How to ensure your grandchildren receive their inheritance
A recent survey by insurance company Sunlife has revealed that a large number of grandparents intend to leave part of their estate to their grandchildren, but surprisingly, don't trust their own children to ensure that these instructions are carried out.
The results of the survey showed that seven in ten grandparents plan to leave their grandchildren an inheritance. 55 percent of those grandparents are looking for ways in which they can protect this aspect of their legacy, without having to rely on their children to pass it on, according to their final wishes.
In some instances, such a legacy is not as straightforward as simply leaving a sum of money in a will. It may be that the grandparents wish to leave a property such as the family home instead – the problem being that children under the age of 18 are not legally able to own property.
One way to get around this problem is to leave assets in trust for the grandchildren. When doing so, it is vital to consider an appropriate age for the child to receive the inheritance, so that they are mature enough to use it wisely. An age contingent trust such as this is normally written into the will.
It is worth remembering however, that any assets left in a trust may incur an inheritance tax charge every ten years, of up to six percent of the value of the trust, above the IHT threshold.
The key to ensuring that your grandchildren will benefit from your estate as you would want, is to take control now and have a will and trust drafted, which both reflect your wishes and family circumstances. Through effective estate planning, it may also be possible to identify ways to reduce any inheritance tax payable on your assets.
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Death isn’t something anyone particularly likes to think about; it’s not the most lovely of ideas to dwell on. And yet, it is inevitable. One way or another, we will all die, so although it is an unpleasant thought, it is something that must be discussed at least once – and that it when you write your will. Without a will, ensuring that your legacy is passed on in the way you want it to be will be almost impossible, and no will can also cause long lasting disputes and family feuds. Is that the legacy you want to leave behind? Is that how you want to be remembered, as the one whose death sparked an argument that broke a family apart?
That’s not a legacy anyone wants to leave.
Therefore, it is essential that everyone writes a will, to stop this kind of thing from happening.
We spend our entire lives building up a collection of possessions and money. We work for it, we strive for it, we sometimes make ourselves ill because of it. So making sure that it is all passed on in the way we want is the least we can do for ourselves and others.
Leaving the writing of a will until retirement can mean it is left too late. It is best to write one much earlier. Some people feel it is the right time to write a will when they have children, or buy a house, or get married. It is something big in their lives that means their death will directly affect others – a child, spouse, or the person who is left to look after the house. And with some people (a growing number) marrying twice or more, making a will becomes even more important. In order for children from all relationships to gain an equal share of the estate, a will has to be written, otherwise the intestacy rules could preclude some from what they are entitled to. Equally, if you are still legally married buy separated, and have moved on to a new relationship, it would, with no will, be your spouse who would inherit, even if you didn’t want them to.
Many people don’t write a will because they believe they have nothing to leave after they die. With fewer people owning their own house, that consideration isn’t thought of. But it’s not just about money and property. Finances don’t necessarily come into it, and anyway, the value of an estate could be much higher than anyone realises due to various bank accounts and other assets that haven’t been thought of in a little while.
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.
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.
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.
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 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
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.
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.
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?
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.
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.
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.
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.