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Tony Wickenden: The will as a pivotal part of estate planning

The key advantages of leaving a valid Will are as follows.

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Commonly a will includes the following provisions:

– Provision as to burial or cremation

– Appointment of executors who would also normally be trustees of any trust declared in the will

– Provision of specific legacies of cash or chattels

– Appointment of guardians in respect of minor children of the testator/trix

– Specific provisions as to any specific assets and the residue of the estate. This could include outright legacies to individuals named in a will or trust provisions

The key advantages of leaving a valid will are as follows:

Avoidance of intestacy

Where an individual dies without leaving a valid will, the devolution of their estate is subject to the intestacy provisions of the jurisdiction in which they are domiciled under the general law. Although the intestacy provisions might in some cases coincide with the individual´s wishes, in many cases this will not be the case.

In particular, many people are under the false impression that where an individual is married, their spouse will inherit the whole of the estate.

While this may be true in some circumstances, (eg. where there are no children of the marriage and no relatives), in many circumstances (eg. where the spouse survives as well as brother(s) or sister(s) of the deceased or issue), the spouse will, under the intestacy provisions, only be entitled to a part of the estate. Making a valid Will is the only way to ensure that those who are intended as beneficiaries will benefit on the individual’s death.

Choice of executors

Through a will an individual will also normally choose their executors and trustees. The people who will deal with the estate of a person who dies intestate – known as administrators – are dictated by the law and may not be the persons the deceased would have selected.

An executor’s role includes collecting all the property of the deceased, paying off any debts and funeral expenses and distributing the estate to the persons entitled under the will. It should be remembered that executors can, to a large extent, act before the grant of probate since they derive their power and appointment under the will and can act in that capacity from the moment that the testator dies. But before a transaction can be finalised the executors must prove their title by producing the grant of probate. Probate is prima facie evidence that the will is valid, that it is the last will and also that any inheritance tax due in respect of the death has been paid. In contrast, an administrator has no such powers to act until the grant of letters of administration is made. Thus a will will also ensure that the estate can be administered more quickly and efficiently.

A person named as an executor doesn’t have to accept that role but, in most cases, will do so.

Guardians

Under the terms of a will, guardians of minor children can be appointed by the testator/trix if they so wish. This should always be recommended where the testator/trix is a parent of minor children.

Choice of trust terms

When drafting the Will the testator/trix can set out the precise terms of the trust and the powers of the trustees. For example, certain trustee powers, which are implied under statute, can be extended or replaced, and special requirements and special powers, for example to distribute capital, pay income to specific beneficiaries, determine in what circumstances a beneficiary may become entitled or lose their entitlement can be included.

Tax planning

Making an appropriate will may also result in tax savings, under current legislation, both in respect of inheritance tax and income tax.

The will is pivotal to much estate planning. In business assurance, the direction of the shares of a deceased business owner should be specified in the will. This is especially so if the shares are to pass to other than a surviving spouse say into a “bypass” trust under which the spouse could benefit.

Tony Wickenden is joint managing director of Technical Connection

Through Techlink Professional, you can access CII and IFP-accredited CPD, a full and up-to-date technical library, technical updates, business generation ideas and, through our additional ASKservice, case-related technical support. Techlink Communicator delivers content for regular client and professional adviser communication. Go to www.techlink.co.uk and click the Free Trial link. Go to www.technicalconnection.co.uk for more details on our services or call 020 7405 1600.

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