It was very sad to hear the news that rock legend Prince recently passed away with a fortune estimated to be in the region of $300 million. Despite his vast wealth Prince never put a Will in place and, as a consequence, his family are now embroiled in a court battle over who will inherit his estate – some three weeks after his death.
If someone dies in the UK without a Will their estate will be distributed in accordance with what are known as the rules of intestacy. These are Government rules which determine how an individual’s estate should be distributed and depend on who the surviving relatives are and their relationship to the deceased. Relying on the intestacy rules can result in a variety of problems ranging from unexpected tax bills to disharmony and upset between family members.
A well drafted Will can help avoid most of these problems and also offer protection to family members against unexpected tax bills in the future and their inheritance being used as a financial resource in marital breakdowns and bankruptcies. These types of Wills would normally incorporate at least one Trust to offer the protection mentioned above and also provide flexibility to help deal with changes in your family’s circumstances. A Will Trust may also offer protection for the surviving spouse if they require nursing home care in the future. The idea being that the assets held subject to the Trust cannot be claimed by the Local Authority to pay for the cost of the care.
A flexible Will would also be supplemented by a Letter of Wishes which set out how you would like your Trustees to use your estate for the benefit of your family. Whilst a Letter of Wishes is not legally binding on your Trustees our experience is that most Trustees will usually try and honour those wishes unless doing do would give rise to problems (i.e. create a tax charge). Who you appoint as a Trustee is very important and it is something you should think about very carefully. In some situations it might be appropriate to appoint one or more professionals to act as Trustees depending on the family dynamics and the type of assets included in the estate.
Current statistics show that only one third of the UK population have a Will in place – don’t be included in this statistic and put a Will in place for the benefit of your family.