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Wills And Trusts - Frequently Asked Questions
There are many common questions that we have been asked by our customers over the years. Here are some of the answers to those questions, if your questions is not answered here, please contact us.
Click on each question to see the answer.
- What is an Asset Protection Trust?
- Who can set up an APT?
- What can I protect in my APT?
- Can anything be placed within my APT?
- Can assets be added at a later stage?
- Can I access my savings that I have protected with the APT?
- When should I set up my APT?
- Can an APT be set up after I enter care?
- My spouse is in care. Can I still set up an APT?
- Why are Trustees needed?
- How long does the Trust last?
- Can I move if my house is in my APT?
- I have a mortgage. Can I still protect my home?
- I have limited savings. Can I release equity in the future?
- Does the APT affect my house insurance?
- Are there any ongoing costs?
- Why Should I Make a Will?
- I have just got married again. Is my previous Will still valid?
- Can I appoint guardians for my children in my Will?
- What constitutes a legally valid Will?
- What is the current Nil Rate Band threshold?
- I have recently lost my partner. All their assets passed to me through their Will and I now have a substantial Inheritance Tax liability. What can I do?
- I own assets outside of the UK. Should I make a Will in the appropriate Country?
- Can I state what kind of funeral I want in my Will?
- I am a Muslim. Can Estate Legacy Services write me a Will in accordance with Shariah Law?
- What if I need a Will urgently because of a serious illness?
- What happens if one or more of my beneficiaries dies before I do?
- I have a business. What if I want it to continue after my death?
- What is probate and who can help me with it?
What is an Asset Protection Trust?
The APT is a 'life interest trust'. When you protect your assets with the APT you grant yourself a life interest in them as the 'principle beneficiary'. After your death, the APT becomes a 'discretionary trust' and holds the assets within it for your chosen beneficiaries.
Who can set up an APT?
Anyone over the age of 18, who has mental capacity, can set up an APT. Mental Capacity is determined by the Mental Capacity Act 2005 and case law precedents that require that you understand the nature and effect of your actions and the size of your estate.
What can I protect in my APT?
You can protect your home and your savings up to the inheritance tax threshold of £325,000. You may wish to protect assets in excess of the capital disregard threshold of £14,250. If you have assets in excess of the inheritance tax threshold additional planning may be required.
Can anything be placed within my APT?
It is normal to protect your home and your savings with the APT. Other large assets such as boats and business interests can also be protected. Assets that are subject to capital gains such as shares and investment property will require special attention to avoid attracting a tax charge. We will carefully appraise your assets and discuss with you any issues that become apparent. Savings will normally be held in the most tax efficient manner within the trust.
Can assets be added at a later stage?
You can add assets to your Trust at any time. Care should be taken not to exceed the IHT threshold in any seven year period. If you transfer assets at a time when you know that you are in need of residential care, this may constitute 'deliberate deprivation' and you will need specific advice from us at that time.
Can I access my savings that I have protected with the APT?
You are free to access your savings at any time up to the point you lose mental capacity. After that time your Protectors can access them on your behalf. Many clients view the APT like a safe deposit box, adding and removing savings as circumstances dictate.
When should I set up my APT?
Your Trust should be set up as soon as possible. None of us know when we may lose the ability to do so. Just as everyone should make a Will, the APT is a comprehensive planning tool that protects us throughout our lives. It is best to set up the APT at a time when you are in good health, living independently and the prospect of entering residential care is only the distant possibility that we all face. Setting up an APT when you know that you are in need of care could be treated as 'deliberate deprivation'. Although the other benefits of the APT will still apply the Local Authority may be able to recover their fees from your Trust.
Can an APT be set up after I enter care?
Yes, but see the comments above. It will not be effective to protect your assets from the Local Authority. You may wish to protect your assets for the other reasons mentioned but you will normally still need to contribute towards the cost of your care. In some situations, we are able to arrange for the income from the assets in the Trust to meet the majority of your care fees so that very little if any of your capitol is lost.
My spouse is in care. Can I still set up an APT?
Yes and it is important that you do this as soon as possible. While you are living in the family home this is treated as a disregarded asset. You are able to protect your share of the family home. If you predecease your spouse who is in care, this will prevent your share from passing into his or her estate and becoming available to Local Authority assessment.
Why are Trustees needed?
Trust law requires the appointment of trustees for a Trust to be valid. They hold the assets on behalf of the beneficiaries and are not permitted to benefit from the Trust in their capacity as Trustees. There are strict laws governing the administration of a Trust and Professional Trustees are required to meet these laws. Trustees should carry professional indemnity insurance to ensure that the beneficiaries are protected against loss. The Professional Trustees that we will appoint to administer your Trust look after thousands of these Trusts for our clients and are totally impartial. Your affairs will remain confidential at all times.
How long does the Trust last?
Under English law a Trust can last up to 125 years. The APT is designed to protect you during your lifetime and your family after your death. The assets can be distributed to your family after your death, but they have the option to receive these assets as a 'loan' from the Trust. There are many protective benefits from receiving the Trust assets in this way.
Can I move if my house is in my APT?
Yes, you are free to move at any time. If you decide that you want to move it is important that you tell us as soon as possible. We will take care of the legal work for your sale and purchase for you (for a competitive fee) and ensure that the new property is properly protected in your Trust.
I have a mortgage. Can I still protect my home?
Yes. The paperwork is slightly different as we protect the equity in the property rather than the property itself. As your lender has a first charge on the property, the Land Registry records this in a different way.
I have limited savings. Can I release equity in the future?
Yes, there is normally no problem with this. Provided that you meet the standard criteria that the equity release company stipulate, they will take a first charge on the property. We will then protect the remaining equity for you. As the loan on your property will increase as the interest is applied to it, the Trust will protect the difference between the value of the property and the outstanding balance of the loan.
Does the APT affect my house insurance?
No. Insurance companies are used to insuring Trust properties and this is rarely a problem. It is important to notify your insurance company but we will be happy to do this on your behalf. With so many properties held in Trust, we are often able to negotiate preferential rates for your home insurance if you so desire.
Are there any ongoing costs?
Your Professional Trustees will make a modest annual charge for their services in maintaining your Trust. This is true of any Professional Trustee. This covers their time, expertise and insurance and normal work carried out by them on an annual basis. It also covers the completion of the annual tax return they are required to complete by HMRC.
Why Should I Make a Will?
It is the only way to be 100% sure that your assets go to the people you love.
I have just got married again. Is my previous Will still valid?
No. Your marriage revokes any previous Wills. A new Will is required to distribute your estate.
Can I appoint guardians for my children in my Will?
Yes. By making a Will you can ensure that the Courts are aware of who you wish to care for your children in the event of your death. You can also decide at what age you wish your children to receive their inheritance (whether this be 18, 21 or 25).
What constitutes a legally valid Will?
A legally valid Will has several essential components. It must be signed and dated by the Testator/Testatrix in the presence of two independent witnesses. The two witnesses must record their details on the attestation page of the Will. The wording of a Will is of paramount importance as incorrectly worded Wills may mean someone intended to benefit no longer does and someone not intended to benefit now has a claim.
What is the current Nil Rate Band threshold?
The current threshold is £325,000 and is frozen until 2015. Any assets over that amount will be taxed at 40%.
I have recently lost my partner. All their assets passed to me through their Will and I now have a substantial Inheritance Tax liability. What can I do?
Within two years of an individual's death it is possible to vary their Will (Deed of Variation). With the agreement of all the beneficiaries a Will can be varied to incorporate a Nil Rate Band Discretionary Trust. We have access to specialist solicitors for this service. For further information contact us.
I own assets outside of the UK. Should I make a Will in the appropriate Country?
It is advisable for you to make a Will in each Country in which you own assets. This will make the administration of your estate simpler for your Executors. We can make your UK Will specific to your UK assets avoiding any complications when your estate is distributed.
Can I state what kind of funeral I want in my Will?
Absolutely, if you have a specific wish then it can be included.
I am a Muslim. Can Estate Legacy Services write me a Will in accordance with Shariah Law?
Yes we can. Simply contact us and we will put you in touch with your local Associate.
What if I need a Will urgently because of a serious illness?
If you contact us we will arrange for an Associate to visit you urgently.
What happens if one or more of my beneficiaries dies before I do?
This happens quite often. At your request we will word your Will in such a way to make allowances for such an occurrence.
I have a business. What if I want it to continue after my death?
This is not a problem. There are many businesses which are run by trusts, for example: The Guardian.
What is probate and who can help me with it?
Probate is a procedure that has to be followed after a person has died (if total assets exceed £5,000). A grant is required on death which gives a Personal Representative/Executor the right to administer the deceased estate.
