trustee

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.

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Keeping an inheritance secret

Keeping an inheritance secret

I read about an interesting problem recently, where a grandmother asked if she can keep her granddaughter's £12,500 inheritance a secret until the girl reaches the age of 18.

The executors of the will have stipulated that a trust fund must be set up and that the lady is to be one of the trustees.

I'm not entirely sure why she didn't want her granddaughter to know about the money as, at the age of 13, she is too young to access the funds until the stated age of 18.  However, there is no law which states the girl must be informed of her forthcoming inheritance before she is able to access the money herself.

What the grandmother must be aware of however, is that this money must be protected in the eyes of the law, and so she may be limited in her choice of trust funds, as financial risk will be factored in by many financial providers.

If you have been asked to set up a trust fund for a minor, or to invest an inheritance in any other way, please do seek the advice of a professional before committing any funds.

Your responsibilities as a trustee

If you have been given the role of trustee of a particular UK trust, it is your duty to ensure that the assets contained within the trust are managed properly for the stated specific period of time.
 
Primarily, you will have what is known as a “fudiciary duty” to ensure that you act in the best interests of the beneficiaries of the trust, at all times, putting aside any personal conflicts or interests, if applicable.
 
In most instances, you will simply be bound to act on the instructions given within the trust, carrying them out to the letter. However, with some types of trust, such as the discretionary trust, you will be relied upon to act as you see fit, with the sole aim of maximising the value of the assets for the benefit of those who stand to gain from them.
 
The good news is that you as a trustee are not generally liable for any personal losses – provided you can demonstrate that you acted in good faith and in the best interests of the beneficiaries at all times. This of course applies only to the value of the assets being held in trust. Should any losses occur over this value, then you will be held personally liable.

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