International Portfolio Bond Discretionary Will Trust for married couples or registered civil partners This draft Discretionary Will Trust is provided as specimen wording for possible inclusion within your Will or in a codicil. Your legal advisers must take full responsibility for the final version as they are in a position to ensure that it meets your requirements and does not conflict in any way with the other provisions contained in your Will. For UK residents only
Guidance 1. How the Trust works The trust is designed for use with Legal & General International (Ireland) Limited s single premium bond known as the International Portfolio Bond for the purpose of this Guidance and specimen wording (and assumes the bonds are still in force at the time of your death). To begin with, each of the couple buys an International Portfolio Bond. This is issued to each as a sole owner, but is on a joint life last survivor basis so it will continue in force after the death of the first partner (or until the bond is encashed earlier by choice). The trust is written into your Will so that it comes into effect on your death. The Trust Fund is held for the benefit of the classes of persons defined as the Potential Beneficiaries. Whilst you are alive you, as the owner of the bond, will have total access to your investment. The trust only becomes effective on your death. 2. Who does what under the trust (a) The trustees after your death your executor(s) will normally be the trustee(s) although you may appoint different trustees in your Will. You should discuss your requirements with the legal adviser drafting your Will. The trustees that are appointed once the trust is established must not be resident in Ireland at the date of their appointment or subsequently become resident there during any period in office. (b) The Potential Beneficiaries these are the classes of persons that may benefit from the Trust Fund at the trustees discretion. It is the trustees who exercise their discretion to appoint benefits to individual Potential Beneficiaries once the trust is established on your death. During your life, you may have decided to leave a letter of wishes to the people who will be your trustees when you die, giving details of any particular individual (say your widow(er)) that you would like them to treat as the primary beneficiary under the trust. Although this cannot be binding, it may assist the trustees in determining who they should appoint benefits to after your death. Any individual you nominate must fall within one of the classes of Potential Beneficiaries to be considered. The legal adviser drafting your Will can assist you in amending the classes of Potential Beneficiaries if you wish before you sign your Will. (c) The Default Beneficiary or Beneficiaries these are the persons who will benefit from the Trust Fund at the end of the Trust Period (80 years) if the Trust Fund is not fully distributed before then. In the unlikely event that a distribution takes place to the Default Beneficiaries at the end of Trust Period, any deceased Default Beneficiary s share will be payable to their estate. 3. Inheritance tax implications The trust is designed to offer maximum inheritance tax efficiency on the first death of a couple who are married or who are registered civil partners. This is achieved by utilising the nil rate band available to the first of the couple to die while allowing the surviving spouse or registered civil partner access to the funds. If the value of the bond is more than the available nil rate band, only so much of the bond will pass to the trust as does not exceed the deceased s then available nil rate band. If an appointment is being made to a Potential Beneficiary who is also a trustee, at least one other trustee must be involved in the appointment who does not benefit from it. 02 Discretionary Will Trust
Discretionary Will Trust PART 1 LEGACY Part A Trust of Legacy In the event that I predecease my spouse/registered civil partner (Name) I give my International Portfolio Bond policies numbered issued by Legal & General International (Ireland) Limited (hereinafter called the Policy ) or where its value exceeds the Relevant Amount so many of the Policies as in total as far as possible equals but does not exceed the Relevant Amount free of inheritance tax and all other duties payable on or in respect of my death to my trustees to hold upon the below mentioned trusts and with and subject to the powers and provisions hereinafter set out. ANY Policies that shall not form part of the Trust Fund (as defined in clause 3 of Part B below) on my death shall form part of the residue of my estate. Discretionary Will Trust 03
Part B Definitions 1 The Potential Beneficiaries The people referred to in the list below are persons who may benefit under the trust. (a) Any widow or widower, surviving registered civil partner, former registered civil partner or former spouse of mine. (b) Any child or grandchild of mine whenever born including any adopted and step children. (c) Anyone descended from my father or mother. (d) Anyone who has ever been married to anyone described in classes (b) or (c). (e) Anyone who may benefit from my estate. 2 The Default Beneficiary or Beneficiaries Please insert the names of the individual(s) and or charity(ies) and their shares if more than one. Name Address Postcode % Name Address Postcode % Name Address Postcode % Name Address Postcode % The total must add up to 100% % 04 Discretionary Will Trust
Part B Definitions (continued) 3 The Trust Fund The Trust Fund means the Policy or so many of the Policies as constitute the Legacy specified in Part A above, the full benefit thereof, any assets at any time added thereto by way of further settlement, capital accretion, accumulation of income or otherwise and all assets from time to time representing the same. 4 The Relevant Amount The Relevant Amount means such sum as is equal to the upper limit of the nil percentage rate band in the table of rates of tax (applicable on my death) in Schedule 1 of the Inheritance Tax Act 1984 (or any statutory modification amendment or re-enactment thereof) less an amount equal to the aggregate of: (i) the aggregate chargeable value transferred for inheritance tax purposes attributable to such one or more (if any) chargeable transfers (including potentially exempt transfers which have become chargeable as a result of my death) made or treated as having been made by me during my lifetime in the cumulation period specified by section 7(1)(a) of the Inheritance Tax Act 1984 (or any statutory modification amendment or re-enactment thereof), and (ii) the aggregate chargeable value transferred for inheritance tax purposes attributable to such chargeable transfer (if any) as I was treated as having made immediately before my death by reason of my: (a) having had (or having been treated as having had) an interest in possession in relation to which section 49(1) of the Inheritance Tax Act 1984 (or any statutory modification amendment or re-enactment thereof) applies in any settled property to which immediately before my death I was treated as beneficially entitled in accordance with that section, or (b) having been treated by section 102(3) of the Finance Act 1986 as beneficially entitled to any property (c) having made other chargeable gifts under any clause of my Will or any codicil thereto. 5 The Trust Period The Trust Period means 80 years from the date of my death and will be the perpetuity period applicable to the dispositions made by my Will. 6 The Accumulation Period The Accumulation Period means the period of 21 years from the date of my death. Discretionary Will Trust 05
Part C Key Provisions 1. The trustees shall hold the Trust Fund for the benefit of any one or more of the Potential Beneficiaries upon such trusts in such shares and with and subject to such powers and provisions as the trustees shall at any time or times appoint by deed or deeds revocable or irrevocable provided that no appointment shall be made in favour of a Potential Beneficiary who is one of the trustees unless there is at least one other trustee who does not benefit directly or indirectly from the appointment. 2. Subject to paragraph 1 of this Part C: (i) The trustees may accumulate the whole or part of the income of the Trust Fund during the Accumulation Period. Such income shall be added to the Trust Fund. (ii) The trustees shall pay or apply the remainder of the income to or for the benefit of such of the Potential Beneficiaries as the trustees think fit during the Trust Period. 3. To the extent that any part of the Trust Fund or its income shall not have been appointed or otherwise disposed of by the trustees during the Trust Period, the Trust Fund shall be held for the absolute benefit of the Default Beneficiary or Beneficiaries and if more than one in the shares specified in clause 2 of Part B above and if no shares are specified in equal shares. 4. The trustees shall have power to pay, transfer or apply the whole or any part or parts of the capital of the Trust Fund as they in their absolute discretion think fit to or for the benefit of any beneficiary entitled to such whole or part. Part D Trustees powers 1. The trustees may invest any money requiring to be invested (subject to obtaining advice, if required by law) in such manner as if they were absolutely beneficially entitled to the investments. 2. The trustees are under no obligation to diversify the Trust Fund. 3. The trustees shall have power to effect any life assurance policy on the life of any person or persons, accept assignments of a policy to the trust and exercise any option on any policy held by the trustees and to sell, charge, assign or surrender the whole or any part of such policy. 4. The trustees shall have power to borrow money on such terms and security as they think fit. 5. The trustees shall have power to lend money to any of the Potential Beneficiaries on such terms and security as they think fit provided that any such loan must be repaid within the Trust Period. 6. For the avoidance of doubt, the trustees may deal in any way they think fit with any policy of assurance or other assets forming part of the Trust Fund with a view to paying any inheritance tax or any other tax attributable to the Trust Fund. 7. The trustees shall have power revocably or irrevocably to delegate any power or powers in making, managing, realising or otherwise dealing with any property comprised in the Trust Fund to any person or persons (including nominees) upon such terms as to remuneration or otherwise as the trustees may think fit and no trustee shall be responsible for the default of any such agent if the trustee in question employed or incurred expense in employing him in good faith. 06 Discretionary Will Trust
Part E Further trust provisions 1 Receipt as a full discharge a) The trustees shall have power to pay or transfer any capital or income to be paid, transferred to or applied for the maintenance, education or benefit of a beneficiary who is under the age of legal capacity or otherwise under a legal disability to any parent or guardian of that beneficiary or to such other person on behalf of such beneficiary as the trustees shall think fit and the receipt of such person shall be a complete discharge to the trustees who shall be under no obligation to see to the proper application thereof. (b) Where a life insurance company pays the proceeds of a policy or policies of life assurance in accordance with the trustees instructions a receipt by the trustees for such payment will fully discharge that life insurance company of any further liability. 2 Payments to trustees Any trustee for the time being shall: (a) be entitled to recover all reasonable expenses; and (b) being a solicitor or other person or corporate body engaged in any profession or business be entitled to charge and be paid all usual professional or other charges for business done in relation to the trust. 3 Appointment of trustees The power to appoint new or additional trustees shall be vested in the trustees. 4 Power to vary administrative provisions The trustees shall have power by deed or deeds revocable (whether by the person making such deed or some other person) during the Trust Period or irrevocable wholly or partially to release or restrict the future exercise of any power hereby conferred on them (including this power) whether or not of a fiduciary nature and so as to bind their successors. 5 Protection of the trustees No trustees will be liable for any loss to the Trust Fund or part of the Trust Fund at any time (other than any professional trustee) unless that loss resulted from personal dishonesty or knowing breach of trust. 6 Governing Law This trust shall be governed by the law of England and Wales. PART 2 RESIDUE I leave the residue of my estate to my spouse/registered civil partner absolutely. Discretionary Will Trust 07
Legal & General International (Ireland) Limited Registered in Ireland number: 440141 Registered office: Beaux Lane House, Lower Mercer Street, Dublin 2, Ireland www.legalandgeneralinternational.com Legal & General International (Ireland) Limited is authorised by the Financial Regulator in Ireland and regulated by the Financial Services Authority for the conduct of insurance business in the UK A member of the Association of International Life Offices W11536 09/08