What Is An Asset Protection Trust?

What Is An Asset Protection Trust 300x204 What Is An Asset Protection Trust?

The word ‘trust’ is one that most people have heard before in relation to wills and money. But what does it actually mean? A trust is a special legal arrangement that allows assets (including money, but it could also be property) to be ‘looked after’ by someone on behalf of the beneficiary who will have been named in the will. Trusts are ideal for keeping a child’s inheritance safe, for example, until they are old enough to receive the money.

There are many different types of trust, and each one is created for specific reasons. An asset protection trust, also known as a lifetime trust, is one of these, although it differs slightly from the usual type. Most trusts only come into existence once the person who has created it dies. An asset protection trust, however, immediately becomes established once it is made.

As the name suggests, the only thing that an asset protection trust can include is a property. Your home would go into trust as a gift, which means that you are able to continue living there. Why would anyone want to do this? For many, it is a way of being able to pass their home onto their children or other friends or relatives even if they have to go into a nursing home. When entering a home, a person’s assets are taken into account and, if there are any, they are usually sold in order to pay for their care. If the house is already in a lifetime trust, then it is as though that person does not own a property, and therefore would not need to sell it.

Asset Protection Trusts 300x258 What Is An Asset Protection Trust?

Be aware, however, that this cannot be the only reason for setting up the trust. If it is discovered to be the reason, your local authority may consider that you have made a ‘deliberate deprivation of assets’ and they may use the home to assess you anyway. They may also refuse to fund any care you may need.

Lifetime trusts are useful when it comes to reducing probate costs, and this can be an excellent reason for using one. 

The Probate Disputes of the Rich (Or Not So Rich) And Famous

Probate disputes can affect anyone, no matter whether they are a big Hollywood star or an unknown. When a famous person dies, it is often not just the family who goes into mourning, but the general public too. But who exactly are we mourning for? It’s the person we think the celebrity was that we’ll miss, not the celebrity themselves, and sometimes, when it comes to probate, the public get to know more about their idol than most would want to. 

Some famous deaths have resulted in lengthy or bizarre probate disputes. Here are just a few of them.

 

Gary Coleman

Gary Coleman 196x300 The Probate Disputes of the Rich (Or Not So Rich) And Famous

When Gary Coleman died in 2010, he didn’t leave a huge estate. His home still had a mortgage on it, but there were some royalties that could be claimed. The problem was that Coleman is alleged to have left three different wills, and one of them included a handwritten codicil that said everything should be left to Shannon Price, Coleman’s ex-wife. However, since they were no longer married, a judge declared that Price could not inherit, and the money instead went to Anna Gray, Coleman’s business partner.

 

Jimi Hendrix

Jimi Hendrix 300x221 The Probate Disputes of the Rich (Or Not So Rich) And Famous

Jimi Hendrix may only have been 27 when he died in 1970, but his estate was worth $80 million. After the music legend’s death, his father took over the running of the estate after a protracted legal battle, but when he died in 2002 it all started up again. Most of the money was left to Al Hendrix’s daughter, Janie, and nothing was left to his son, Leon. Leon and his children started a lawsuit, as they felt that Janie had influenced Al, ensuring that they were left out of the will altogether. The trial took three months, and the judge found that the will was valid, and Al had not been influenced by anyone.

 

J. Howard Marshall II

Anna Nicole Smith 300x225 The Probate Disputes of the Rich (Or Not So Rich) And Famous

The name J. Howard Marshal II may not be instantly familiar to everyone, but mention Anna Nicole Smith – his wife, who was 62 years younger than him – and immediately everyone knows who the man was. When he died in 1995, Marshall’s will came as a surprise to everyone; Anna Nicole and Marshall’s son, J. Howard Marshall III, were completely left out of the will. The entire estate, worth $1.6 billion, was left to Marshall’s stepson, E. Pierce Marshall. Although both Smith and J. Howard Marshall III contested the will and filed probate disputes, both died before a final ruling could be made. 

Who Can Witness A Will?

Who Can Witness A Will 300x225 Who Can Witness A Will?

In law, the witness to a will has to do two things in order to satisfy the legal side of what they have been asked to do. Firstly, they must be present and observe the will being signed by its writer. Secondly, they must be willing to swear in court and on record that the event actually occurred.

Witnesses have been required to validate the legality of wills since the Wills Act 1837. This Act requires two independent witnesses (both must be over 18) who have both seen the will being signed and have no objections to their information being included within the will itself. It is important to note, however, that by putting their information within the will, that does not mean that they will have to do anything further except, perhaps, to swear that they saw the will being signed should the matter go to the Probate Court.

 As long as the will is valid, and no one contests, challenges, or disagrees with it in any way, nothing more need to be done by the witness after signing the will.

In the question of who can witness a will, the answer is that most people can. The major requirement is that they are over 18, although those who are blind or not considered to be of sound mind are not considered appropriate witnesses as they can’t see the will being signed, or won’t be able to swear that it has been done. It is important to be careful who you ask to witness the will, however; if a creditor, spouse or civil partner of the testator, or a beneficiary (or their civil partner or spouse) witnesses the will there could be trouble further along the line. This is because a beneficiary is not allowed to benefit from a will they have witnessed. The will itself will still be valid as it has been witnessed, but the beneficiary’s gift will be voided and they will inherit nothing. 

Are Probate Fees About To Rise?

The government want to raise probate fees 300x199 Are Probate Fees About To Rise?

The government has recently been discussing probate fees, and the idea that it might be time for them to rise. Currently, there is a flat fee for probate (£155 if made through a solicitor, or £215 is made by an individual) that everyone must pay in order to be awarded their grant of probate. However, the new plans that the government are keen to bring in will mean that rather than one fixed fee that everyone pays, it will become a banded fee. That means that the cost of probate will change depending on how much an estate is worth.

There are due to be talks about this on 1st April 2016.

Probate is the process, in England and Wales, of applying to deal with the estate of someone who has died. The executor of the will is the person who should apply for the grant of probate, and this comes from the probate registry. According to the Ministry of Justice, around half of all deaths don’t lead to an application for a grant of probate. Reasons for this could include the bank not requiring a deed to release funds (perhaps the assets were owned jointly), or in cases were the value of any assets is less than £5,000.  

The new, potentially higher, fees are to go towards the additional work that the Probate Service now has to do.

The new plan is as follows:

If the value of the estate is less than £50,000 (or is exempt from needing a grant of probate) there will be no fee; estates between £50,000 and £300,000 will cost £300; estates between £300,001 and £500,000 will cost £1,000; estates between £500,001 and £1 million will cost £4,000; estates between £1 million and £1.6 million will cost £8,000; estates between £1.6 million and £2 million will cost £12,000; estates over £2 million will cost £20,000.

The good news, however, is that although these fees must be paid before the grant of probate is released, the executor will be reimbursed through the deceased’s estate, and therefore will not actually lose any money. 

What Happens If You Don’t Want Your Inheritance?

Not everyone is happy to receive an inheritance. They may not need the property or money. It may be more trouble than it’s worth (due to tax or the cost of maintenance), or there could be issues between the deceased and the beneficiary that mean the latter is not happy to receive anything from the former, no matter what it is. Whatever the reason, is it possible to say no when a will is executed?

I dont want my inheritance 300x203 What Happens If You Dont Want Your Inheritance?

The answer is that if you inherit something, you can’t simply say you don’t want it and walk away. But there are other things you can do to ensure the money, property, or possessions don’t reach you.

One way to get around the problem is for the beneficiary to gift their inheritance to someone else – another family member. This could, however, still cause problems when it comes to inheritance tax or capital gains tax, so it may not be the perfect solution.

Another option would be for the beneficiary to completed a deed of variation, which would then alter the will so that another person receives the inheritance, or it is put into a trust if that makes more sense. Certain conditions must be met in order to do this, but it is possible.

A deed of variation can be sought 225x300 What Happens If You Dont Want Your Inheritance?

Things become slightly more difficult when the will has provided for a minor, or even an unborn baby. This is because those who are affected by the will have to be the ones to request the variation. A minor can’t do that and neither, obviously, can an unborn child.

A deed of variation can significantly reduce your tax bill, and it can, if worked out correctly, allow for a large inheritance to be passed to the next generation without it needing to be a gift for which there must be a wait of seven years.

It is best to speak to an expert if you are considering this course of action.

How to avoid new probate fees

How to avoid new probate fees

With government proposals underway to alter probate fees from fixed to banded, hundreds of families could be faced with a bill of up to £20,000 after their loved one dies.

To avoid passing on this potentially significant financial debt to their next of kin, many individuals with assets tied up in property are seeking ways to avoid probate.

One such way of doing this could be through a living trust.  This allows the owners of a property to pass it on much more simply to their beneficiaries, without any need to register for probate.

Either married couples or single people can sign a declaration of trust, thereby becoming a trustee or co-trustee.  Once this is in place, the property in question can then be transferred from current names to the trustee(s).  In this way, the owners still retain ownership of the property but this is now through the living trust.

Once all trustees are deceased, the property then passes to the person or persons specifically named within the trust document as successor trustees.  This is often a fairly simple and fast process which does not require a probate application, thereby saving potentially thousands of pounds, depending on the value of the property in question.

It is worth noting that living trusts can be revoked, so if an individual has been named as a successor trustee but the owner trustee changes their mind further down the line for whatever reason, they can alter the trust or cancel it altogether, should they later decide to sell their home.

Remember however that although a living trust can help to avoid probate with regards to the property included in your estate, there may well be other cash and assets which need to be dealt with separately.  Under the new government proposals, if these are valued at less than £50,000, they will not be subject to probate legislation.  However, to ensure that they are passed to your chosen beneficiaries, a will should also be drafted, giving your precise instructions.

#iwcprobate #bereaved #probate

Roger Lloyd-Pack Left No Will

Roger Lloyd Pack Left No Will 300x200 Roger Lloyd Pack Left No Will

Roger Lloyd-Pack was a much loved British star who sadly died of pancreatic cancer in January 2014. But although Roger Lloyd-Pack was much more intelligent than his most famous character, Trigger from Only Fools and Horses, there was one thing he forgot to do before he passed away.

He neglected to write a will.

Lloyd-Pack’s estate was estimated at being £1.4 million, but without a will there was no certainty that the money would go to his family, especially as he had been married twice, and it was thought that some of his children and other family members might miss out on their part of the inheritance because of the lack of a will. Due to intestacy rules, his estate would have been legally entitled to be shared out between his widow and his four children.

And another problem that could arise is that thousands of more pounds could be owed in inheritance taxes – money that wouldn’t have to have been paid if a will have been made in the first place. The children are automatically entitled to share the money after legal expenses and the funeral have been paid for, but this net amount will be subject to tax laws.

This means that, although Mr Lloyd-Pack might have wanted his children to inherit an equal share of his £1.4 million fortune, their true share (after his wife inherits approximately £250,000) could be a lot less.

Writing a will ensures that the people you want to inherit your estate, money, and belongings do so, without additional costs or any unwanted problems. It will be a hard enough time for family and friends to deal with funeral arrangements, probate, and the emotional sadness that comes with the death of a loved one, and having a will in place saves that extra trauma. 

My Son, I Leave You… My Wives!

Man Leaves Wives in Will 300x225 My Son, I Leave You... My Wives!

It’s possible to leave many things in a will – property, money, stocks, shares, various possessions, animals, and almost anything else you can think of (although there are some things that absolutely, definitely cannot be bequeathed to somebody, including insurance policies and your own body), and there have been some surprising items left to people in the past – Shakespeare himself left his second best bed to his wife Anne Hathaway.

And many people are left things that, once they’ve got them, they’re not entirely sure whether they want them or not – perhaps there’s no room, or the upkeep is too expensive.

As it turns out, Abumbi II, the 11th king of Bafut (Cameroon) falls into both of those categories.

When his father passed away, Abumbi II was given all of his dad’s wives. All 72 of them. Now that’s a lot of wives, but take into account that the son already had around 30 of his own, and now his wives number over 100. He married each of his father’s wives, as tradition states he must, and will now learn how to be king from them. This is the main reason behind ‘passing on’ the wives, as they will have seen how the late king ran the country, and will pass that information on to his offspring.

But there was more to the bequest that just 72 wives. There were the 500 children to consider too. Abumbi II will have ‘adopted’ each of them, and become not only their brother and half brother, but also their father. It can get a little complicated, but the idea is to keep the royal family in one place, together.

It is a tradition that dates back to ancient times, and since polygamy is legal in Bafut, there is no reason for the practise to change any time soon. 

Challenging A Will

Challenging a will in court 300x225 Challenging A Will

Did you know that, if you are unhappy with a will, bequest, or legacy, you can challenge in it court? A recent survey showed that around 40% of people had no idea they had this sort of recourse, or they thought it would be a ‘distasteful thing to do’ – even when the will itself was thought to be wrong. The older a person is the less likely they are to make any sort of challenge, even if they have been left out completely (this sometimes happens when there is more than one child in a family; the eldest child is left more than the others, if the younger ones are left anything at all).

But this may well be worth bearing in mind because reports show that 80% of challenges to wills are actually successful (although only 32% of wills thought to be unfair actually make it to court).

To challenge a will there must be a valid reason behind it. There is also a time limit, so it is important to seek legal advice as soon as you feel you have a claim; leaving it too long to at least check to see whether you might be able to change the will can cause you to miss out completely when there was no need for it. When you speak to an expert, they will be able to ascertain how likely it is you will win should you take the case to court (and therefore whether it is worth pursuing in the first place), and how much time you have left to put in a claim.

Just feeling that a will is unfair, or acknowledging that the bequest – if any – is not what you were hoping for is not a valid reason for challenging a will. However possible claims could come under not being sure that the signature belongs to the deceased, believing the witnesses may not have carried out their task correctly, believing that the will was written under duress, thinking that the true intentions of the will haven’t been understood, or if you haven’t been allowed reasonable provision. No one can be forced to leave someone something in their will, but there are occasions when this ‘reasonable provision’ should be adhered to. 

Challenging A Will 300x199 Challenging A Will

Legacy Letters – Do I Need One?

Writing A Legacy Letter 300x200 Legacy Letters   Do I Need One?

Legacy letters, otherwise known as ‘ethical wills’ have been around for a long time. 3,500 years, if estimates are correct. And it’s quite incredible that so few people have heard of this interesting and heart felt way of letting loved ones know exactly what is expected of them, or exactly how they are thought of, after someone has passed away.

The term ‘ethical will’ is a little misleading; it’s not a will in the sense of it being a legal document that will distribute your earthly material possessions to friends and family once you have passed away. That’s why ‘legacy letter’ makes more sense as a title. But whatever you call it, it is an excellent way to share your values, hopes, dreams for the future, life lessons, advice, and of course your love with anyone whom you wish to read it.

Inspirational Thoughts in a Legacy Letter 300x211 Legacy Letters   Do I Need One?

You may have considered writing a legacy letter without even realising what it was you wanted to do. Many people find that when they come to a turning point in their lives – perhaps they have been diagnosed with a terminal illness, maybe they have had children and want those children to know how special they are, or they want to make a big change – they also want to write a legacy letter so that, should anything happen to them, their friends and family will know they were loved.

It’s a way of saying all those things we all want to say but feel slightly strange and embarrassed actually speaking out loud. It can be a cherished and lasting memory for your friends and family.

In medieval times, legacy letters were common practice, and it was usually fathers who wrote them to their sons. They were used to teach lessons that would be useful when the father passed away. These ‘wills’ were, in fact, popular right up until the 18th century, when they were used to ensure that certain beliefs were passed on through the generations. They fell out of favour somewhat after this, but they have never disappeared completely. You may even have written a legacy letter without knowing it!

You can write anything you want in a legacy letter – it doesn’t have to be about passing on beliefs (religious or otherwise), and it’s certainly not restricted to fathers and their sons. Whatever words of wisdom or information you want to write down to be discovered once you have died, you can. What about including a family history or family tree? How about some favourite inspirational quotes? And what about all those things you wanted to say but somehow never found the words for?

Inspirational Quotes in a Legacy Letter 300x211 Legacy Letters   Do I Need One?

The only thing that can’t be included in a legacy letter is anything of a legal nature; you will need a valid and legal will for that as any bequests within a legacy letter are not considered legal. 

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