Monthly Archives: January 2017

Reasons why your client may require a trust

By | Trusts | No Comments


If you ask your client if they want to create a trust you will receive varied responses: for example, ‘It’s a good way to save tax’.  According to research the main reasons why people want to create a trust is to control the assets: for example, to prevent children from gaining access to money before they are mature enough to handle it safely and effectively. Tax planning was secondary to this.

The suggestion of the creation of a trust is generally as a result of you, as the advisor, after addressing the client’s chosen objectives. You will do this by assessing the client’s objectives first and then offering a particular type of trust as a means to achieve these goals. By addressing the objectives in this way your client will be more interested in the idea of creating a trust.

Why would you be suggesting the provision of a trust as a solution to your client’s objectives?


In order to protect the assets

As we all know, our clients and families work hard for their property, business and the building up of a particular asset and thus wish to protect these from any future unfortunate relationships, connections, poor business decisions and spendthrifts.

Also, it may be that there are no substantial assets, there may be just a reasonable ‘nest egg’ for the family: parents may wish to safeguard funds to prevent them from being dissipated sooner rather than later. For example, your client may have a son or daughter who may have an addiction.

It may be that your client wishes to protect or preserve the assets so that funds will be available to provide assistance for more than one group of beneficiaries.

Another concern of your clients may be that if they die they want to ensure that funds will be available for their surviving spouse, but also that the funds pass to their child/ren in the event that the survivor forms a new relationship.


The protection of beneficiaries

Some clients believe that their children will never learn the value of money and therefore wish to protect their hard-earned savings from their shopaholic children. Unfortunately trusts cannot prevent beneficiaries from making poor choices. They can, however, provide a reasonable hand (in the form of a trustee) to act as a guide or disciplinarian to requests by beneficiaries for money or other resources.

Your client may be concerned as they have a child with learning disabilities who will never be able to manage their own financial affairs. What can be done at a time when both parents have died to protect their vulnerable child from potentially unscrupulous friends and carers?  Discretionary trusts are a useful tool to preserve some or all of the family’s estate which can then be used for positive benefits for their disabled child.

There are some parents that have able-bodied children who have sadly chosen the wrong path and have become addicted to drugs or alcohol. Your clients will obviously worry that if they were to inherit a large amount of cash they would endanger their lives.  In these circumstances your client may wish for their assets to be managed by someone so as to provide a roof over their child’s head which the child is unable to sell. Small and regular distributions can be provided to the child to meet everyday costs.


For maintaining control over assets and beneficiaries

Your client may wish to transfer assets into a trust but maintain control over these by being one of the trustees.


For treating income and capital of a gift in different ways

Your client may want certain categories of people they would like to benefit, maybe their surviving spouse/partner and their children.  It may be that the spouse/partner is financially dependent on your client and would need to have access to the trust funds should your client die. If capital was given outright to the surviving spouse/partner it could be used for any purpose as they see fit, and the children may not benefit from this.

By using an IIP Trust (interest in possession) the trust income can be released appropriately ensuring that the capital fund is preserved for the children.

This particular trust is often used when clients have children from a previous relationship.

It may be that your client has an elderly relative that may require financial assistance with outgoings and will require income to do this but does not require the capital. The capital can then be directed elsewhere upon the demise of the relative.

The provision of income for beneficiaries who are too young to manage large amounts of cash is a popular reason for creating a trust. It may be that your client wishes the fund to be used for the purpose of school fees and day-to-day maintenance whilst they are under a particular age. Upon attaining that certain age the children would be deemed responsible and the capital would pass to them.

Attesting the Execution of a Will

By | Attestation | No Comments

Having your Will witnessed correctly is especially important in making the document legally valid. Many people are not aware that you should be particularly careful in who attests the execution of your Will. Being a witness can also mean far more than simply providing your signature on a document, which people are unaware of when they agree to attesting the execution of a Will.

So who can witness my Will?

Any person who is named as a beneficiary under the Will cannot be a witness, as this means that they shall forfeit any legacy that they were to receive. It is generally always advisable to have someone completely unrelated to the Testator and independent from the estate attest the execution of the Will, in order to avoid any conflict or complications further down the line. In addition to this, although it may seem obvious, it is also important that a witness has capacity. Someone who is blind cannot act as a witness as they is physically incapable of seeing the signature.

Section 15 of the Wills Act 1837 states:

“If any person shall attest the execution of any will to whom or to whose wife or husband any beneficial devise, legacy, estate, interest, gift, or appointment, of or affecting any real or personal estate (other than and except charges and directions for the payment of any debt or debts), shall be thereby given or made, such devise, legacy, estate, interest, gift, or appointment shall, so far only as concerns such person attesting the execution of such will, or the wife or husband of such person, or any person claiming under such person or wife or husband, be utterly null and void, and such person so attesting shall be admitted as a witness to prove the execution of such will, or to prove the validity or invalidity thereof, notwithstanding such devise, legacy, estate, interest, gift, or appointment mentioned in such will”.

Do my responsibilities come to an end once I have witnessed the Testator’s signature?

When individuals agree to being a witness, they are also often unaware that they may be called upon in the future during the process of obtaining Probate, should the validity Will or Testator’s signature be called into question. As above, section 15 of the Wills Act 1837 states that such person “shall be admitted as a witness to prove the execution of such Will, or to prove the validity or invalidity thereof”. For this purpose, it is important that a witness provides their details (address, full name and occupation) when they sign the document, as this will prove helpful should an Executor need to contact them in the future. An Executor can request that they swear an Affidavit to prove the Execution or validity of a Will and, in matters where an estate becomes contentious, a witness can even be called upon to provide evidence in Court.

People often under estimate the importance of attesting the execution of a Will, however, it is ultimately much more important than you may think.


For more information feel free to contact [email protected]

Trusting Your Trustees: Removing Troublesome Trustees

By | Trustees and Executors | No Comments

Trusting Your Trustees: Removing Troublesome Trustees


The role of trustees is chiefly to manage the assets in their trust for the advantage of the beneficiaries: property trustees ensure that the house is protected, insured, secure and available for the life tenant; trustees of money must invest the fund wisely, seeking tax advice and making fair decisions as to how money is advanced for the use and benefit of the beneficiaries.

However, some settlors or beneficiaries may grow wary of their trustees. They may feel unfairly side-lined and neglected, or believe that the trustees are abusing their powers.

So, how can settlors and beneficiaries remove troublesome trustees?

In some lifetime settlements, the settlor may retain a power to replace trustees. This must be explicitly provided in the trust documentation itself. Failing this, there are very few powers to easily remove trustees.

If the trustee is unwilling to retire from their role, they may need to be removed by a court order. In order to remove a trustee, a beneficiary must demonstrate that the trustee is failing their duties of faith – their “fiduciary duties” – to the detriment of the trust. This could include negligent accounting, loss of capacity, refusing to take notice of beneficiaries, failure to submit tax returns, embezzlement, or using the fund for their own purposes.

If a beneficiary can demonstrate such a ground for a breach of duty, they can apply to the court for an order to have the trustee removed and replaced. But the evidence must clearly show a specific breach of duty: simply not getting one’s way, or personally distrusting the trustee, would be insufficient.

Even if good grounds are found, applying to the court will take time, money and legal assistance.

As such, it can be incredibly difficult to remove a trustee. The best advice is to select capable and conscientious trustees in the first instance. Otherwise, it is an uphill struggle to correct an unsuitable appointment at a later stage: and even then, ordinarily, only at a time when harm has already been caused to the beneficiaries.