Wills and trusts live chat transcript

Transcription

1 Wills and trusts live chat transcript NAS Anil: Hi everyone. Welcome to our chat focused on wills, with our guests Daniel and Kathryn. We'll try and get to as many of your questions as we can. Hi, I am Daniel, a solicitor with lots of experience in wills and trusts. I look forward to doing my best to answer your questions! Hi, I'm Kathryn Sykes from Pickup & Scott in Aylesbury. I am a Chartered Legal Executive who has specialised in helping Vulnerable People for the last 16 years. NAS Anil: Please note there will be a transcript of this Q&A Question from Guest: For Daniel, here s your first question- How do I ensure that my daughter who has Asperges syndrome can be left funds in my will but still claim benefit? My solicitor said a trust is the best way with siblings as executors, is this correct? Your solicitor is correct; the best way to ensure your daughter can retain access to her benefits is to set up a trust. The trust has to be "discretionary" which means the trustees of the trust have discretion as to whether or not to use the assets in the trust for your daughter. As to who should be the trustees, this depends on your family situation but it may well be that the siblings are best placed for the role. Question from Guest: And Kathryn, here is your first questions- If someone has been receiving high rate DLA and they are then left money from their parents estate do they pay back the money they received in DLA, do they keep the money as a gift, does their DLA stop? Disability Living Allowance (being replaced currently by PIP) is what we called a Needs Tested Benefit rather than a Means Tested Benefit. What that means is that it is not affected by how much money a person has, only their needs. Means Tested Benefits, such as ESA would be affected by such an Inheritance if they received it outright rather than it being placed into a Trust.

2 Comment from Angela: Hello and thank you for being here. We have a daughter of 35 who is autistic and our only child, she lives in a home with other autistic adults. When we die we want to ensure that she has enough to live on but she will still need residential care, we want to be sure that she doesn't get a lump sum of money from the sale of our property, if we still have it, and we want to do the best for her without leaving her open to exploitation by those who would befriend her to get hold of her money. What is the best solution willwise? Hi Angela, the way to protect your child is to set up a trust in either or will or during your life time. The trust has to be "discretionary" which means the trustees of the trust have discretion as to whether or not to use the assets in the trust for your daughter. Money in the trust will be looked after by the trustees (who you appoint) and therefore she is not at risk of exploitation. Because the trust is discretionary, it will not impact access to local authority support. Comment from Angela: Thank you both very much, I'll start to get your recommendations underway. Question from Guest: I have been unable to find a simple way of setting up a will as I am a single mother with an Asperges teenage son, without a guardian or next of kin for my son. I have recently started a relationship with someone who has an adult Asperges brother, but I need to ensure that my son's needs are met, especially if my new partner and go on to buy a house together (whether this should be as tenants in common or joint beneficiaries). My major asset is my house, which at present is rented out so that my son and I can live near his school. However, I notice that the trust arrangements my partner has create a situation that serves the solicitor, who doesn t have any special understanding of Asperges nor make any contribution- but creates further cost Firstly, when you buy a house with your partner make sure you have a Declaration of Trust drawn up which sets down the shares each of you have in the property. This will enable you to each leave you share of the property under your own Wills. I would suggest that you look on the NAS website under the Leave a Gift in Your Will page to find a directory of specialist s solicitors who will be able to prepare a Will for you including all the necessary protection of appointing Guardians and Trustees and putting your son's inheritance into an appropriate trust. Comment from Peter: My autistic son is 12 I am 66. How do I ensure he always has a roof over his head? Hi Peter, It is very important that you set up a trust in your will. The benefit of this, if it is set up properly, is the money in the trust will not impact access to benefits and local authority support. In your trust you will appoint trustees and their responsibility will be to look after the money in the trust for the benefit of your son.

3 Comment from Peter: Thank you very much Kathryn and Daniel. That was most helpful. Question from Guest: Hello - I missed a little course in Brighton recently when Wills and Trusts were being explained. We have a 22 years old Autistic, not independent son and would like to put some money from his grandfather into a Trust. Is it correct that this money cannot be used freely in the event of his parents' death? In other words, not used against his provision (he currently has a budget). Has you son already received the money from his grandfather and has it been given to him outright? If so, then only he can place it into a Trust or by the Court of Protection under an Order. Either way it will be considered to be Deliberate Deprivations of Assets and will affect his benefits. If not, then a Trust would need to set up, either by you or grandfather into which the money can be paid so that it does not pass through your son's hands. Comment from Twig Hall: Dear Daniel. Please can you explain how a Trust works when our 22 year old's grandfather deposits about Our son receives DLA and has a personal budget - which is currently under threat for various reasons. We have had so many problems with authorities and want to secure some money for him for the future. How would this work in terms of running the trust and it being kept solely for his use, or a trusted person on his behalf, in the event of parents' death. Hi Twig Hall The trust is administered by the trustees of the trust. Do you know who this is? The power to run the trust lies with the trustees. Once money is put in the trust the tax authorities need to be notified. If the trust is discretionary it should not affect any personal budget. Nor should DLA be affected by the trust. Comment from Twig Hall: No he has not received the money - we are waiting to see what is best to do. So I need to set up the Trust (my father is quite old and would prefer that) first and it mustn t be given to our son? Twig. That sounds right but you really should get advice on your particular circumstance. Check the NAS website for suitable solicitors in your area. Comment from Twig Hall: Would we be the Trustees? There is no-one except us, the parents, who are running his money affairs. To date - he just has a personal bank account and a Direct Payment/Personal Budget Account which is managed by a friend Twig, you can be trustees but the problem is that you need to think about who will be looking after the money after you both die, so you do need to think about who could take on this role.

4 How do I go about setting up a trust? What if there are no family members to manage the trust You can appoint professional Trustees such as Solicitors or Accountants or alternatively a close family friend. What happens if you want to change the trustees once the trust has been set up? Thanks for your question about Trustees - Their is either a Statutory Power that allows the Trustees themselves to appoint new Trustees or the Trust Deed itself will give that authority to a specific person, such as the person who created the Trust, called the Settler. The document used is called a Deed of Appointment and Retirement which allows new Trustees to be appointed and old Trustees to retire from the role. Comment from CC: If your pension is in a SIP - rather than a normal pension type product - is it possible to wrap that into a discretionary trust. Also how do you manage that trust if one son is AS and other is not? NAS Anil: Hi, we would recommend that you visit your solicitor and take your pension information and t&c's with. Sorry we couldn t be more helpful. I understand the concept of a discretionary trust. But what are the mechanics for setting one up. Does something physical have to be initiated at the time of drawing the will up or can the wording in the will be on the lines of... "25% of the estate to be used to set up a Discretionary Trust under the control of the named trustees (2 other daughters and son)". When the will is invoked there will be funds available to create a discretionary trust, but as long as we are alive, an expense of setting something up in advance is something that we would like to avoid if all that is necessary is a pair of simple mirror wills with the correct wording to cover the 25% share for our autistic daughter. Thanks for your question about the mechanics of setting up a trust. One option is to include the trust in your will. It comes into existence when you die. Nothing is needed other than your will and the wording you suggest is more or less spot on (although you need to get this drawn up professionally). Another option is to set up a trust now, in which case a small sum should be transferred to it when set up (say, just 5 pounds). Based on what you say, the best thing for you would be to just put the trust in your wills. Does it cost more to set up a will for a special needs child?

5 Costs for Wills vary between different solicitors firms. I personally charge a small amount extra for Wills including Vulnerable Person Discretionary Trusts as they are more complicated but many of us try to keep our costs as reasonable as possible. Here's another question we received earlier that both Kathryn and Daniel have answered: When should I make a Will? Daniel: It is never too soon to make a will as we don t know how long we have on this planet! However, I would say that once you have children you should have a will. Kathryn: There are many different triggers for when you should consider making a will or updating it, if you already have one. One of the most important is as soon as you have children, regardless of how much your estate is worth, so that you can appoint Guardians to look after your children if something happens to you while they are still young. Another is buying a house. A further one would be on separation from your spouse or civil partner pending divorce proceedings or on a second marriage. Comment from George: Daniel: A will is how you direct what will happen to your money and property after you die. If you don t leave a will your money and property will be divided up according to a rigid pre-set formula set by the government. In many cases this could mean that your money and property ends up with the wrong people. If you have a son or daughter with autism it is particularly important to leave a will to make sure that he or she is provided for after you die in an effective way that does not impact benefits and local authority support. Comment from Val Edwards: I am heartened by all the comments thus far and that my solicitor is up to speed on our needs Also, can you say something about your experience of having a single trustee against a number... as many people assume, for instance, that all siblings would be best as trustees rather than one? Comment from Peter: Can a minor be named as a trustee? Thanks you for these two questions about Trustees. Firstly a minor cannot be a Trustee although it is possible if you are writing a will to appoint someone as a Trustee on the contingent that they have reached a certain age. If there is property in the Trust then the law requires a minimum of 2 Trustees and the maximum number of Trustees you can have registered at the Land Registry is 4. Even when there is no property I would recommend between 2 and 4 Trustees.

6 I would like to hear the answer to whether a statement can be included in the will that the executors will have to set up a trust with your named trustees... Yes, the will can provide that a trust is set up with trustees you have named. Normally, the terms of this trust will be included in the will. The trustees of the trust can be different to the executors of the will, if you want Comment from K: Does the Trustee need to live in the same country? Dear K, it is not a requirement for all the Trustees to live in the country where the trust is located but it would be impractical if there were no local Trustees. There can also be some practical difficulties such as banks not allowing non-resident Trustees to be included on a trust bank account. Comment from K: Excellent information, thank you so much Comment from K: The issue I have is I'm American, my Husband is English. My daughter is American (no way is she going to be a single trustee!) the other siblings are half and half, so I have no clue as to what country they will live in when they get older! So for me to decide on who to name as trustees is impossible :( Dear K, If you are creating the Trust in your Will you can change the Will to reflect the changing locations of the children. If you have made a lifetime trust then the Trustees can retire and new ones appointed if you find that they all become non-resident in the future. Comment from K: OK that makes sense! Thank you so much for this info about mentioning a trust in your will, as I could have saved years of a nagging anxiety in my mind about a will. This means that as personal circumstances change, the will can be updated and trustees re-named without having to go through the rigmarole of getting trustees changed, if you haven't yet found someone with both the desire and knowledge to be an effective trustee Comment from Val Edwards: Many any thanks Here's another question from earlier with the web address to the NAS recommended list of solicitors. Who should write my Will and is it expensive?

7 Kathryn: There is no requirement to have any legal qualifications or knowledge to be able to write a Will, you can buy kits to make them at home, you can use any old Tom, Dick and Harry who have set themselves up as a will writer, a professionally trained Will Writer or a specialist lawyer, it is completely your choice. There are vast differences in the prices that you pay and consequently there is a vast difference in the service you will receive and the protection and redress available to you if there is a problem. Unfortunately, if the Will is not properly written (and this is often not found out until after your death) it can cause enormous problems, I would always recommend going to a member of Solicitors for the Elderly, a member of the Society of Trust and Estate Practitioners or a member of the Institute of Professional Will Writer to make sure they have the specialist knowledge. Most lawyers and professional Will Writers make every effort to ensure that the cost of preparing Will s are kept as reasonable as possible. Daniel: I think it is best to go to a solicitor or legal executive who has experience in will writing. Unless you have very complex financial affairs it should not be expensive at all. Check out the NAS websites for solicitors they suggest. NAS: You can also visit the NAS web page here: where you can download our list of specialist solicitors. Is there a difference between an ordinary discretionary trust and what I understand is called a disabled person's trust. HMRC's publication IHTM Special trusts: trusts for disabled persons - refers to the latter. The main difference is Tax. A Discretionary Trust is taxed at 50% for income tax, Capital Gains Tax at 28% and they are also subject to lifetime Inheritance Tax at creation, when money is paid out from it and on every ten year anniversary. A Vulnerable Discretionary Trust has a more favourable tax treatment where there is no Lifetime Inheritance Tax, and Income tax and Capital Gain tax would be at the rates applicable to the Vulnerable Person as an individual while retaining the protection against the Trust Assets being included in any means tested for benefits and care funding Comment from Barry I would be grateful if you would clarify if there is any difference between a normal discretionary trust that has a learning disabled beneficiary as one of the beneficiaries, and what HMRC describe in their online publications as trusts for vulnerable people. Are the latter trusts just trusts in relation to which HMRC will give special tax treatment if income is advanced to a vulnerable beneficiary, but then the income paid out will affect the beneficiary's earnings related benefits? I.E. is what really matters that the trust is a discretionary trust and the trustees do not pay out 'income' as such? Hi Barry. There are significant tax differences. The tax authorities give a beneficial tax regime to trusts that are for disabled and vulnerable beneficiaries. Both disabled persons trusts and "discretionary" trusts are discretionary in nature. The type of trust that is preferable in your particular circumstances will depend

8 on a range of factors and it is important to get specialist advice on this, where the solicitor is aware of your financial situation. Hi Barry - A disabled beneficiary trust is the old named for a Vulnerable Persona Discretionary Trust, they both have the same aim - to protect vulnerable people whether they are mentally or physically disabled or a minor. With a Vulnerable Personal Discretionary Trust the Trustees have discretion to pay or not to pay income or capital to the vulnerable Person. Any money that is paid out can affect means tested benefits and care funding so careful though has to be given before making any distributions. Comment from Barry: Daniel and Kathryn, thank you for such helpful answers. If I have already set up a standard discretionary trust that includes all my children as part of my will do I have to change this before I die or can the trustees just use their very wide powers of appointment to create a sub-trust that they then nominate as a Vulnerable Discretionary Trust? Hi Barry. Yes Comment from Barry: Thank you very much. You have been very clear and helpful What happens if the beneficiary of the trust fund dies, and they are unable to leave a will, do you have to provide for the money to revert to siblings (or named beneficiary) when setting up the fund? Thanks for asking about what happens when the beneficiary dies. The trust document must specify where the money goes when the beneficiary dies. So actually there is no need for the beneficiary to have his or her own will. Comment from Jen: Hi, I am looking to set up two Trusts in our wills, one for my ASD (Severe non-verbal)son and one for NT (but possibly ASD Asperges)son, where's the best place to start? I understand that they need to be discretionary trusts but who is the best person to help me with this...i guess a solicitor but do they have specific titles when dealing with Special Needs/disabled children? I live in Basingstoke and want to find a local firm, does anyone know of one or know where I can search for one please...thanks Hi Jen. Check out the NAS website. It lists solicitors specialising in this area. Hi, we are going to put up some more of the questions that were answered in advance of the session.

9 Comment from Kevin: Hi, I was wondering what is the best wording to use to include a gift to a charity in my will? Dear Kevin - the wording I use is "I give the sum of * to name of charity of address Registered Charity Number * absolutely" and then your Solicitors should include clauses that allow a proper officer of the charity to give a valid receipt of the legacy, and that the gift will pass to a resultant charity if they have changed name or amalgamated with another charity. It is worth remembering that any money you leave to a charity not only supports their good works but is also exempt from Inheritance Tax and if you give more than 10% of your estate to charity the amount of Inheritance Tax you will be charged will be reduced to 36% Do I need to choose a guardian when I write my Will? What does a guardian do? How do I know who I should choose? Daniel: It is a good idea to do this. Choosing a guardian is very important and requires a lot of thought. Only you can say who is the right person would be. Think about people you would trust to look after your children. Kathryn: If you have minor children then, yes you should appoint a guardian in your Will. A guardian takes over Parental Responsibility for your minor children and makes the decisions about that child s life until they reach 18, such as which school they go to, where they live etc. Choosing a guardian for your children is a very difficult and personal decision. I always recommend that the trustees (who look after the money) are different from the guardians (who look after the children). I also recommend you choose the people that will give your children the upbringing closest to the one they would have received from you. I also suggest considering having guardians from both sides of the family. Another previously answered question by both Daniel and Kathryn. What do I need to take to the meeting with the solicitor? Kathryn: You will always need to take ID as solicitors are bound by money laundering regulations. They will also need to know details of your financial assets, your family circumstances together with full names and addresses of the people to be included. I provide my clients with a Questionnaire before I meet with them, which gives them the chance to write down all the information I need ahead of the meeting. Bringing your address book with you is also useful. Daniel: You don t have to bring anything (apart from ID). However it is helpful if you are able to bring your previous will (if you have one) and any information about your financial and family situation. Here's another question: Where do I store my Will?

10 Daniel: Your solicitor should be able to store it for you. Or you can keep it at home. Banks offer services to store wills as well. Kathryn: Most legal firms provide a Will storage facility, which I would recommend you take advantage of. My firm does not charge for this service and we also register our clients Wills free of charge on the Certainty National Will Register to ensure that the family can always find the Will in due course. What is the difference between a Will and a trust and do I need both? Daniel: A will sets out what happens to your money and property after you die. A trust is a way to give money and property to certain people (the trustees) to hold on behalf of other people (the beneficiaries). The trustees are then able to use the money and property in the trust for the benefit of the beneficiaries. Kathryn: A Will is a document that distributes your estate on your death and only comes into force at the time. A trust is a protective wrapper that protects the assets placed in it for the people you want to benefit. A Trust can be set up either in a Will or during your lifetime. Whether you set up any trust that is needed in your personal circumstances in your Will or during your lifetime will depend on what you need to achieve. I prepare a lot of Vulnerable Person Discretionary Trusts to protect assets for children who are autistic and not able to manage money. The advantage of including this trust in your Will is that it is often cheaper, it does not come into force until your death, you can change it by changing your Wills during your lifetime and there is no administration to worry about until your death. If you make the trust during your lifetime then you can start putting money into it straight away, in addition you can just give the details of the Trust to other family members who can also put money into it, either during their lifetime or in their Will. Should I be considering a trust? What are the benefits? Daniel: If you have a child with autism who relies on state assistance or benefits or who would have difficulty managing money the answer is definitely. If you leave money to your son or daughter directly, the money will be taken into account in assessing their eligibility for means tested benefits and unless you are extremely wealthy will soon be used up to pay for care and support. A trust is a way to preserve the money and property so that it can be used throughout your son or daughter s life to pay for extras. A trust is especially important if your son or daughter is vulnerable when it comes to money and would have difficulty managing any money left to him or her. A trust can ensure that someone you trust is in charge of the money or property. Kathryn: They are especially useful in protecting assets for vulnerable people who are not able to manage their own money.

11 If the only assets the vulnerable person has are their potential to benefit from a trust and their benefits, then this can avoid the need to a lengthy and expensive Court of Protection application for someone to gain authority to deal with their money for them. It can also protect those funds from the vulnerable persons being taken advantage of as they cannot access those funds without the Trustees. How do I know what type of trust I should be setting up? Daniel: There are a range of different types of trust, with different implications for tax and benefits. From a benefits perspective it is important that the trust is discretionary. This means that the trustees have discretion as to whether to use the money or property in the trust for any, all or some of the beneficiaries. Kathryn: You will need to receive specific advice about your own circumstances so that the right trust can be set up for your needs. Comment from Sheila: Hello is it possible to provide for the situation where the trust beneficiary has children of their own? Hi Sheila if you want to benefit the children of the beneficiary, those children could also be named as beneficiaries. So, if the beneficiary you have in mind is your son or daughter, you could include your grandchildren as beneficiaries. Comment from Sheila: And is that possible even if no grandchildren have been born yet Hi Sheila yes you can name "grandchildren" as a class of beneficiary in anticipation (or hope) that some will come along! Comment from Sheila: Ha ha fingers crossed! Thanks. How does the trust affect the state support that my child receives? Kathryn: That depends on the type of trust that you have set up. Trusts come in two basic types Fixed Interest and Discretionary. With a Fixed Interest trust you have to set down what each beneficiary is entitled to, for example with a Life Interest Trust (commonly used for second marriages and care fee planning) the principal beneficiary (called the Life Tenant) is entitled to the income arising from the trust. Because they are entitled to that income, it is included in any means tests for benefits or care fee funding.

12 With a discretionary trust you generally have a group of beneficiaries that can all potentially benefit from the trust but only do so at the discretion of the trustees. They are therefore not entitled to anything at all and the trust is not included in means testing. There is a variant of this type of trust called a Vulnerable Person Discretionary Trust which is often used for people on the autistic spectrum when they are not capable of dealing with money. Daniel: This depends on the type of trust. A discretionary trust should not impact state support. But if your son or daughter receives regular payments from the trust, or is given a large sum, then it could affect state support. One of the best ways to avoid this is for the trustees to use the money in the trust to pay direct for items and services for the beneficiary. We have 5 minutes left so please do send any of your questions through now What should I be taking into consideration when I am choosing trustees? And how many do I need? Kathryn: There should always be at least 2 Trustees. I recommend no more than 4 as it could become impractical as all decisions must be taken unanimously. Trustees should have common sense, be financially astute and have a good relationship with the beneficiaries. They should not be bankrupt. You can appoint a professional such as a solicitor or an accountant as a Trustee to help deal with technically issues; however they will be entitled to charge for acting in this role. Daniel: TRUST is the key word here. You need people you can trust. It is ideal to have two or more people but I realise this is not always possible. It is best if the trustee is of a similar age to the beneficiary (if they are the same age as you there is a good chance they will not be around to carry out the job!). It is important to think about potential conflicts of interest. For example, you might want your autistic child s sibling to be trustee but you might also say in the trust that, on the death of your autistic son, you want the funds in the trust to go to your grandchildren. The sibling who is trustee would have an incentive to not spend any money on the autistic child so that there is more money for their children when the autistic child dies. This sounds a bit cynical but it is important to think through how people might behave in the future when you are not there. One option is to appoint a professional, such as a solicitor, as a cotrustee with family members. The downside is cost professionals charge, sometimes a lot. The upside is that they can ensure matters are being dealt with appropriately. Who can help me set up and manage a trust? Daniel: Solicitors and accountants with the right experience should be able to help. Kathryn: I would suggest a Specialist Trust Advisor such as a member of the Society for Trust and Estate Practitioners or Solicitors for the Elderly. Many firms provide trust drafting and management services. It is also advisable to get advice about the investment of trust assets from an Independent Financial Adviser.

13 If I wanted t leave a gift to charity, what type of gifts could I give? Daniel: You can leave anything you like to charity. Some people leave a fixed amount. Others choose to leave a percentage of their money and property to a charity. Kathryn: There are three types of legacies: 1. Specific this is a gift of a particular item such as a painting. 2. Pecuniary this is a gift of a specified sum of money, such as 5,000. You can index link the value of a pecuniary legacy so it increases in value over time in line with inflation. 3. Residuary this is a share (or all of) the rest of your estate after the specific and pecuniary legacies have been deducted and all your debts and taxes are paid. With a pecuniary legacy, the sum will stay the same (except from any index linking) regardless of if you estate increases or decreases in value. A share of the residue would mean that the charity would always receive the same proportion of your estate, regardless of any changes in its value. NAS: Any gifts in will's are very gratefully received Thank you to the NAS for inviting me here to day. It has been interesting to see your questions and I hope Daniel and I have helped point you in the right direction. If you would like any more personal questions answered our contact details can be found through the NAS website. I hope you found this helpful. If you have further questions please get in touch. You can go to my firm's website or me on daniel@sheridanlaw.co.uk Best wishes to you! I just wanted to say a massive thank you to Kathryn and Daniel for joining us this afternoon and for all your questions. The transcript will be staying on this page so you can come back at any point to view what was discussed. NAS: Please note that the information contained within this document is for guidance only and you should always seek professional legal advice.