Will - Post mortem tax planning

Your Will - Trustees

Post mortem tax planning

Introduction

This article is one of a set about wills. While some of the information pages explain various pieces of legislation which are relevant to making a will, others explain a particular aspect of will writing that you might like to consider.

This article explains the role of a trustee and gives you tips on how to choose the best trustee for you.

Making your will tax efficient

There are two ways in which your executors and beneficiaries can change the “disposition of your estate”, after you have died, if at the time of your death, your will is no longer tax efficient or suitable for the needs of your family.

First, they can get together and agree to a different distribution of assets.  In other words, they can re-write your will.  This is done under the authority of the Inheritance (Provision for Family an Dependents) Act 1975. The process is simple but you must comply with time limits and the deed must be properly drawn.  The benefit or interest of no person can be changed in the slightest without his consent. The usual way forward is therefore to apportion any financial benefit among the beneficiaries so that all gain from the changes. Best is to review your will regularly and “get it right”.

Secondly, you can create by your will, a two year discretionary trust.  You simply leave all or any part of your estate to your executors with absolute discretion as to what they do with it. Of course, they are still bound as executors to behave in accordance with the law and your wishes, but they must be able to distribute the assets of that trust as they decide.

It is usual for the will maker to write a letter to them, setting out his wishes in as much detail as he likes. If a discretionary trust is set up in this way, and the assets distributed fully within two years of your death, inheritance tax will be payable just as if the distribution set out in the trust deed was set out in your will.

If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:

• do not provide a complete or authoritative statement of the law.
• do not constitute legal advice by Net Lawman.
• do not create a contractual relationship.
• do not form part of any other advice, whether paid or free.

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1. Additional notes on IHT strategy
2. CGT - Taper relief on disposals of business assets on or before 5 April 2000
3. CGT - Taper relief: qualifying holding period
4. CGT - Working out the tapered chargeable gains
5. CGT - Working out the tax due
6. CGT – Allowable Losses
7. CGT – Assets and disposals
8. CGT – Indexation Allowance
9. CGT – Introduction
10. CGT – Post transaction valuation checks for CGT
11. CGT – Reliefs – (other than taper relief)
12. CGT – Taper relief: Business assets and non business assets
13. CGT – Working out the amount chargeable to CGT
14. CGT – Working out the chargeable gain
15. How to register an LPA
16. IHT - Agricultural relief
17. IHT - Alter Inheritance tax
18. IHT - Business relief and businesses
19. IHT - Calculating Inheritance Tax
20. IHT - Deceased left no will
21. IHT - Deceaseds liabilities
22. IHT - Discretionary trusts
23. IHT - Excepted estates
24. IHT - Foreign aspects
25. IHT - Gifts
26. IHT - Introduction – Is Inheritance Tax due?
27. IHT - Joint property
28. IHT - Paying IHT
29. IHT - Penalties
30. IHT - Pensions
31. IHT - Probate
32. IHT - Responsibilities of personal representatives
33. IHT - Settled property
34. IHT - Thresholds and Interest
35. IHT - Valuing assets
36. IHT - Woodlands
37. Lasting Powers of Attorney
38. Living Wills and Advance Directives under the Mental Capacity Act
39. Notes for attorneys on LPAs for personal welfare
40. Notes for attorneys on LPAs for property and affairs
41. Ordinary Power of Attorney: a temporary alternative to an LPA
42. The Rule against Perpetuties and Accumulations
43. Your will - Choosing executors
44. Your will - Discretionary trusts
45. Your will - Giving to charities
46. Your will - Important drafting points
47. Your will - Inheritance and children
48. Your will - Inheritance tax strategies
49. Your will - Keeping it within the family
50. Your will - Living Wills
51. Your will - Marriage and divorce
52. Your will - Medical use of your body
53. Your will - Mutual wills and mirror wills
54. Your will - Property you can leave by will
55. Your will - Revoking wills
56. Your will - Trustees
57. Your will - Why make a will