Financial Advice - Trusts/ Wills/ POA

Question 1

Explain how the use of spousal by-pass trust could reduce any future IHT liabilities

Answer 1

If death occurs with uncrystallised pension fund - fund passed to spouse
This could then be included in spouse estate - IHT
If death benefit going into spousal by-pass trust then spouse can be trustee/beneficairy
They can receive income/capital/loans from trust at trustee discretion
As they have no right to benefit the value of trust will not be included in their estate
Maximum IHT is 40% x fund value

Question 2

Explain to Amir and Karina the difference between mutual wills and mirror wills

Answer 2

Mirror wills leaves assets outright to each other
Can be changed at anytime after the death of one of them [as long as they have mental capacity to do so]
They do not need to give notice to each other if they want to amend or revoke will

A mutual will agreement to make wills at same time on agreed terms
Legally binding obligations that will shall not be changed after first death
This can be reassuring to Amir and Karina that nothing will change after the first death and their respective siblings will receive in full
If both parties are still alive then they can write new wills

Question 3

Identify the key instruction that should be included in a will

6

Answer 3

Identify beneficiaries
Identify split of estate
Specific gifts/ charitable donations
Identify suitable exectors
Residuary beneficiaries in even of death of main beneficiaries
Funeral requirements

Question 4

Explain why wills must be reviewed regularly

4

Answer 4

Ensure exectors/trustees are able to act
Consider change in family circumstances
Financial position may change
IHT planning

Question 5

What is Lasting Power of Attorney

Types:
What is Attorney responsible for
What are the different types of Attorney
Where is it registered

Answer 5

Two types:

Property and financial Affairs - Can be used when having capacity
Health and Welfare - Can only be used when donor has lost capacity

LPA must be registered with Office of Public Guardian

Must be a certifiacte from a prescribed person confirming they understand LPA
Can cancel LPA anytime as long as they have capacity

Single Attorney:
Should name a replacement attorney as if the original attorney dies or becomes disqualified the LPA will pase

Joint attorney:
Should one of the attorney dies/disqualifies the LPA will lapse

Joint and severally attorney:
Can act independetly or together/ if one dies LPA continues

Question 6

What happens if an LPA is not in place

Answer 6

Then courts will register deputy from the Courts of Protection - the courts will decide who will look after you