Frequently asked questions
A trust is brought into existence when a person (called the ‘settlor’) transfers some of his assets to trustees (who become the legal owners) for the benefit of third parties, called ‘beneficiaries’ (the beneficial owners). A trust is a legal entity in itself. Another word for a trust is a settlement.
Sometimes trusts are created under a will and sometimes they are created during the lifetime of the settlor. Sometimes trusts are created to save tax, sometimes to protect assets; there are many and various reasons for setting up a trust.
Yes. Both you and your partner should make a will, even if most of your property is in one person’s name. Making a will allows you to name your spouse as the person who will benefit from your property if you die, and in your will you can decide where your property should go if your spouse dies before you.
If you are not married but are cohabiting (living together as an unmarried couple) it is even more crucial that you both make a will. There is no automatic entitlement that your partner will receive any of your money or possessions if you have not made a will.
If you die without making a will, or if your will is invalid, you die intestate. The management of your estate, which is your house (if you have one) and any other assets minus all your debts, is then done by administrators (called ‘executors-dative’ in Scotland) appointed by the court, who will probably be your close relatives.
In some cases, your possessions may go to the Crown, but generally the bulk will go to your spouse or if you don’t have one, your children. If you have no children, other blood relatives are next in line. One in two people in the UK currently dies without making a will and if you haven’t done so already, it’s a really good idea to prepare one.
In Scotland, the rules of intestacy allow your spouse and dependents to claim your property and money regardless of your wishes. If no surviving relatives can be found, your entire estate goes to the Crown.
Obviously, you should include exactly who will inherit your property, and what in particular each person will inherit. Just as importantly, you should choose the person who will be responsible for carrying out your wishes and who will act as a guardian to your children if they have no other parent.
You can also use your will to say whether you would prefer burial or cremation and if you would like to be an organ donor. Lastly, you might be able use it to reduce the amount of tax to be paid by people inheriting from you.
A will is valid until revoked, which can happen in a number of ways. By destroying it, combined with your intention to cancel it. Physically destroying your will usually revokes it. Accidental destruction of a will doesn’t cancel it but there might be difficulty in proving that it applies. A will can be destroyed by another person, but it must be at the request of the testator.
Every adult can and should make a will. You need to be of legal age, which is 18 in England and Wales and 12 in Scotland. You must also be over the age of 18 in Northern Ireland, although there are exceptions if you are under 18 and married or you have been married.
You must also be of sound mind – understanding what you are giving away, how you are giving it away, and who you are giving it to. If you have a history of mental disorder or if an illness may be affecting your judgment in any way, consult a qualified doctor before writing your will. This helps establish your competence and will be useful should your will be contested later on the grounds of mental incapacity.
To change your Will, you must write a new valid Will.
You can make a pecuniary gift, a specific gift or a residuary gift.
A pecuniary gift is a gift of money (e.g. ‘ I give £1,000 to X’). A specific gift is a gift of a particular item (e.g. ‘I give my gold necklace with the ruby inset to Y’) and a residuary gift is a gift of the remainder of your estate after the payment of debts, testamentary and funeral expenses, all duties and taxes and pecuniary and specific gifts.
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