PERSONAL LEGAL WILLS, TAX AND ESTATE PLANNING

A.

Not necessarily, though some provisions of the will may become inoperable. This is a situation in which you should certainly take professional advice.

A. Providing that you have gone through a legally binding ceremony, your civil partner will have exactly the same rights as a spouse would have.

Registration of the civil partnership (like marriage) invalidates any existing will, unless the will was drawn up in expectation of this registration. If you have not registered the civil partnership, and have not made a will, your partner will not be entitled to anything. So if you are planning to register a civil partnership, have registered a civil partnership without considering the impact on your will, or have not made a will anyway, take advice.

A. Yes, and if you have made arrangements for them you should do so, otherwise the executors may decide on some other course, in ignorance of your intentions.

If you wish to provide for your pets, and can spare the capital, you could set up a simple trust, with the income going to support them during their lifetime, and the capital going to another beneficiary - for instance, an animal charity - after their death. However, the trust's income and capital gains would be subject to tax, and you might have difficulty finding anyone prepared to act as a trustee.

Alternatively you could leave your pet(s) with a cash sum to a named legatee (someone you can trust to give them a good home). Or you could leave them with a cash sum to an appropriate animal charity, such as the Cinnamon Trust or the RSPCA, which runs a re-homing programme. If you opt for this solution, be sure to put an appropriate clause in your will - the RSPCA, for example, provides one on its website.

A. The answer to this question depends partly on the status of the children in question. If they can prove that they were dependant on you, and that you have not properly provided for them in your will, they may be able to persuade a court to make provision for them from your estate. Even if they are completely independent they might attempt to obtain a variation, so if you intend to do anything that appears to be unfair, you should provide reasons. These can be set out in a letter of wishes, that you write at the same time as your will, to explain your reasons for writing the will in that way.

You might, for instance, point out that you are leaving everything to your younger daughter - a struggling artist - because your older daughter is well established as a director of a merchant bank, or a senior partner in an accountancy firm. Or you might explain that you are excluding your older son because he had his share when he was setting up in business, five or ten years ago.

A.

It depends on how much you own and how complicated your bequests are. If you own relatively little, and intend to make straightforward bequests, perhaps not, although in these circumstances getting a solicitor to draw up your will costs relatively little and will give you peace of mind.

In some circumstances you would be very unwise to draw up a will without a solicitor: if, for instance:

• Your heirs include a child or children, or a disabled adult. In such cases, you may need to set up a trust for them, and appoint guardians;
• your heirs are elderly or ailing;
• your estate is likely to be worth more than £325,000 and you have no spouse or civil partner to whom to leave it, so that all the excess is potentially subject to inheritance tax;
• you want to leave specific sums of money, or items of value - perhaps sentimental - to particular friends or relatives;
• you own property overseas - particularly land (see question 19).

A. The cost of making a will is generally quite moderate, although it does depend on how complicated the provisions are. Ask for an estimate of the cost before you start.

A. Yes. It is quite common for banks and solicitors to act in this capacity. Bear in mind, however, that they will be going for an efficient settlement, rather than the best settlement - for instance, they will probably call in the house clearance agents to get rid of everything other than the objects you have specifically named in your will, unless you make it plain that there are other objects of value amongst your chattels.

They will also charge fees for their services, which will come out of your estate. These fees are likely to be anything between two and six per cent of the value of the assets. Ask for an estimate of fees, and details of how they are calculated.

The Public Trustee (see http://www.officialsolicitor.gov.uk/estates/pt.htm) may be willing to act if you absolutely cannot find anyone else to act as your executor. There is a minimum charge of £1,250, whatever the size of estate, and the scale means that his fees on an estate of £50,000 would amount to £6,250, and on an estate of £150,000 to £11,900.

A.

UK law says that the law governing foreign property (personal effects, land and buildings, bank accounts, etc) is the law of the country in which the property is situated. Whether you can dispose of that property in your UK will, or you need to make a local will, therefore depends on the law of the country in which your property is situated. Often you will need to make two wills - one in the UK and one abroad - and the two must be consistent. Take advice.

A particular danger to look out for is the 'forced heirship' rules that apply in some countries. These say that a proportion of your property must pass by law to certain of your heirs (often only those in your bloodline - not your spouse's family), whatever your wishes, and whatever it says in your will.

Another is inheritance tax. Land and buildings, in particular, are likely to be liable to local inheritance tax in the country where they are situated. Foreign inheritance tax can be punitively high (particularly if your beneficiaries are not family members) and is often levied on the value of the bequest to the beneficiaries, rather than being paid out of the estate first.

You will, of course, have to obtain a valuation of the property for the purposes of probate.

A. Once you die, and your executors apply for a grant of probate (see question 26), your will becomes a public document, so your spouse will find out. You would therefore have to make some other provision for your friend, during your lifetime: for example, you might arrange for your friend to benefit under a life assurance policy (though he or she would still need a copy of your death certificate to be able to claim the money).

A. No. However, they can take their expenses (for example, for travelling, phone calls, employment of agents to track down missing beneficiaries, or even handing over to professional executors) from the estate, though they would have to keep details.

Executors can benefit under the will, and it is quite common for the principal beneficiaries to take on the job - in fact, appointing your principal beneficiaries as executors means they have a vested interest in getting things done fast, so they get their entitlement sooner.

A. That depends on the terms on which the shares were granted in the first place. These will be in the company's articles of association. For public companies, a transfer to your spouse (or any other beneficiary who is over 18) will invariably be allowed. Share transfers in private companies are often more restricted. Common terms are that:

• the directors can refuse to register a transfer of your shares to anyone (including your spouse);
• the shares must be offered to the other shareholders before they can be transferred to your beneficiary;
• the shares can be transferred under your will, but only if the transfer is to a member of your family (which would include your spouse), or to family trusts.

A. If the intended beneficiary was a child, the law says it goes to their heirs instead, unless you have said otherwise in your will. Otherwise it becomes part of your 'residue' (ie what is left over, after all the specific bequests made by your will have been satisfied).

A.

Yes you do. If you die without making a will (ie you die 'intestate'), fixed legal rules apply to determine who is entitled to your 'estate' (ie what you leave).

If you die intestate but have assets of less than £450,000, then your spouse (or civil partner if you are legally united in a civil partnership) will be entitled to everything, no matter how many other close blood relatives (parents, brothers, sisters, nephews or nieces) you have

The same applies if you die intestate with assets of more than £450,000, but none of your close blood relatives is still alive.

But if you have assets worth more than £450,000, and die intestate with close blood relatives still alive, your spouse or civil partner only gets:

• your personal effects.
• the first £450,000 of your other assets.
• half of what's left.

The remaining half goes to:

• your parent(s) - an equal share to each if both are alive. If they are both dead:
• your brother(s) and/or sister(s), equally. If any have died before you, their share is divided among their children (your nephews and nieces).

These rules override any informal wishes you may have expressed.If, for instance, you want to leave a gift to the woman who comes to keep the garden under control, you need to put it in a will.

There is also the question of inheritance tax. If:

• the value of your estate on your death; and
• the value of anything you have given away within the past seven years

amounts to less than £325,000, inheritance tax will not be payable on your death: £325,000 is the current (2009-10) level of the general exemption from inheritance tax (the amount you can leave without attracting any inheritance tax). This amount is reviewed every year in the budget.

If, however, they amount to more than that, your estate is potentially liable to inheritance tax (see question 22). Assets passing to your spouse or civil partner are exempt from inheritance tax, but those passing to your parents or other relatives are not. Tax planning can generally reduce liability to inheritance tax, so if you think your estate may be liable, take advice - which will often include advice to make a will.

Even if everything goes to your spouse or civil partner, and is therefore exempt from inheritance tax on your death, you should consider what will happen on your spouse's or civil partner's death if they die later than you. Any unused part of your nil rate band can be 'inherited' by your surviving spouse or civil partner, and added to their own nil rate band but if your assets, when 'bunched' together with theirs, could create or increase, the inheritance tax liability on their death, consider taking tax planning advice. Again, this will often include advice to make a will.

A. If you have assets of less than £250,000, and die intestate (ie without making a will), then your spouse or civil partner will be entitled to the whole of your estate (ie what you leave). The children get nothing.

If you die intestate with assets worth more than £250,000, and with children (from this or any earlier marriage), your spouse (or civil partner) is entitled to:

• your 'personal effects' (household goods, car, tools etc);
• the first £250,000 of your other assets; and
• a 'life interest' in half of the rest.

• your personal effects;
• a house worth £300,000;
• £20,000 of life assurance; and
• £5,000 in your bank accounts,

A. Yes, plenty.

• Prepare a schedule of your current assets, date it, and give approximate values. This doesn't have to be all your assets - just those with some monetary value. Provide details of any subsequent purchases or disposals.
• Prepare a schedule of your current debts, and date that too. Provide details if you subsequently add to or reduce any non-recurring debts (for example, if you pay off your mortgage).
• Provide details (name, address and telephone number) of your bank(s), stockbroker(s) if any, accountant(s) if any, and solicitors. Make a note of your bank account numbers, in the same order, but keep it separate - give it to your executor, or at least tell him (or her) where it is.
• Provide a list of your utility providers (gas, electricity, water, telephone and cable or satellite), with addresses, phone numbers and your account number.
• Decide what kind of a funeral you want, and if possible who is to be employed to provide it. Provide instructions for your executors.
• Provide precise details of the chattels you are leaving to individual beneficiaries, in sufficient detail to ensure that there can be no doubt about what it is you intend to leave to whom.
• Provide a list of your favourite charities/charity shops, so that your executors can dispose of some of your remaining chattels there, before the house clearance people come in.
• Provide a list of your beneficiaries, with their current addresses and telephone numbers. Stay in touch with them, so that you can amend their details if necessary.

A. You can appoint up to four, with alternates in case they don't want to serve, or they pre-decease you; though obviously with too many the task will become unmanageable. Two or three is the optimum number.

While all are ultimately responsible for the proper administration of your estate, you could pick them with a view to each taking on a different area of responsibility - for instance, one to organise the valuation of your personal effects, their eventual distribution, and the clearance of everything else; one to take responsibility for the security, valuation and eventual sale of the house; and one to look after investments and liaise with the tax authorities. But bear in mind, too, that they might need some flexibility if, for instance, one of them becomes sick or disabled, or indeed pre-deceases you.

Think about leaving a legacy to your executors (provided they take up the role on your death), in recognition of the work involved, and provide in your will that they can recoup their expenses.

A. If you and your partner are not married or legally united in a civil partnership, your partner will not be entitled to any of your assets when you die - no matter how long your relationship has been - unless you make a will.

If you die intestate and have children, your estate will go to them, equally. If one of your children pre-deceases you, their share will go to their children, divided equally between them. If you have no children, your estate will go to your parents, equally. If you have no parents, everything goes to your brothers and sisters, equally. If any of your brothers and sisters pre-decease you, their share goes to their children, divided equally. If you have no brothers or sisters, your estate goes to your grandparents, equally. If you have no grandparents, your estate goes to your aunts and uncles. If an aunt or uncle pre-deceases you, their share goes to their children, again divided equally.

Even if you die leaving no children, parents, brothers, sisters, nephews, nieces or grandparents, your assets still won't go to your partner. On your death they will instead pass to the Crown, the Duchy of Cornwall or the Duchy of Lancaster, depending on where you live.

So it is vital that you - and your partner - make a will in these circumstances. Take advice.

A. There are three requirements, for a will to be legal.

• It must be in writing. Telling a friend, relative or even your solicitor what your intentions are is not enough.
• You must sign it.
• When you sign it, there must be at least two other people present to witness your signature (see question six).

A. If you want to make a minor change, you can do it by adding a 'codicil' (a note attached to the original will). For instance, you might want to leave a fine mirror to a friend or helper: that would make a suitable subject for a codicil. Codicils have to be signed and witnessed like the original will (though the witnesses can be different).

If you want to make more significant changes, however - perhaps because of the death of one of the original beneficiaries, or the birth of a new grandchild - you should draw up a new will, or preferably get your solicitor to do it.

What you should avoid doing, under all circumstances, is writing on the original will. That can create problems, for example, if the Probate Registry query it, or there is a dispute between beneficiaries. It might invalidate the will completely.

A. Any subsequent marriage (or entry into a civil partnership) will invalidate your current will, unless that will was drawn up in the expectation of the marriage, and mentions it. Unless this is the case, you need to draw up another will, preferably before the ceremony, and preferably taking advice before you sign it.

A. Providing all your beneficiaries agree, and they act within two years of your death, yes they can. It is however safer, if possible, for you to review your will on a regular basis, and certainly whenever relevant tax or probate rules change.

A. Your executors are the people who make it all happen. Amongst other things, they have to:

• register the death and collect the death certificate (and copies) for everyone who will need to see it (including, for instance, the bank(s), insurance companies, investment advisors, etc);
• apply for a 'Grant of Representation' from the Probate Registry (see question 26, below);
• notify the bank(s), pension agencies, solicitor, utility companies, and other relevant parties;
• arrange your funeral and pay for it (the money comes from your estate);
• arrange for the payment of any debts outstanding on your death;
• identify the 'beneficiaries' (people who inherit under your will) and establish where they can be contacted;
• close up the house (if necessary) and arrange for house clearance prior to a sale;
• arrange for the valuation of your estate, including any chattels of significant value;
• liaise with the tax authorities on inheritance tax;
• pay the inheritance tax due (an account should be delivered within twelve months of the death);
• arrange the distribution of bequests;
• keep account of all transactions, and get the accounts signed off by the beneficiaries.

A. Probate is the process through which the executor(s) (see question seven) or administrators of your estate (see question 11) get permission to deal with your estate. Being named in the will, or being the nearest next of kin and therefore entitled to be administrator, is only the first step: before they can actually do anything with your assets and liabilities, they need a 'Grant of Probate' (if you have left a will) or 'Letters of Administration' (if you haven't) from the Probate Registry. Before they can get that, however, they need at least a good estimate of the value of your assets and liabilities, so the better your affairs are organised, the faster probate will be granted.

The Probate Registry will examine the application from your executors (or administrators), and may ask questions, after which they will be asked to attend an interview to prove that they are who they say they are. They must swear to the validity of the information given, and their own commitment to fair dealing, in a standard form sworn statement.

The 'Grant of Probate' or 'Letters of Administration' will then be shown to anyone being asked to release your money or other assets, or accept payment for your debts.

A. They must be over 18, of sound mind, and able to see; but apart from that there are no restrictions. However, witnesses - and their wives, husbands or civil partners - are not allowed to benefit under a will; so do not ask your next door neighbours to do it if you are leaving them something in your will.

If you are going to ask the window cleaner or a charity collector to witness your will, be sure to get his (or her) address. It is generally better to ask someone who can easily be traced. They do not need to know what is in your will - they are merely witnessing your signature.

A.

Your executor(s) (see question seven, above) or administrator(s) (see question 11, above) will be responsible for the payment of any tax due on your death, and will not be able to obtain probate or letters of administration (see question 26) and start distributing your bequests until these payments have been made.

If your estate is worth less than £325,000 - the current (2009-10) threshold - you do not need to worry about inheritance tax. If your estate is worth more than this, however, inheritance tax at 40% may be payable. In establishing the value of the estate, HM Revenue and Customs will require the inclusion of:

• personal effects of any value, for example your car(s), paintings, jewellery, antique rugs or furniture;
• your house;
• any other property;
• any investments;
• the contents of your bank and savings accounts;
• the proceeds of any life assurance policies (other than those that have been made payable to other people);
• gifts - apart from those made under the annual allowances (see below) - made within the past seven years.

If you own assets jointly on your death, such as your house or a joint bank account, there are rules that determine which proportion of those assets is treated as part of your estate for the purposes of calculating its value for inheritance tax purposes. Usually, if you are one of two joint owners, you are treated as owning half, if one of three, a third, etc.

However, the following are excluded from the value of your estate:

• your debts, if any (including, for instance, closing bills from the utility companies);
• the costs of your funeral;
• any gifts to your spouse (or civil partner);
• any gifts to a registered charity;
• any gifts 'for national purposes';
• gifts in consideration of marriage: up to £5,000 to a child, £2,500 to a grandchild, or £1,000 to anyone else;
• gifts of up to £3,000 to any one person in any one year;
• gifts of up to £250 in any one year to any number of people;
• regular and normal gifts out of expenditure (eg payment of insurance premiums);
• gifts made more than seven years before your death.

Your executor(s) or administrator(s) may also have to make provision for capital gains tax (if assets have to be sold to facilitate settlement of the will).

A. You should keep the original somewhere safe and off your premises - for example, with your bank or your solicitor. You can also file your will at the Probate Registry - although if you alter it, or make a new will, and don't tell them, it can create problems for your executors when they apply for probate or letters of administration (see question 26) on the basis of a different will. Your executors will need the original, not a copy. If you get your solicitor to draw up your will in the first place, they will usually keep the original, and give you a copy.

A.

If your estate is very small (less than £5,000), your heirs don't need to worry about the formalities: no one will need to apply for probate. But banks and others will usually want to see a sworn statement explaining the situation, and may ask for an indemnity from your beneficiary, before releasing funds. Take advice.

But if you have died intestate (ie you haven't left a will), and your estate is worth more than £5,000, then members of your nearest family are entitled to apply to the Probate Registry to administer your estate - to obtain 'Letters of Administration' and become your 'administrators'.

There is a pecking order' - ie your spouse or civil partner is entitled to apply first; failing that children over 18; failing that grandchildren over 18; failing that your parents, brothers or sisters or their descendants; failing that your grandparents, or your uncles or aunts; failing that the Crown, or the Duchy of Cornwall or the Duchy of Lancaster.

The process they have to go through to obtain 'Letters of Administration' is for all practical purposes identical to that required to obtain a Grant of Probate (see question 26, below), and their duties and powers are roughly the same as those of executors. But the fact that they have to sort out who is entitled, and wants, to apply, adds extra delays to what can in any case be a slow process.

If you die insolvent your creditors have the right to apply for Letters of Administration.

A. Trustees have significant powers and responsibilities, particularly if the trust deed gives them discretion over the distribution of the assets. The overriding consideration should be to appoint trustees who you believe will make sensible decisions, in the best interests of your chosen beneficiaries.

It's a good idea to appoint at least two and perhaps three trustees. You may want to consider appointing a professional trustee - though alternatively the trustees can take advice from professionals as necessary.

You can be a trustee of the trust yourself, as can any of the beneficiaries, though this may risk causing a conflict of interest. Whoever the trustees are, they must act fairly where different beneficiaries' interests are concerned.

Whoever you choose, you should make sure they are willing to act as trustees - for example, if you are naming them in your will.

A. If the child is under 18 at the time of your death, there will be no immediate inheritance tax charge on the assets passed into the trust. As long as the child becomes entitled to the assets on reaching the age of 18, no inheritance tax is payable.

If you prefer the child to be older before taking control of the assets, the trust can continue up to the age of 25. However, a (relatively small) amount of inheritance tax will be payable when the child receives the assets, based proportionately on a charge of 6% for ten years. For example, if the assets are received at age 25, 4.2% of their value (seven tenths of 6%) would be payable.

A. Any gift to your spouse in your will is free of inheritance tax, and that includes assets that are put into trust.

One option is for your will to create an interest in possession trust, where your spouse is entitled to receive the income from the trust for life. On your spouse's death, the assets can then pass to your children (or into trust for them). Provided your children become absolutely entitled to the assets by the age of 25, relatively little inheritance tax will be payable (see question 17).