Monthly Archives: June 2016

Lifetime Gifts

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Lifetime Gifts

Can I give away assets during my lifetime without falling foul of inheritance tax or causing potential complications for my Executors upon my death?

If done correctly, with understanding of the relevant rules and with plenty of forward thinking and planning, lifetime gifts can be an extremely useful way of ensuring assets pass to your chosen beneficiaries and can also be effective at reducing a potential inheritance tax liability upon death.

Any gifts made to an individual will fall back into the estate of the person making the gift should they die within 7 years. Taking advantage of the 7 year rule can be a useful way of reducing a large estate where there are concerns about a potential inheritance tax bill on death.

Of course, the future is uncertain and circumstances can change rapidly. Nobody can know how long they might live and whether they will live 7 years after making a gift. Despite this, the 7 year rule can still be an effective method for reducing inheritance tax as the gift becomes subject to taper relief after 3 years, and any inheritance tax is therefore reduced from 40% down to a potential minimum of 8%, compared with a set rate of 40% if the assets simply remain in the estate.

Every individual also has an annual tax free allowance for gifts of £3,000 and if utilised over a number of years can help to reduce the size of an estate and mitigate inheritance tax.

In addition to this, there is no limit on gifts to individuals of up to £250.00 for things such as Christmas or birthdays. There are also no limits on regular gifts made out of income, and depending on your relationship with the intended beneficiary, then gifts of up to £5,000 can also be made in contemplation of marriage.

Please feel free to contact the Society of Will Writers for further information regarding the use of lifetime gifts in estate planning.



Who should witness my Will?

By | Attestation | No Comments

Under English law your Will needs to be witnessed: two people should be present while you sign, and must themselves sign and provide their details. The reason behind this law is that if there are any irregularities with your Will, or it should go missing, they can come forward with details to help prove your Will is valid once you have passed away. They give written evidence by “affidavit,” a sworn statement which is presented to the Probate Registry.

It may seem like a rubber-stamping exercise, but at SWW Trust Corporation we often see Wills which are not witnessed correctly, or whose witnesses are unwilling or unable to come forward. This can stop a Will from being proven valid in Probate.

As such, having poor witnesses to your Will could make your Will useless.

So, what is the best advice for choosing Will witnesses? We would recommend the following.

  • They must NEVER be beneficiaries under your Will or married to anyone who is. In fact we recommend that no family member, beneficiary or anyone whatsoever involved in the estate witnesses the Will. The Will legacy may be invalidated if they are a witness.
  • Remember that your witness may need to be called forward to give evidence of how and when the Will was attested, after you yourself have passed away. As such we would recommend that they are healthy, younger than you, conscientious, honest and literate.
  • A good memory is important. They may be asked for details such as the date, who else was present, what else they were doing that day, any diary or other records to corroborate their information, etc. As such someone who keeps a good written record of their daily business may also prove helpful.

You can seek further advice from a local Member of the Society of Will Writers: please see their website for further details,

Sure, I’ll be a trustee: how hard could it be?

By | Professional Trustee | One Comment

Sure, I’ll be a trustee: how hard could it be?

The short answer is: “Harder than you may think.”

Trustees are responsible for holding onto the trust fund on behalf of the beneficiaries. In simple, “bare” trusts this could seem like little work: just hold onto the funds until the beneficiary turns eighteen, for example. As long as you avoid blowing it all on yourself, what harm can you do?

But some trusts involve more complex assets: property, shares, antiques, large sums of money. This means extra attention is needed, such as accounting and legal advice, professional assistance, constant care and attention, property maintenance, and so forth. Trustees also need to ensure that all income, inheritance, capital gains and other taxes are paid annually.

If there are multiple beneficiaries, the trustees need to ensure that everyone’s wishes are recognised and considered before they make decisions. They need to keep records of all decisions made, money spent, advice taken and correspondence.

Bear in mind that trustees are personally liable for negligent loss. This means they have to pay the trust out of their own pocket for their mistakes. For example, if a trustee invests all of the fund in one company’s shares, and that company begins to fail, the failure of the trustee to mitigate that harm with all due diligence will mean she will have to pay for the deficit of value. She could also be held liable for not “diversifying the fund,” or for placing all of the eggs in one basket without seeking professional advice.

Ordinary trustees are not paid for their time, either, and are usually barred from seeking any benefit at all from the trust.

As such, being a trustee can often be an onerous, dangerous, litigious and thankless task.


James Greenwood-Reeves

Estate Case Manager

SWW Trust Corporation

Small or insolvent estates: problems with executorship?

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Small or insolvent estates: problems with executorship?

Even small estates need an administrator or executor to ensure all legal duties are discharged; and in insolvent estates this is particularly important, as the creditors must be notified and funds must be apportioned carefully under the relevant legislation to ensure that no lenders are being defrauded.

There are very strict rules regarding the hierarchy of apportionment for different types of debt (secured, funeral, testamentary, preferential, unsecured, deferred, etc). Some gifts will need to be used up entirely; others need to be reduced “pro rata” in order to pay off debts equally between certain beneficiaries. The rules of “abatement” and “ademption” need to be followed to the letter. One might consider an expert probate service in such circumstances, to ensure that the estate is not to fall foul of this intricate regime.

However, the fees of a professional executor can eat away at such small estates even further. Paradoxically, a small or insolvent estate can take even longer to finalise if there is any dispute over how the few remaining funds are to be distributed: among various creditors, beneficiaries or executors.

It is good practice to consider these outcomes when dealing with small or precarious estates. Be honest and cautious, and explain the difficulties at hand. It might be worth considering insurance or other products; but generally it is best if a responsible family member can undertake the administration, so that the additional considerations of a professional executor do not complicate matters unnecessarily.

Further, if an estate is “property rich but cash poor,” note that there can be severe difficulties in administration from the lack of liquidity. Probate costs, Land Registry charges, debts and other costs and liabilities will need to be paid somehow. Sometimes the residuary beneficiaries may be able to front these costs in order to receive an unencumbered property; however, sometimes a charge needs to be placed on the property value to cover these costs; and often, it becomes a question of selling the property to make liquidity. This eventuality needs to be considered very carefully by testators who are low on ready assets.

The SWW Trust Corporation cannot administer to insolvent estates; however we can be of assistance in small estates, either through our Grant Assist service, our Trusts services or our hourly-rate service for guidance and assistance, as might be appropriate in any given matter. Naturally the smaller the estate, the less appropriate it will be to employ professional assistance.