Drawing up a will

What happens to the wealth of a person who does not leave a will? What if their will cannot be found? Who does the remaining wealth go to? What happens if a person leaves their wealth to a partner who has died before them?

These questions frequently arise because people put off making a will or do not update it when their circumstances change. And what about leaving a donation to a charity you value or have been involved with? Don’t delay.Talk to somebody qualified to help you ‘put your affairs in order’.

Estate and inheritance

Most transfers of assets are now free from inheritance tax, provided the donor survives for seven years after the transfer. However, this tax is complex and needs careful planning. Steps to reduce inheritance tax can result in increased potential liabilities to other taxes, such as capital gains tax. For assistance with this issue, seek the advice of an ICAEW Chartered Accountant.

Trusts

Creating a trust is a device sometimes used to make financial provision for family and others. It has clear income tax, capital gains tax and inheritance tax implications.

A settlement may be established either during the lifetime of the donor (or settlor) or on death.
A lifetime trust arises when the settler makes a settlement passing the legal ownership of a trust property to a trustee.

Where the trust is created on death, the personal representative must first complete the administration of the deceased’s estate. This usually involves obtaining probate and paying any inheritance tax. The personal representative will then deal with the collection of assets and payment of liabilities.

Distribution of the estate may last months or, in the case of complex estates, years.  Inheritance tax is charged on a deceased’s estate before property is transferred to a trust created by a will or an intestacy, though no capital gains tax arises when personal representatives transfer property to trustees.

There are many types of trust offering beneficiaries a range of interests. These include absolute interest, limited interest, reversionary interest, vested interest and contingent interest trusts, and it is well worth consulting an expert for clarification and advice.

Whether a trusteeship involves a family settlement, a charity, a pension fund or some other financial trust, the professional knowledge and integrity of ICAEW Chartered Accountants make them obvious choices as trustees.

Making a will

It is often an advantage to have expert tax and accountancy guidance when drawing up a will, especially if large sums are involved. Carrying out the terms of a will may also need professional input and it is for this reason that ICAEW Chartered Accountants are often appointed as executors.