Will Writing Services
A will is one of the most important legal documents you will ever produce, and is the only way to ensure that your wishes are carried out and your estate is divided in the way that you choose.
A Life Interest Trust (LIT), also known as an Interest in Possession Trust, is a document that names one or more beneficiaries to an estate and their entitlement to an income from assets held in trust over their life time.
This person is known as the Life Tenant. If that asset is a house or property, then the Life Tenant is entitled to either the rental income on the property, if it is rented out, or to live in the property if they wish to.
However, a Life Tenant is not entitled to receive any of the remaining capital from the Trust. The Trust can also name other beneficiaries who are entitled to the assets in the Trust once the Life Tenant has died. They are known as Residuary Beneficiaries or Remainder men. However, while the Life Tenant is alive they do not receive anything from the Trust unless the Life Tenant agrees to a distribution of the assets. LITs are designed to protect the c hildren of a marriage o r Civil Partnership in t he event that one partn er dies and the other remarries.
You can also make specific requests or instructions on a Life Interest Trust. As a Trust is overseen by Trustees, you can give them specific instructions as to how you would like the Trust to be managed.
For example: You can give the Trustees the power to either give or lend capital from the estate to the Life Tenant at their discretion. Where a property is involved, you can specify that if the Life Tenant wants to vacate the property they can then direct the Trustees to sell that property and buy another for the Life Tenant to occupy and you can give specific instructions as to how you would like any capital in the Trust to be invested.
A Life Tenant is treated as owning all of the assets held in Trust. Any income (such as rent) from the Trust belongs to the Life Tenant and is therefore taxed according to the beneficiary’s personal income tax rate.
No additional income tax is paid by the Trust. One major advantage of the LIT is that it protects the assets in the Trust from being used up during the lifetime of the Life Tenant. So if a Life Tenant goes into full time nursing care, the local authority cannot take the assets in the Trust to pay for the care of the Life Tenant.
A Life Interest Trust is particularly useful if a couple have children and want to make sure that they benefit from the estate of either partner. This can be contrasted with a trust which simply gives a right to reside in the property. A perfect solution to a remarriage with children from a previous relationship.
A trust of this nature does not give the occupant a right to income from the trust and is not therefore taxed as an income in possession trust.
Abbotts are able to complete Life Interest Trusts for £250 plus VAT within your Mirror Wills (£216 incl VAT). For more information please contact us on 0845 313 3353 or email us firstname.lastname@example.org
David Cameron, Nick Clegg and Ed Miliband have all agreed to give one tenth of their estates to charity when they die.
In an unusual cross-party move, the three leaders have signed up to support a campaign called Legacy10 to promote charitable giving. Under government plans to promote the campaign – which Mr Cameron sees as part of his Big Society agenda – new inheritance tax laws will also encourage legacy giving.
Delighted: Labour leader Ed Miliband said he was happy to join the PM in supporting the initiative.
With effect from April any estate which leaves at least 10 per cent of its taxable wealth to a charitable cause will be able to take advantage of a reduced rate in inheritance tax, from its current level of 40 per cent down to 36 per cent.
The leaders join a growing band of businessmen and celebrities who have made the pledge, including Sir Richard Branson, architect Lord Rogers, Charles Dunstone – co-founder of The Carphone Warehouse – the banker Jacob Rothschild and Olympics boss Lord Coe.
Downing Street confirmed that Mr Cameron and Mr Clegg had agreed to sign up to the pledge.
In a statement to the Mail, Mr Miliband said last night: ‘I’m delighted to be supporting this important initiative. I hope the commitment will encourage many others to consider committing to leaving 10 per cent of their estate to charity in their will.’
Leading lobbyist and PR man Roland Rudd, founder and chairman of Legacy10, said: ‘I am so pleased all of our main political leaders have not only chosen to support Legacy10 but have made a personal commitment to change their wills to make the pledge.’
Mr Cameron is paid £142,500 but is thought to be worth several million pounds. His aides have denied suggestions he is worth £30million.
Cabinet ministers such as Mr Clegg are paid £134,565 and Mr Miliband gets the same.
At the moment 74 per cent of people support a charity during their lifetime but only 7 per cent of the UK population leave a charitable gift in their will.
When writing a Will it is highly possible that there will be a gift to a minor contained within it, or the possibility of a minor inheriting under a per stirpes clause. It is worth considering what actually happens with such a gift and who should act as a Trustee in such circumstances.
Money can bring out the worst in people as Claire Sproston found out after discovering her father and stepmother had stolen the inheritance she had been left in her grandfather’s Will Miss Sproston’s grandfather, Benjamin, passed away when she
was just 13 and had made a Will naming his six grandchildren as Beneficiaries, each receiving an equal share of his £50,000 life savings . Miss Sproston’s inheritance was placed in trust until she turned 18.
When she reached the landmark age, Miss Sproston enquired about the money only to be told by her father, Nigel, that he changed the trust and she would have to wait until she was 21 to receive her inheritance. It was only after Miss Sproston consulted her cousins that she realised something was afoot and that her father would not have been able to alter the terms of the trust. She promptly went to see a solicitor who discovered the sad truth; her inheritance had gone.
Nigel Sproston and wife Jane were found guilty of fraud at Cardiff Crown Court and jailed for ten and nine months respectively. The couple lied to solicitors and an investment company as well as forging Miss Sproston’s signature in order to get their hands on the £13,000 inheritance. The Telegraph reported that Nigel Sproston, who pleaded guilty to fraud, told police he “spent £2000 of it paying off debts, £5000 on a holiday for myself, gave £1500 to charity and the rest just got frittered away.”
His wife denied the charge but was found guilty nonetheless. Speaking after the verdict, mother-of-one Miss Sproston, now 22, said: “I’m still denying to myself, really, that either of them could have done what they did. When I first found out what my father had done, he told me he did it out of anger because we were naughty as kids.” “My dad has never told me what he did with my money. I don’t know if I will ever get it back.”
It is always worth ensuring you know and trust whoever it is you are appointing as Trustees. Contact us for further information or to discuss Professional Trustee options (email@example.com or 0845 313 3353).