Wills and Intestacy - Structure of Wills (4) Flashcards
How are wills structured and drafted?
Structure and Drafting: It is typical to draft wills in a consistent structure, to ensure that the testator’s instructions are carried out and to anticipate common issues such as failure of gifts and inheritance tax.
(1) Gifts to Solicitors: Gifts may only be made to solicitors if independent advice is actually sought.
What is the opening in a will?
Opening: The will begins by identifying the testator by their full name and address, and identifies itself as a will.
(1) Date: Dates are not required, but help to establish chronology. Common to add at the start or the end.
(2) Revocation Clause: A will should expressly revoke all former wills, codicils, and testamentary dispositions.
(3) Marriage Expectation: A marriage expectation clause will be found here, to prevent automatic revocation. It should specify the intended spouse by name, and indicate the intent not to revoke.
(4) Funeral Wishes: It is common to express funeral wishes, though these cannot be legally enforced.
What are the rules arround appointments of executors?
Appointments: The testator should appoint their executors, and any trustees if required.
(1) Number: It is prudent to have 2 executors in case of any issues, but only one is required. A maximum of four can act at once, but an unlimited number can be named.
(2) Choice of Executor: Executors may be professionals or non-professionals, and may be corporate bodies.
Non-Professionals: Usually friends and family. Cheap, but inexperienced.
Caveat: They may hire a professional from the estate funds in any case.
Professionals: Usually solicitors. Experienced, but expensive. May be familiar with family.
Partnerships: If a firm is appointed, it is the partners at date of will who can act.
Corporations: Usually banks or trust corporations. Experienced, but usually impersonal and more expensive (they tend to take a percentage cut of the estate as payment).
(3) Charging Provisions: Non-professional executors and trustees cannot remunerate themselves except for reasonable expenses. Professional trustees may acquire reasonable remuneration by consent of the other trustees.
Charging Clause: It is prudent to contain a charging clause to permit remuneration.
(4) Guardians: Testators may appoint guardians to look after their adolescent children.
What are the rules around gifts and beneficiaries?
Gifts and Beneficiaries: Gifts and their intended beneficiaries should be clearly set out.
(1) Collection Gifts: A testator can leave a collection of items, and name a group to choose freely from them.
Provisions: It is prudent to provide a selection process, such as a time frame and an order of priority.
(2) Naming Beneficiaries: Beneficiaries should be clearly identified by name, address and relationship to the testator. Uncertainty means the gift will fail.
(3) Child Beneficiaries: If a beneficiary is a child, one should decide whether to vest contingently or outright.
Outright: Gift vested with no conditions, meaning it will be held on trust for the child until adulthood.
Contingent: Gift will vest on adulthood, meaning it will return or pass on substitution if not met.
(4) Substitution Clause: Gifts often fail. As such, it is important to add substitution clauses to determine where a gift might otherwise go.
Longstop: It may be prudent to specify a ‘longstop’ beneficiary for the residue. If the residue fails, it passes on intestacy. This is known as an Ultimate Gift clause.
(5) Charitable Gifts: If a gift is made to a charitable body, the body must be accurately identified.
Unincorporated: Will should give authority to an officer to sign on the charity’s behalf, otherwise every member of the body will have to sign, i.e. ‘treasurer on death’.
Anticipatory: The clause should anticipate any change in nature the charity might undergo before death.
Dissolution: The clause should anticipate dissolution, such as ‘to X, if not, to X’s general charitable purposes’.
(6) Survivorship Clause: It may be prudent to specify a survivorship clause, to prohibit an estate from passing immediately to PRs of a beneficiary who narrowly outlives, and suffers double IHT.
What is the burden of liabilities in a will?
Burden of Liabilities: It may be wise to determine the source from which liabilities are to be paid.
(1) Inheritance Tax: By default, all inheritance tax is paid from the residuary estate, subject to contrary intention, such as ‘to receive the house and the burden of IHT upon it’.
(2) Costs: There may be costs associated with transporting or transferring a gift. By default, the recipient suffers these costs, but contrary intention can be shown, i.e. ‘to receive gift, and costs to be paid from residue’.
(3) Charges: There may be gifts with charges over them, such as mortgages over a house. By default, the recipient bears these costs, but contrary intention can be shown (s35 AEA 1925).
How are documents incorporated into a will?
Incorporating Documents: A document can be incorporated into a will by reference, provided: a) it existed at date of will; and b) is referred to in the will. Future documents cannot be incorporated. Typical for a schedule of items.
What are PR powers?
Personal Representative Powers: It is wise to include, remove or modify certain powers of personal representatives and trustees.
General Provisions
General Provisions: The following provisions may be suitable to all wills:
(1) Charging Clause: The ability for PRs to charge for their services must be expressly included.
(2) Satisfying Pecuniary Legacy: PRs can satisfy a pecuniary legacy by providing the beneficiary with a residue asset of equal value, provided they consent (s41 AEA). A bespoke clause can remove the consent requirement.
(3) Insurance: PRs have power to insure assets to their full value and pay premiums from income or capital, but it is common to include this right expressly (s19 TA 1925).
(4) Receipts of Children: Children cannot give good receipts for gifts, but it may be practical to stipulate that such gifts are held on trust (CA 1989).
(5) Self-Dealing: PRs cannot pursue self-interested opportunities by fiduciary duty, but a clause may permit this.
(6) Rights Over Going Concern Businesses: The default powers of PRs over continuing businesses are limited. It may be wise to create a trust over them, or modify their powers accordingly.
What are trustee specific provisions?
Trustee-Specific Provisions: The following provisions may be suitable to a trust conveyed by will:
(1) Power to Appropriate Assets: The power to appropriate assets does not apply to trustees, so should be expressly included.
(2) Investment Powers: Trustees have an implied power to invest (s3 TA 2000). It may be expressly modified.
(3) Power to Purchase Land: Trustees can only purchase UK land (s8 TA 2000). Express provision may extend this power to foreign purchases.
(4) Power of Sale: Trustees have the power to sell land. However, statute is unclear on personalty, so express provision is appropriate.
(5) Power of Maintenance: Trustees have an implied power of maintenance to accumulate income only until a beneficiary reaches adulthood. This can be postponed or modified.
(6) Power of Advancement: Trustees have an implied power of advancement to award capital before expressly stipulated in the will. This can be altered.
(7) Power to End Trust: Beneficiaries who as a whole are sui juris and absolutely entitled can end a trust (Saunders v Vautier). This right can be expressly excluded.
(8) Rights Over Land: Beneficiaries have a right to occupy land, and to be consulted in respect of trust land. This may be expressly modified.
