Probate and trusts
Start reducing any inheritance tax liability now
Upon death someone has to apply for a grant of representation. This gives the legal right to deal with
the deceased estate - their money, property and any other possessions. This is termed probate.
If there is a will the person named as the executor in that will can apply for grant
of representation. If there is no will then usually the next of kin may apply.
Grant of representation has to be applied for before probate.
The Probate Service will tell you who has applied for grant of representation upon request and a small fee. This
will give you the opportunity, if necessary, to stop the grant of representation if you wish to dispute
the facts underpinning the application.
Trusts are formal arrangements where legal ownership of assets can be transferred and distributed at a
later date. There are many variations of such trusts but the two main ones are, -
- Discretionary trust - enable you to start transferring ownership of
your assets in your lifetime. In a situation where you want to start reducing your assets but do not want
to start distributing them to your beneficiaries you can place them into a discretionary trust leaving
clear instructions, within the trust terms, for distribution to the trustees. There is no immediate
tax liability for assets up to the value of the nil rate band for inheritance tax. Moreover, after seven years
in the trust the tax liability is removed altogether and you can start again with a new nil rate band. One
thing worth pointing out here is that although you are transferring ownership you can still retain some control
over the assets through the trustees.
- Discretionary will trust - where you stipulate in your will that upon your death assets up to the
value of the nil rate band of inheritance tax are placed into a trust in the children's names. These assets are outside of the
surviving spouses estate but the trustees may be able to make loans back to them as necessary.
Trusts are useful tools to reduce your likely inheritance tax liability and ensure your wealth is
distributed as you intended.
It is worth seeking financial advice about trusts now. We are happy to bear the cost of your initial
consultation giving you the chance to ask us questions on how you can make the right decisions for you.
Call 0800 634 4846 to arrange your initial consultation