your will. Changes over time make reviewing necessary such as a change in your marriage status, a death in the family, the birth of a child and/or a change in your financial circumstances. Our Private Client Advisory team can assist with your estate planning and reviewing and amending your will.
13 – How long does an estate administration take?
The time it takes to administer an estate largely depends on the complexity of the estate; availability of relevant information; potential disputes arising from the contents of the will or intestacy; the ease of identifying beneficiaries or the time it takes to sell or collect in the assets of the estate etc.
A straightforward estate may take between 6-12 months to administer and a complex estates can be in administration for many years.
