Will Drafting

Question 1

What should the opening of a will look like?

Answer 1

The main purpose of the opening is to identify the testator and the nature of the document. The full name and address of the testator should be stated.

The date should appear within the commencement or at the end of the will. It is advisable to date a will so that the chronology can be established for the purposes of revocation

If the testator intend to marry in the near future, they should state that the will is made in expectation of that marriage and that they do not wish the marriage to revoke the will.

In absence of such a statement the will is automatically revoked by the subsequent marriage/civil partnership.

Question 2

Why is it important that a will contains a revocation clause?

Answer 2

The purpose of this clause is to indicate that all earlier wills and codicils are expressly revoked.

It Is important to include a revocation clause to avoid having to search for prior wills after the testators death.

This Is usually after the opening of a will.

Question 3

After a revocation clause, what should the will contain.

Answer 3

Appointments of executors and trustee, this identifies those who will be responsible for dealing with the estate.

It is sometimes sensible to create an express trust of the estate, where this happens the testator should point person to be trustees.

it is often convenient to name the same people as both executors and trustees, although it is not essential. They will act as executors while they collect in the estate, pay debts and distribute the estate.

When they have completed that stage, they will transfer the property that is to be held on trust to themselves to hold in the new capacity of trustee.

Question 4

How many executors should be appointed in a will?

Answer 4

In principle, there no maximum number of executors that can be named in the will.

However, there is a little point in naming more than four because only a maximum of four can apply for the grant of probate to the same assets.

The minimum number is one, and this will often be sufficient for a small, simple estate where the executor is the sole or main beneficiary.

With that being said there is a risk that the sole executor may pre-decease the testator or be unable to act for some other reason. for example a testatrix appoints her husband to be executor by they subsequently divorce, the appointment will not have effect because it is treated as though the husband predeceased her.

It is therefore prudent to appoint at least two executors, or name a substitute for a sole executor. If the executors will also be trustees, it is sensible to appoint at least two so that they can give good receipt for the proceeds of sale of any land held in the trust

Question 5

Who can the testator choose to be their executor?

Answer 5

The testator may appoint any combination of:

*individuals who are not professionals Eg friends & Family ( Non professional individuals)

*Solicitors or other professionals as indivudlas or as a firm.

• Banks or other trusted corporations.

Question 6

What are the advantages of the testator electing non professional individuals as an executor

Answer 6

Such persons are unlikely to want to charge the estate for their time spent in dealing with it. Also appointing family members or close friends whom the testator trust will have the advantage of ensuring that persons familiar with testator and their affairs will deal with the estate.

However, if the estate is other than straightforward, it is likely that the individuals will lack the expertise necessary to complete the admisntration and will have to employ a solicitor.

Question 7

What are the advantage of the testator electing solicitors or other professionals as their executor

Answer 7

A solicitor or other professional will have the necessary expertise to administer the estate.

There is a risk that the individual solicitor may retire or die, to avoid this possibility the firm of solicitors can be appointed.

If the firm is a general partnership not an LLP it has no legal personality and so the appointment should be of the partners in the firm at the date of death who are appointed.

It is also sensible to provide for the possibility of the firm changing its name, amalgamating or become an LLP between the date of death. Usually the testator, will indicate that the appointment is of the partners in the new or amalagamated or the members of the LLP.

Question 8

What are the advantage of the testator electing Banks or other trust corporations as their executor?

Answer 8

The operation will not die or retire, and there should be financial and some legal expertise.

Disavantages may be that the bank charge a percentage of the value of the estate, which can be a significant expense.

Question 9

Can non professional executors e.g friends & family charge for acting as an executor?

Answer 9

They can recover their out of pocket expenses from the estate or trust fund for example travel expenses from attending meetings but not remuneration for their time and skill.

s29 of The Trustee Act 2000, allows the payment of reasonable remuneration to a trustee for time spent and work done but only if the trustee is either:

1. A trust coperation
2. A trustee acting in a professional capacity. This means acting in the course of a profession or business which involves providing relevant services to estate and trusts.

Premission is required from co executers or co trustee. A sole executor is unable to recover remuneration under the statutory provisions.

Wills often contain an express power for the executors/trustees to charge. It is called a charging clause; it may appear early on together with the cause appointing the executors .

Including an express clause is desirable in case 29 does not apply for some reason, eg where some of the executors have died leaving a sole professional executor.

Question 10

What provisions should be inserted in a will if the testator has children?

Answer 10

They should include a clause in the will appointing guardians to look after the children after the death of both parents.

Question 11

How can the testator avoid ademptiation when leaving specific legacies or gifts in a will?

Answer 11

If the testator does not own specific assets at death, the gift fails (adeems), resulting in the beneficiary getting nothing in place of the gifted item unless the will expressly provides for substitution.

The risk of demotion could have been avoided by wording the clause in a different way. For example the will could have used more general wording such as a gift of ‘my main residence at the date of my death’

This gift would not fail, if the testator purchases a replacement residence before death.

Question 12

How can the testator prevent arguments arising from leaving a collection of items to various people

Answer 12

The testator should indicate the order of choosing or provide for a means of resolving any dispute. It is normal to provide that the decision of the executors will be final. It is also wise to require the selection to be done within a time- limit to avoid delays in the administration.

Question 13

How should beneficiaries be identified in a will?

Answer 13

Beneficiaries must be clearly identified in the will; otherwise the gift will fail for uncertainty. Accurately stating the name and address is important and including the relationship to the testator will help.

If the testator wishes to benefit persons who may be minors, or relatively young, they consider whether they want to make outright or contingent gifts.

A vested gift imposes no conditions and the beneficiary will be immediately entitled to it merely by outliving the testator and provided they are 18. If they under 18 then the gift will be held on trust for the beneficiary until their eighteenth birthday. His parents and guardians of the beneficiary can hold good receipt and will as trustees for until the beneficiaries eighteenth birthday.

If the beneficiary dies before the age of 18 with a vested gift, then the gift forms part of their estate.

A contingent gifts imposes conditions to be satisfied before the gift can vest. The will should appoint trustees to hold an express trust for the beneficiary until that condition is satifised. Unlike vested gifts, contingent gifts do not form part of the estate if the beneficiary dies. The gift would instead pass to the persons expressed to entitled in default or, if none, with the residue of the estate.

Question 14

How can a lapse of a gift be prevented in a will?

Answer 14

A beneficiary who predeceases the testaor is not able to take a legacy. The legacy will normally fail or lapse and will pass with residue unless the will provides for a substitute beneficiary.

There are some limited exceptions such as s33 wills act but it is usual to include an express substitutional gift if the testator does not want the lapsed legacy to pass a part of residue.

Question 15

How should gifts to charities in a will be presented?

Answer 15

It is important to identify the charitable body accurately. This should include the address and registered charity number of the body for identification.

Some charities are run as unincorporated associations, without express provision stating otherwise all members of an unincorporated associated would have to sign a receipt.

To avoid this, it is normal to authorise the executors to accept the receipt of an authorised officer of the charity.

The clause should provide that the receipt of the person who appear to be the treasurer or other proper officer of the organisation will be sufficient. This avoids the need for executors to check the constitution of the body to establish the identity of the proper officers.

It is useful to also consider that the charitable body may dissolve, amalgamate or change its objectives before the date of death. It is useful to state that the gift is to the body ‘for its general purposes’. This may help establish that the gift has not failed, because those purposes can continue to be performed by another organisation or help establish that the testator had general charitable intention and so allow the gift to be applied to a similar charity.

Question 16

Where does the burden of inheritance tax lie in a will?

Answer 16

The default position is that the inheritance tax on the individual legacies is paid out of the residuary estate.

However, the will can displace the general rule by exhibiting a country intention.

For example ‘I give the old vicarage to Alison Peters subject to tax’. The words subject to tax vary the general rule. Alison bears the burden of IHT attributable to the Old vicarage.

OR- ‘ I give the old vicarage to Alison Peters free of tax’. The words free of tax confirm the general rule that the IHT attributable to the old vicarage falls on residue.

Gifts left in a will should indicate whether they are ‘free of’ or ‘subject to’ tax.

Question 17

What is the position of costs associated with the packing and transporting of a gift left in a will?

Answer 17

Unless the will provides otherwise, the beneficiary will bear these costs.

The testator should consider if these costs will be too great for the beneficiary and if so provide that the gift is free of costs. If such words are included, the costs ill be paid from the residue of the estate.

Question 18

If the specific devise of land is mortgaged, who will bear the burden of paying off the mortgage debt?

Answer 18

Under s35 Adiministration of Estates Act 1925? The mortgage debts falls on the beneficiary who receives the charged property unless the will contains a country direction.

If the testator does not want the beneficiary of the charged property to take on the mortgage debt, the devise should be expressed to be ‘free of mortgage’ this will was the burden of the mortgage debt on to residue.

Question 19

Should there be a gift of residue in a will?

Answer 19

It is important that the will contains a gift of residue and that care is taken to ensure that it does not fail, as the result would be partial intestacy.

Question 20

What should a gift of residue contain?

Answer 20

There should be an express direction for the payment of all debts, expenses and legacies to be made from the residue before it is distributed to the beneficiaries.

In absence of such direction the statutory order set out in the AEA 1925 will apply and this can lead to problems.

Question 21

Is a trust required for the gift of residue in a will?

Answer 21

Where the residue is passing outright to adult beneficiaries, there is no need for an express trust. However it is not unusual to create a trust of the residue in these circumstances as it does no harm.

In family wills, common express trusts are

• Contingent Trusts- Conditional on the beneficiariess attaining a specific age.
• Discretionary trusts- Where trustees select who, from a class of beneficiaries, is to benefit, and how much each will receive. e.g on trust for such of my children and in such shares as my trustee shall select.
• trusts with successive interest, such as a trust to pay the income to the testator or testatrix spouse for life, remainder to the children.

Question 22

How can gifts in residue avoid resulting in partial intestacy?

Answer 22

By including substitutional gifts to cover the possibility of the primary gift failing. For example where the residue is left to the testators niece, there could be an express substation of her children if she predeceases the testator.

It is also worth considering a ‘longstop’ beneficiary to inherit if all the intended arrangements fail. The longstop beneficiary is often a charity because there is little possibility of such a gift failing.

It is also wise to omit names and specific shares in the residue and refer only to any children the testator may have at the date of death.

Question 23

What is the significant of s33 of the will act in relation to a gift of residue?

Answer 23

If the testator leaves a gift in equal shares to his 3 children, and the children predecease him. S33 Wills Act 1837 provide for the failed one third share to pass to any child of the dead child; but if there were none, the failed one-third share would pass on intestacy.

Therefore It is wise to omit names and specific shares in the residue and refer only to any children the testator may have at the date of death.

Using the phrase ‘for such of my children as survive me and if more than one in equal shares’ will ensure that there will be a partial intestacy only if all children predecease the testator

As a result of this provision, should one child predecease the testator, the deceased Child’s share would pass to the other children. It is usual to provide that if the deceased child leaves their own children, they take their parents share.

Question 24

Should a will contain a survivorship clause?

Answer 24

Yes as it gives the testator more control over the destination of their property, a survivorship clause may be used in the following way:

‘If he survives by 28 days, but if he does not so survive me, then to my sister’.

Alternatively, there may be a general declaration that a survivorship period is to apply to all gifts in the will.
‘Any beneficiary who does not survive me by 28 days shall be treated as having died before me’.

Question 25

What admisntrative provisions that should be included in all wills and why should they be included?

Answer 25

Personal representatives and trustees have a number of statutory administration powers.

However it is usual to include classes in wills extending or modifying some of these statutory powers, where they are not regarded as sufficient. Even where the statutory powers are adequate, it is common to repeat them in the will so that the testator, PRs and trustees can see all the powers in one place.

(a) Power to charge- When drafting such a clause it is important to be clear whether a person engaged in any profession or business can charge for time spent on the admisntration or whether only a person whose profession involves administering estates and trusts can charge

(B) Extended power to appropriate assets without consent of legatee- Section 41 AEA 1925 gives PR’s the power to appropriate any assets in the estate in or towards satisfaction of any legacy or any interest in residue provided that the approbation does not prejudice any beneficiary of a specific legacy. If a will gives a pecuniary legacy to a beneficiary, the PRs may allow that beneficiary to take chattels or other assets in the estate up to the value of their legacy, provided that these assets have no been specifically bequeathed from the will. Section 41 provides that the legatee to whom the assets are appropriated must consent to the apportiation, although it is common to remove the need for this consent.

(c) Power to insure assets- Pre have a duty to preserve the value of the estate. Section 19 Trustee Act, gives Mrs and trustees power to insure assets against all risks, to the full value of the property, and to pay premiums out of income or capital.

It is not necessary to amend the statutory provision. However, including an express provision makes life easier for lay PRs who will be able to see from the will itself exactly what they can do.

(d) Under the general law, an infant cannot give a good receipt for a legacy or share of the estate. There are often tensions within families and a testator or testatrix may not be happy for a parent or guardian to give a good receipt for a legacy. In such a case, the will should be drafted to leave a legacy to trustees to hold for the benefit of the minor rather than to child directly.

(e) Self-dealing- The fiduciary position of Mrs and trustees prevents them from entering into any transactions where duties and personal self interest conflict. For example purchasing property, which is part of the estate or trust, would breach their fiduciary duty. An express clause in the will may permit self dealing by the trustees. One situation where it important to include such clause is where the executors or trustees are also beneficaires.

Question 26

What administrative provisions should be included in Trusts?

Answer 26

(i) Power to appropriate assets- Section 41 AEA 1925 does not apply to trustees. It is necessary to include an express provision, equivalent to s 41, to permit the trustees to appropriate trust property towards beneficial interests arising under the trust without obtaining the consent of the beneficiary.

(ii) The power to invest- Under the general law, trustees have a duty to invest Money. The TA 2000, s3 gives trustees a ‘general power of investement’ enabling then to invest as if they were absolutely entitled to the trust property themselves. This wide power excludes investment in land, other than by mortgage, but the purchase of land is permitted by s8.

An express investment clause can be included but is no longer necessary in most estates. Trustees are able to delegate the management of trust investment to a financial adviser, the Trustees act 2000 permits delegation and this should be done in writing, providing the advisor with a written policy document setting out investment objectives and restrictions on the choice of investments.

(iii) Power to purchase land- S8 Ta 2000 gives the trustees power to acquire freehold or leasehold land in the UK for investment, for occupation by a beneficiary or for any other reason. When exercising their power, the trustees are given ‘all powers of an absolute owner in relation to the land’.

The statutory power does not authorise the orcuase of land abroad, nor does it allow trustees to purchase an interest in land with someone else. An express power will be needed if the trustees are to have such powers.

(iv) Power to sell personalty- Trustees holding land have the power to sell it, under their powers of an absolute owner under TA 2000. There is doubt as to whether they have the power to sell personalty. Therefore an express power will be needed if the trustee are to have such power by way of including provisions in the will.

(V) Power to use income for maintenance of beneficiaries- Where trustees are holding a fund for a minor beneficiary, s31 TA 1925 gives them power to use income they recieve for the minor’s maintenance, education or benefit.

(VI) Power to use capital for the advancement of beneficiaries- Section 32 TA 1925 allows trustees in certain circumstances to give a beneficiary a payment of trust sooner than that would recive it under the basic provisions of the trust. The power only applies to beneficiaries who have an interest in trust capital.

Where the trust creates a life interest, it is common to extend s32 TA 1925 to permit trustees to make advancement of capital to the life tenant. A life interest trust is a trust that is written into your will. It gives a named individual, usually the surviving spouse or partner, the right to receive income from the trust during their lifetime, while the assets themselves are held for the benefit of the ultimate beneficiaries, usually the children or grandchildren.

These provisions would permit the trustees to give or lend capital from the trust fund to the life tenant even though they have an interest only In income, not capital. such a clause will give more flexibility to supplement the life tenants income but the life tenant would be dependent on the discretion of the trustees..

Section 32 confers an absolute discretion on the trustees; therefore, the beneficiaries cannot compel them to make an advancement.

(VII) Control of trustees by beneficaires- legislation provides that where beneficiaries are aged 18 or more and entitled to the whole fund, they may direct the trustees to retire and appoint new trustees of the beneficaires choice.

(ix) trusts of land- Beneficaires have special powers under a trust of land where there is an interest in possession: which may be excluded by provision in a will

Trustees exercising any function relation to land have a Duty to consult beneficaires who is of full age and entitled to an interest in possession. The duty to consult may be excluded by the will and often is.

Beneficiary with a beneficial interest in possession even if not of full age, has the right to occupy land subject to the trust if the purposes of the the trust include making the land available for occupation by him, or if the trustee acquired the land in order to make it so available. There is no power to exclude the legislative power but a declaration that the purposes of the trust is not for occupation of land may be included in a will.

(x) Power to carry on the tester’s business- The powers of the Pre to run the business are limited. For example they may only run the business with a view to selling it as a going concern and may use only those assests employed in the business act the date of death.

Question 27

Should a will contain an attestation clause?

Answer 27

All wills should contain an attestation clause resting that the formalities required by wills act 1837, s9 have been complied with.

Question 28

Should the solicitor take instructions from a third party when it comes to drafting a will?

Answer 28

Solcitors should not take instructions from anyone but the client for drafting of a will. It would not be in the best interest of the client to take instructions from an intermediary.

Question 29

Should the solicitor draft a will which is leaving gifts to him?

Answer 29

Solicitors should not prepare a will giving significant amounts to themselves, their spouses, civil partners or family members unless the client has obtained independent legal advice with regard to making the gift.