Estate Planning Considerations

Question 1

Effect of Divorce on Wills

Answer 1

Will is not revoke or void
Will is simply read as if the ex-spouse/partner is no longer alive (unless Will has a provision to the contrary)
Important for divorcees to update Wills post divorce

Question 2

Lasting Power of Attorney

Answer 2

Following the divorce, Peter must stop acting as attorney/not be allowed to act as attorney
Unless the LPA has a provision to request so
If there are no replacement attorneys, the document will not be of use
New LPAs should be drafted, appointing new attorneys as well as replacements

Question 3

Gifts from Excess Income

Answer 3

• Must be regular
• Out of disposable income
• Records must be kept
• If have disposable income, good way to reduce estate
• Can help children out
• Not affect standard of living
• Cannot be funded from capital
• In addition to annual exemptions
• Can be challenged by HMRC post death
• Gift must be outright/no GWR

Question 4

Review Will/LPAs regularly

Answer 4

• Update post divorce – remove Peter, find new attorneys/executors
• Keep will UTD with legislation
• Ensures executors/trustees/attorneys are in place and ready to act
• Can change beneficiaries/ensures wishes are reflected
• Ensure RNRB will be left to direct descendants
• Reduce risk of family conflict/dispute

Question 5

Why setting up a bereaved minors trust in Will can ensure boys are financially protected if Julie dies

Answer 5

• Simple/clear process/reduced admin/reduced cost
• Can use RNRB if property is in Trust/IHT efficient
• Children inherit automatically at age 18
• Money can be used for education/maintenance
• Trustees of choice can be appointed by Julie
• Letter of wishes in will/assets managed for benefit of children
• Not taxed at trustee rates/effectively taxed at children’s rates
• No periodic/exit charges
• Trustees can amend trust at 18/transfer to a new trust (18-25)

Question 6

DIS Nomination

Answer 6

Not nominated a beneficiary for DIS benefits.

Question 7

Duties & Obligations of Trustees

Answer 7

• Act in best interests of beneficiaries
• Follow the provisions in the trust deed
• Avoid conflicts of interest
• Consider all beneficiaries
• Follow trustee act 2000
• Make decisions together
• Legal owner of trust property
• Use utmost diligence to avoid losses
• Review investments and amend as required
• Obtain/consider professional advice
• Keep proper accounts/records/pay taxes/reporting
• Act as ordinary prudent business person would
• Invest cash asap, unless withdrawing