Is This The Ideal 'Modern Will'?

20th May 2008

Modern life is complex and family life can be particularly difficult.

The ideal solution for any new Will or Trust is to prepare a document which meets the requirements of the testator or settler who are leaving their assets under the Will or Trust whilst also giving as much flexibility as possible within the documents to adjust for future changes of law and circumstance.
With this thought in mind, that the proposed Will should be called, “The flexible life interest with remainder to discretionary Trust Will” as the ideal modern Will for many married couples and civil partners.

The main advantages of this type of Will can be summarised as follows:-

1. The flexible life interest Will Trust which will be created in favour of the surviving spouse or partner will still benefit from the new transferable IHT nil-rate band notwithstanding the recent changes to the tax treatment of Trusts.

2. The flexible life interest Trust is flexible because it allows the Trustees to grant capital as well as income to the surviving spouse or partner, if required.

3. The creation of the life interest Trust should protect the testator’s capital assets from any claims made against it by a local Council or other authority if the surviving spouse or partner needs to go into long-term nursing care.

4. The life interest Trust also creates a situation which is sometimes known as the “21st Century chastity belt”. In other words the testator’s capital can be protected so that it eventually falls into the name of the testator’s children or other named beneficiaries rather than potentially into the pockets of a new spouse or partner.

5. Once the life interest Trust is terminated, the benefits of a discretionary trust arise which again give a good deal of flexibility to the surviving children or other named beneficiaries who can all potentially benefit from the discretionary Trust as named beneficiaries and are also likely to maintain control of the Trust as named beneficiaries.

The main benefits in this regard are as follows:-

• If any of the children as potential beneficiaries of the discretionary Trust are subject to matrimonial or insolvency proceedings, their interest as potential beneficiaries of the discretionary Trust means that the funds are protected from ex-spouses and creditors of the potential beneficiaries.

• In some circumstances, the surviving children may already have assets of their own which already exceed the nil-rate band available to them. In these circumstances, the right to loan monies or take occasional benefits from the discretionary Trust is a particularly tax-efficient means of utilising the Trust.

• Of course, there may be occasions when the potential beneficiaries simply wish to receive the capital from the Trust and subject to their consent the Trustees will have the relevant powers to simply appoint capital to the relevant beneficiaries and close the Trust, if applicable.

As always, the advice of a specialist practitioner should be sought before entering into a Will of this sort.

We are expert Will Solicitors in Bournemouth with solutions to all your Will problems. Simply contact  us today on 01202 802 807.