Will: value to nil rate band placed in discretionary trust

This will template is most likely to be used by someone with a young family and a share in a private company or business partnership. It aims to give you control over how your estate will be divided and also provide some basic IHT planning. It uses a discretionary trust to protect assets for beneficiaries until they reach a certain age. After specific gifts have been made, business interests are left as gifts to one person or party such as a sibling or adult child. The residual estate is divided so that assets with a value up to the nil rate threshold at the time of death are placed into a discretionary trust for one set of beneficiaries (such as your children), and the rest is proportioned between named beneficiaries (such as your spouse or partner and your children). There is provision for gift over if your spouse or partner does not survive you. As in other Net Lawman will templates, you can set trust provisions in detail, giving you control of how the trustees should invest and manage your estate. Also included with the template are guidance notes, explaining clearly how to edit the template and how to sign the will correctly, and a short example letter of intent to your executors or trustees.

Suitable for use in: England & Wales
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About this document

This will is very flexible and could be used in many different situations. The person who uses the template is likely to own their own business, have a stake in a private company such as a family business or be in a business partnership. He or she is also likely to have young children. He or she may be married or single.

After making specific gifts to individuals, including leaving all the interest in the business to one person (or a group of people), the remainder of the estate is divided:

Firstly, assets valued to the maximum of either the nil rate threshold for inheritance tax or an amount specified by you are placed in a trust fund for a group of beneficiaries (most likely your children, or a group of people that does not include your spouse or civil partner to whom transfers are likely to be exempt of tax).

Secondly, the remainder of the estate is given in proportions you choose to individuals, groups of individuals, charities.

If your spouse or partner does not survive you then their share of your residual estate is placed into the trust fund.

Use of a discretionary rather than a standard trust has a number of advantages:

  • entitlements can be rearranged within 2 years, allowing post death tax planning;

  • allocation does not have to be on an even basis - some beneficiaries could be given a greater share than others;

  • trustees have discretion (which you can guide in a letter of intent) as to how to use the estate. For example, you could direct that it should be used to help support children who want to go to university;

  • benefit can be maintained without giving ownership in situations where ownership could erode value. For example, your share of a family business could be left in a discretionary trust so that your children only become shareholders (controlling how the business is run) once they have sufficient experience.

Note that many of the tax benefits of discretionary trusts have now been removed. You can read more about trusts in general, or about this type of trust that is managed at the discretion of the trustees.

Who should use this template?

This template could be used in quite varied situations. The use of a discretionary trust makes this template likely to be used by someone who has a young family or dependents who are not yet financially responsible. Since the residual estate is proportioned between different beneficiaries, the testator could choose to leave some of his or her estate to charity and some to extended family or friends.

As an example, using this template, the testator could choose to leave his share of the family business to his adult daughter from a first marriage, his collection of worthless antique maps to his friend, £325,000 (the current nil rate threshold) in a discretionary trust for his two young children from a second marriage, and split the rest of his assets 70% to his current wife, 10% to each of his brother and sister and 10% to a charity.

This template is suitable for a man or for a woman - it isn't gender specific. We follow normal, modern legal convention of using the masculine form of a word (e.g. testator) regardless of the gender of the person.

This template can be used for basic inheritance tax planning (largely as illustrated by HM Revenue and Customs), but we do not provide guidance on the subject. If the value of your estate could exceed the NRB, then we suggest that you seek advice from a qualified tax specialist before signing your will.

The calculation of the nil rate threshold has become more complicated. As in prior years, the primary threshold is £325,000. However, if you leave your home to direct descendants, it is increased by £100,000 in 2017/18 and a further £25,000 each year to 2020/21. 

The law in this will

The law on wills is varied but precise. This will provides flexibility within that precise legal framework. The Net Lawman trust powers in this document free the trustees from some of the bonds of the Trustee Act 2001 that are unsuitable for trusts managed within your family and by professional advisers.

The law on wills can seem complicated. We have prepared a number of short articles to explain the more difficult legal concepts. You may like to read some of our articles that should help you to write your own will.

When to use this will

You can write a will at any time in your life. Most people consider a new will when their financial circumstances change, or when relationships change. The Law Society advise that you review you will every five years, and that you make a new will after a major life change such as having a child, marriage, separation or divorce. It is possible to change a will without making a new one, but a new one is usually the preferable option.

Document features and contents

  • Revocation of all earlier wills
  • Appointment of executors and trustees
  • Appointment of guardians for children
  • Legacies (gifts of money)
  • Bequests (gifts of possessions)
  • Option to deal with private company shares
  • Option to deal with business partnership interest
  • Instruction to executors to gather in assets
  • Gift of inheritance tax NRB into a discretionary trust
  • Residual estate is proportioned between named beneficiaries
  • Option for gift over to trust for another group of beneficiaries if your spouse or partner does not survive you by more than a given time
  • Options for small bequests and legacies to children without involving a trust
  • Option to treat past gifts as included or excluded
  • Payments to executor(s)
  • Warning to executors on valuations
  • Alternative wishes for burial / cremation / use of your body for advancement of science
  • Signatures and witnesses
  • Example letter of intent
Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

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