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Maximum Inheritance:The easy way to write the will that’s perfect for you

Maximum Inheritance

The easy way to write the will that’s perfect for you

Ade Oduyemi

Talking Drum Enterprises

This book is for you if:

•you want the fruit of your life’s work to pass to your family, no fuss no fight;

•you want to make things easy for those you leave behind;

•you want to write a will, but you don’t know where to start;

•you want to write a will, but you think it’s expensive;

•you know someone who wants to put their affairs in order and you want a perfect gift for them;

•you want a will that will constantly be up to date no matter how your circumstances change;

•you want to avoid any and every possible dispute to your estate;

•you want to pay no more inheritance tax than you need to; or

•you recognise your responsibility to your survivors.

Maximum Inheritance: The Easy Way to Write the Will That’s Perfect for You

Copyright 2017 Ade Oduyemi

All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means without the written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

For permission requests, contact the author:

Ade Oduyemi at [email protected]

www.max-inheritance.co.uk

Published by

Talking Drum Enterprises

18 Salisbury House

8 Melbourne Road

WALLINGTON

SM6 8SA 

Table of Contents

Your Estate: Making it Watertight 5

Congratulations, You’ve Come of Age 8

Sleepwalking into … Intestacy 18

Guardians 25

Introducing…Testamentary Freedom 31

Your Assets Are … All You Can Sell 36

Executors 42

My Mum’s Christmas Card List 48

The Wisdom of Doing It Yourself 50

Updating Your Will 55

Life Insurance 65

Common-law Spouse 71

Inheritance Tax 76

Separation and Divorce 97

Subsequent Marriage (Disinheriting Your Children) 104

Your Business & Your Will 107

Trusts 113

Lasting Powers of Attorney 116

Statement of Wishes 123

Disputes & Problems 132

Funeral Wishes 142

Putting It All Together 145

Free Resources 148

Glossary 150

References 158

[Introduction
Your Estate: Making it Watertight]

‘… mindful of the uncertainty of life …’

John F Kennedy

One thing causes inheritance disputes and problems.

Just one.

It’s the same reason why people pay more inheritance tax than necessary:

Not planning.

My mother always said, ‘if it’s worth doing at all, it’s worth doing properly.’

A poor plan is as no plan.

Useless.

Whether you’re an army private or the mother of a future king of England, the principles are the same. I will show you what they are and we’ll see how they’ve been employed. I’ll show you how to employ them.

My clients who have applied these methods of writing their wills and planning their estates are confident they’ve done the right thing. Their plans are flexible and adapt to their circumstances as they change.

Fire and Forget

After reading this book, writing your will and planning your inheritance should take 45 minutes. Do it once, and that’s it. You just need to be shown how, and you have me for that. I’ve spent two years compiling this book. I’ve analysed all my cases – thousands of them. I’ve spoken to over 400 of my clients. I’ve looked at 500 inheritance disputes. I’ve examined scores of inheritance tax returns. I’ve distilled my findings into this book and rendered them in plain English. I’ve illustrated the concepts with my clients’ cases (with their permission). I’ve also explained the principles included through cases in the public domain.

Following the principles in this book comes with a guarantee: your plans will always be up to date and your wishes will be carried out. Your estate will go only to the people you want.

The methods I’m about to share on protecting your estate for your nearest and dearest are foolproof. They start working from today. In the meantime, I look forward to hearing from you at [email protected] with your questions.

You holding this book is proof that you’d like the fruit of your life’s work to go to your nearest and dearest. To those of your choosing, not the people the state dictates, worse still to the tax man or, horror upon horrors, to the Crown.

In the chapters of this book, I will lay out the common-sense actions you can take to ensure your wealth stays in your family.

This book is based on 30 years’ inheritance planning experience; nonetheless, the contents herein are to be regarded as guidance. Advice, however, is a personal thing. Just ask me.

The principles and concepts in this book are based on the laws of England and Wales.

Let’s go.

[Chapter 1
Congratulations, You’ve Come of Age]

‘[A great incitement to kindness,
to generosity and to effort.’]

Alain de Botton

People I meet have two things in common, even though they are adults with dozens of characteristics and qualities. In asking 402 of them, with their different personalities, prejudices and philosophies, what marked their coming of age, 385 of them gave a similar answer. Some said it was when they left school, left home or started their first job. A few said their coming of age was marked on the day they took out their first mortgage. Someone said something about learning to drive –driving a tractor at the age of 11 – she grew up on a farm in New Zealand. One said on the morning of her last A-level exam she found her father had died in his sleep. Remarkably, only one person marked his coming of age by the birth of his first child.

Ninety-four percent of respondents, 378 people, said they realised they’d become adults when they’d acknowledged their mortality.

You might know of the TV show Heir Hunters. The show exists because some people don’t care who inherits their assets.

The two things my clients have in common are:

•their coming of age is marked by the acknowledgement of their mortality; and

•they have taken steps to prepare for the financial consequences of their mortality to their loved ones.

My clients don’t want their estate in the hands of Heir Hunters – whether they’re followed up and down the land by TV cameras or not.

Scarlett O’Hara (in the film Gone with the Wind) might have been right: ‘Death, taxes and childbirth … there’s never a convenient time for them.’ Inconvenient timing notwithstanding, what sort of person fails to confront the greatest and gravest question ever to be asked of him? Alain de Botton says, ‘the contemplation of one’s mortality is a vital way to make sure one leads the sort of life one wants to lead. It leads one to squeeze every last drop of the lemon of life, a great incitement to kindness, to generosity and effort.’

You reading this book shows you’re an adult and you want to control your estate. That you want to fend off outsiders and hangers on, including the taxman. It’s proof you’ve overcome the greatest lie ever told.

This book has just one aim. Making planning your inheritance easy, painless and straightforward. Almost none of us knows the day of one’s death; after all, you’re young(ish) and you’re not planning to die. If you follow the points in this book, your planning will be thorough. Your planning will always be up to date even if you lived till you reach 110. It just takes a bit of help from an expert. Apart from reading this, securing your family’s financial future should take about 45 minutes.

Stick with me and I’ll show you how to secure your family’s financial future for generations to come.

I Didn’t Write Virginia Woolf’s Will

Early in my career, I met Alice. She had a bit of bother with her mortgage application. Alice was a beneficiary, twice removed, of the writer Virginia Woolf’s estate. The writer had left the rights to one book to Alice’s mother; the rights had since passed to Alice. In a bad year – a bad year was a year in which there were no reprints, no major adaptations for film or TV – she got an income of £30,000. I met Alice in 1990. Oh, the mortgage application was successful.

I couldn’t have written Miss Woolf’s will. No, I’m not that old. There I saw the effect of a properly planned estate. This was my inspiration to concentrate on inheritance planning to the exclusion of all other financial advice.

The point of this book is simple: you are an adult and you’ve acknowledged your mortality, do you care who inherits your assets? If your answer in the negative, put down this book and pour yourself a drink.

I’ll paraphrase Malvolio (William Shakespeare, Twelfth Night): you might have been born rich, you might have worked hard, you might have been lucky – we create our own luck do we not? However you came about your assets, irrespective of the value of your possessions, your wealth might be grand or modest – in the final analysis, do you care, when the last of your days has passed, who inherits your assets? Do you care that your estate doesn’t vanish like steam from a tea kettle?

Assuming your answer is the affirmative, I’ll show you in the coming chapters how to fend off hangers-on, including the tax man, from your estate. This book is not just a list of theoretical points. It’s no mere ‘how to’ book or a ‘step by step’ guide. It is an understanding of the inheritance issues and potential problems that face people like you and me, and how to handle them. We’ll also learn from those who, unfortunately, failed to confront the issues.

We’ll see how to make sure your assets go to your nearest and dearest with the minimum amount of expense and fuss and hassle. I’ll show you how to bullet proof your estate. It’ll take you 45 minutes, half a football match or the time it takes to bake a chocolate cake, to ensure your assets go to where you want them for all time.

‘[The rain came down, the streams rose, and the winds
blew and beat against that house; yet it did not fall,
because it had its foundation on the rock.’]

The Bible, Matthew 7:25

The Foundation

The will is the foundation of all inheritance planning. Most focus on the final document that is the last will and testament. That would be like a boxer’s eyes being riveted on his opponent’s feet – resulting in regarding his opponent as a pair of feet rather than a complete athlete.

The document, important as it is, should not be our focus; that would simply distract ourselves from our objective.

Our focus is the process from which the document is a product. The process is all important; therefore, we start with a blank sheet of paper. A sound understanding of the process will create both a perfect will and a thorough inheritance plan, which will maximise the inheritance to your intended beneficiaries.

A Will Does Two Things

If you’ve children under 18, your will is a means of appointing guardians.

The more commonly recognised function of the will is that it is a set of instructions to your executors as to how to distribute your assets on your death:

•A will allows you spell out who gets your possessions – in what proportions and under what conditions.

•A will lets you give away your property in the most efficient and effective way, with the minimum of hassle and headache.

•Drafting your will properly should resolve any potential disputes.

•Early planning can help to reduce the inheritance tax payable – often to zero.

Above all, a will provides certainty: clarity as to what happens to one’s estate and (minor) children after one’s death.

Anyone can make a will. The only conditions are:

•That one is of sound mind – possessing testamentary mental capacity. This means that one knows the nature, meaning and effect of the document being written. Yes, the will must be in writing.

•The testator, the person writing the will, is at least 18 years old – or 16 if one is in the armed forces.

Couples generally write wills together. This makes sense as you likely have assets in common.

‘[Life appears to me too short to be spent in nursing
animosity, or registering wrongs.’]

Charlotte Brontë

There are several common, but unwise, will writing practices. We’ll come to know them so we can avoid them.

Getting Even

A will isn’t for scoring points. It’s not for getting back at those who’ve wronged you. It is not about poetry. If you’re unhappy with someone, write them a letter. Send them a telegram (I’m old fashioned like that). Facebook and Kik might just be passing fancies, and in time may go out of business. If you must (not that I’d necessarily recommend this), do it EastEnders’ style by having a big argument at a wedding. Perhaps not civilised, but it would clear the air.

There’s little point waiting till you’re dead so folk can read your feelings in your will.

Later, I will show you a simple, effective and fool-proof way of explaining why you wrote what in your will. If you’ve no choice but to leave these things unsaid till you are dead, there’s an instrument for that.

The Piper

Your will isn’t for asking people to do strange, unusual, or eccentric things. It is not to be used to bend people to your will. Gifts with strings attached are a terrible idea.

I’ve counselled a testator against leaving a legacy to her son on condition that he was married by his 40th birthday. I met someone who owned a collection of copies of Wisden, the cricket almanac. He had a copy of every edition, including the 1864 edition worth £25,000. He planned to leave the collection to his son ‘on the condition that the collection was not sold’. I asked him a two-part question, ‘what’s the penalty for him breaking up the collection, and how would the collection be policed?’

Conditions contrary to the inherent legal nature of property, such as ‘it shall not be sold’, are invalid.

Leaving gifts with strings attached is likely to cause challenges to your will.

Given a fuller treatment later, the will is for expressing one’s funeral preferences or organ donation wishes.

Wills have always been public documents. They’re stored in a warehouse near Birmingham. Anyone can get a copy of any will for a tenner. Don’t write things in your will that would make you appear petty, vindictive, or spiteful. Like you, I was brought up not to speak ill of the dead; likewise, the dead should not speak ill of the living.

Mutual Wills

David and Elaine Fredericks were happy. They did the grown-up thing and got round to creating wills. Their wills had a clause stating that the will could not be changed without the agreement of both parties. This is called a mutual will. Their marriage vows were till death do us part. Elaine was widowed at the tender age of 39, while pregnant with their 3rd child. You see the flaw in the Fredericks’ wills don’t you?

There were good reasons for Elaine to change her will – the primary and most obvious was that she wanted all her children to be beneficiaries of her estate. David, being dead, could not agree to the change. I’ve never written a mutual will. I’ve never seen cause to write a mutual will. The first rule of mutual wills is: we don’t do mutual wills. Ever.

Couples generally want their inheritance to be preserved for their children if the surviving spouse remarries (or forms another relationship). We’ll see how to do that.

Joint Wills

The joint will is a rare beast. A single document written stating the wishes of the two parties to a relationship. Problematic. Don’t.

Codicils

You might have heard of them. There is no point to them. There’s a full chapter on updating a will. For now, let’s leave it at ‘we don’t do codicils’.

[Chapter 2
Sleepwalking into … Intestacy]

‘[I never saw an ugly thing in my life:
for let the form of an object be what
it may – light, shade, and perspective
will always make it beautiful.’]

John Constable

Intestacy is dying without a will.

Intestacy means the state dictates how your estate would be distributed. The laws of intestacy have little regard to your family structures, finances or relationships. Intestacy can cause the forced sale of the family home. Dying intestate often means the estate pays more inheritance tax than is necessary.

Then I saw intestacy. Intestacy, and the arguments arising from intestacy, are breathtakingly ugly. Your beneficiaries should not to have to bear the arguments, lawyers, conciliators fees and court cases. The sheer hassle of not being able to produce a will is frankly unnecessary. But, then, that’s just me.

Sometimes the first duty of intelligent men is the restatement of the obvious.’

Arthur Eric Blair

You don’t need me to convince you avoid the ugliness of intestacy. You want to avoid it; that’s why you’re reading this book.

Intestacy could:

•increase your beneficiaries’ liability for inheritance tax;

•mean your divorced spouse having a hand in your estate;

•force the sale of the family home to divide your estate by the intestacy rules;

•give all or parts of your estate to relatives you last heard from when John Major was in Downing Street;

•mean your partner loses out; or

•mean your estate goes to the Crown.

You know there’s no such thing as a ‘common-law spouse’, so if you’re living with someone, the survivor could be in for a rough time if one of you dies intestate.

We’ve heard of the folk who say they’re young, they’re not ill, they’re not planning to die. Then again, who is? They’ve got life insurance, but they’ve got no will. They couldn’t explain the logic of that, not even to themselves. The best they can come up with is that they’ve not got round to it yet. Still, they can’t point to what is to be gained by putting it off. Procrastination is the thief of time wealth.

You’re forward thinking enough to not plan to die intestate. In for a penny, in for a pound – we should beware of accidental or partial intestacy.

The opening clause of every will is in this form: ‘This is the last will and testament of me, Jacqueline Oliver; I revoke all former wills.’ Jacqueline lives with her family in Surrey. Her estate’s worth £650,000. She wrote her will in 1999.

She owns a delightful holiday cottage in Malta. She went to Malta last year. She wrote a will disposing of her Maltese property. However, the Maltese will opened with ‘… I revoke all former wills’. The effect of the Maltese document, which only referred to her property in Malta, was to invalidate her 1999 will, which governed most of her estate. Her estate was then, by accident subject to partial intestacy.

Ouch!

Mr and Mrs Tanner were looking forward to their 80th birthdays. They were fit and in good health. They thought it’d be a good idea to look at their wills, just because. They’d not done too badly for themselves; they lived in a £1 million farmhouse in West Sussex. Peter, their gardener, had worked for them for over 30 years. They left £30,000 to Peter, a few small bequests to charities and a small gift to their local church. The Tanners had no surviving children, so they left their estate among their grandchildren.

Their wills were correctly drafted. Their wills were witnessed by Peter’s wife Linda and Linda’s sister. The gift to Peter became invalid. At best, there would have been a case of partial intestacy. A will may not be witnessed by a beneficiary or the spouse of the beneficiary of the will.

A will being declared invalid, no matter the reason, could cause intestacy.

Intestacy can result from a will being lost. We shall talk about storing and updating a will further. For now, storing and updating your will should cost you nothing.

I’ll show you how to ensure your will cannot be declared invalid and cannot be challenged, so that your estate will be distributed as you wish. Onwards.

It is harder to kill a phantom than a reality.’

Virginia Woolf

Fables

There are a few things you might have heard; if you consider each of these for a minute, you’ll realise they are mere fables. Nowt but false myths.

It’s my money, I can do what I want with it – I can cut anyone I want out of my will.

Yes, you can, but not wilfully.

We’ve lived together for several years, it will all go to my partner.

No, it won’t.

My spouse will get everything.

Er, again, no.

It will go to my next of kin.

In inheritance law, the context of ‘next of kin’ is so unclear as not to be relied upon.

I’m worth more dead than alive.

No one is ever worth more dead than alive. The only reason one could say that is if they were comparing income to assets. That’s not even comparing apples to oranges; it’s like comparing apples to motor cars. For most people, income will cease on death. Their assets will be reduced slightly and then transferred to their beneficiaries.

‘[I have enough money for the rest of my life
and enough to leave a good inheritance for our kids.’]

David A. Siegel

Yes, you’ve heard of folk such as John Lennon, Bob Marley and Elizabeth Taylor. To say they were no mere mortals would be true, but that would be to miss the point. They chose to leave their wealth to grow after their deaths. They reckoned they had more money than they could spend. They could, if they’d so chosen, have realised their wealth in their lifetimes. Just like David Bowie and Robbie Williams did.

Returning to regular folk like you and I, no one’s worth more dead than alive.

I have so little, I don’t need to write a will.

This combines false modesty with the tendency to see through the prism of income. Do the sums.

The point of making a will is not the size of the estate, but that one cares about its orderly transfer.

I’ve seen a family been rent asunder over a £65,000 estate. The difficulty is not so much the size of the estate, but that the family has broken into factions.

Leave them a pound.

You may have heard it said, ‘If you wish to exclude an heir from your will, don’t ignore them, leave them something like a grand or two. They can’t contest it then.’ Balderdash. There are several variants of this urban legend, such as ‘leave them a pound’.

Leave a clause to prohibit contests.

Another common misconception is ‘If you don’t want your will to be challenged, put a clause in it that “anyone challenging this will shall forfeit what would have been his or her share”’. Again, this is not true.

Inheritance tax.

Some may say ‘I don’t have enough to worry about inheritance tax. It’s a problem for the rich.’ Once upon a time you might have been right. We will discuss this in full later.

If I write a will, it means I might die soon.

Don’t make me laugh.

Get my simple three-part intestacy banishment tool:

max-inheritance.co.uk/intestacy

[Chapter 3
Guardians]

‘[It’s a personal, very important thing.
It’s a family matter.
Are you ready, Jerry?’
Rod Tidwell]

Jerry Maguire

If you died now, this minute, where would any minor children you have spend tomorrow night? Practically, a neighbour or friend might take them in for one night, possibly two or three – but who would you want looking after them for the rest of their childhood.

I assume know you don’t want the local social services people involved in your child’s upbringing.

If an orphaned child has no guardians, its interests will be looked after by different organisations. The Official Solicitor and Public Trustee will look after look the child’s property. The child will be cared for by the local social services department.

Do you want social services involved with your children? If they are adopted out of your family (in error), it is irreversible – did you know that?

The Comfort of the Familiar

It is possible to appoint guardians without a will. Simply draw up an appointment of guardian deed. I am yet to see such a document in practice. Such documents are no use in making financial provision for the children, so what’s the point of them? A final point on appointing guardians without a will: such arrangements are so unusual as to deprive those sorting out your affairs after your death of the clarity that they would otherwise have had if you’d used familiar and common formats and procedures.

Stick to the familiar, write a will.

[Jerry Maguire: ‘What can I do for you?’
Rod Tidwell: ‘It’s a personal, very important
thing. It’s a family matter. Are you ready, Jerry?’
Maguire: ‘I’m ready.’
Tidwell: ‘I want to make sure you’re ready.’
‘Here it is. SHOW ME THE MONEY.’]

[Dialogue from
Jerry Maguire]

Where’s the Cash?

Your guardians are like Mr Tidwell; they say, ‘show me the money’. They assume you’ve made the necessary arrangements. How many people do you know who’d bring up your children if there was no cash following the children?

The guardians – they want to see the money. Financial arrangements are more fully addressed in the sections on executors and valuing your assets.

There are no set rules about who may be appointed guardians to minor children, but I’d consider such things as:

•Are they up to the responsibility of bringing up children?

•Would they have the energy for the task?

•Are the appointments practical?

•Do we have the same beliefs and values?

Above all, consider the relationship between the guardians and the children. No one wants a teenager in the house if the teenager doesn’t want to be there. Both parties are guaranteed to be miserable.

I’m Offended You Thought You Had to Ask

Many of my clients have called their proposed guardians to discuss the appointment. The response was, ‘of course’. The response has sometimes been, ‘I’m offended you thought you had to ask.’ So far, so ordinary.

As you know, bringing up children is a responsibility to be borne only by the willing.

Similar to executors, it is necessary to have only one guardian in a will. While your nominee might accept the appointment in your lifetime, he or she is not bound to act as guardian. A guardian may disclaim the appointment, might predecease you, or might be unable or unwilling to perform the duties of the guardian. It is prudent to have two guardians in a will. It might be a matter of appointing two guardians to act side by side, or appointing one guardian with a replacement if the first person cannot act.

‘[We both liked children; we just didn’t want any ourselves.
We thought we’d leave that to others.’]

Thomas McGuane

Parental Responsibility

Alan and his wife have two children. They have parental responsibility for (they are in effect guardians) of the children. When Alan became a widower, he became the sole parent (thus sole guardian) of the children.

Unlike adoptive parents, step-parents or foster parents have no right to make decisions in regards to a child’s wellbeing. In matters of guardianship and inheritance, adoptive parents are as birth parents.

Alan’s wife died in August 2008. Alan thus became a single parent. He had two children, Bianca and Charlie. Alan met Dalcie; they all moved in together in August 2011. They got married in September 2011. Dalcie thus became step-mother to Bianca and Charlie. As step-mother, she had no rights regarding their upbringing. By December of 2012, Dalcie had adopted the two children, and she thus gained parental responsibility over the children.

The appointment of a guardian will normally only take effect if both parents have died.

Chantelle and Damian are divorced. The children of the marriage live with Damian. Both Chantelle and Damian retain parental responsibility for the children. The normal course of things is that if Damian dies while the children are under 18, they will go to live with their mother. Any appointment of guardians in Damian’s will would be dependent on Chantelle having died first. The relevant clause in Damian’s will would resemble ‘if my ex-wife Chantelle dies before me, I appoint my sister Jane to be the guardian of my children Elaine and Freeda while they are under 18 years’. There should be a similar clause in Chantelle’s will.

Only parents with parental responsibility can appoint guardians. Guardianship appointments are usually worded to allow the guardians to do this in their own turn, should it be necessary.

John Lennon’s will appointed his wife Yoko Ono as the guardian ‘of the person and property of any children of the marriage who survive me’. John F Kennedy Jnr had a clause in his will that appointed his ‘wife Carolyn Bessette-Kennedy as guardian of each child of our marriage during minority’. The testators were appointing the mothers of the children as their guardian. These clauses were nothing but a waste of ink.

Elsewhere, I counsel against naming relatives by marriage in one’s will. So, I avoid such phrases as ‘my sister Joan and her husband Kevin’. You’ve certainly encountered divorcing couples who bring the phrase ‘bitter custody battle’ to life. One wouldn’t want one’s children to be the subject of the bitter custody battle between Joan and Kevin. Appoint your sister. If you’re stuck for replacement, I’ll be pleased to help you make the perfect selection.

Get assistance with guardianship appointments max-inheriance.co.uk/guardians

[Chapter 4
Introducing…Testamentary Freedom]

I was brought up in Britain,

and I’m very proud of my

Britishness and my culture.’

Naomie Harris

The main characteristic of an estate is the same as that of every detective story: ‘qui bono?’ (i.e. who benefits?).

A few of my clients’ recent antecedents include France, Portugal and Greece. Some of my clients were born in Poland, Bulgaria or Romania. The cosmopolitan nature of my clients, well, it just is. My clients broaden my experience and inform me that in these other countries inheritance runs along rigid, predictable lines.

For example, in France, children are ‘protected heirs’ and cannot be disinherited. They receive a certain proportion of the estate, which depends on the number of children and the existence of a surviving spouse.

England and Wales is distinct from many European jurisdictions in the existence of testamentary freedom. A testator is free to leave his or her estate to whomever he or she wishes. One must make reasonable provision for one’s family. Disappointed expectant beneficiaries are likely to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975. In simple terms, this means that those whom the deceased looked after in his/her life (including those conceived but not born before death, en ventre sa mere) are expected to be looked after in the deceased’s death. Spouses, civil partners and children are among those allowed to bring claims under Section 2 of the Act. They can ask for a reasonable share of the estate. Adult children, however, might face an uphill task in bringing a successful claim, as many, including I, understand the law’s intent is to protect dependents and minor children. Later in this chapter we’ll talk about one class of person who cannot inherit.

To enjoy freedom, we have to control ourselves.’

Virginia Woolf

So, while in England and Wales, you are free to leave your estate (and in what proportions you so desire) to whomever you please, one should not unwilfully leave out of the will those who would reasonably have a claim on your estate. Testamentary freedom is all very well, but there is little point in abusing it. If in doubt, ask me.

If, like David Gest (the fourth of Liza Minelli’s husbands), one leaves most of one’s estate to one’s lawyer, one should positively expect a court case. Oh, what a waste of good money.

Mirror Wills

When a couple write a will together, they tend to leave most of their possessions to each other. Their wills refer to the same people and things. Each party to the relationship has his or her own will. Each document is reflective of the other, hence the name.

A couple not writing a will together must inform each other so their intentions and interests don’t conflict with each other’s.

Surprises

I once got a telephone call from some journalist writing something on wills. To enliven her piece, she asked me, ‘Could you tell me about any unusual inheritances or bequests you’ve dealt with?’

My response was, ‘There should be nothing unusual or surprising in a will. Looking to surprise people in your will is merely planting the seeds of a dispute.’ The conversation lasted less than a minute.

Remember the celebrity steeplejack Fred Dibnah? Fred had five children by the time he married Sheila, who was his third wife. They had a son. Sheila, his widow, was left nothing in his will. Fred’s will directed that his estate be shared among Fred’s older children: Jack, Roger, Jane, Caroline and Lorna. You don’t need me to tell you that was a dispute waiting to happen.

‘[All happy families are alike, but an unhappy family
is unhappy after its own fashion.’
Leo Tolstoy
Anna Karenina]

The Important People

Roughly twice a year I encounter people who say things like, ‘I’m keen to plan my inheritance, I’d like you to take instructions for my will, but I don’t my wife [or husband, or other relative] to know what I’m writing in my will’.

They say, ‘I don’t want them to know.’ But, they mean, ‘There’s likely to be a disagreement about how I’ve left my estate to my relatives … this or that person might be upset that they’ve not got as much as they’d expected or that I’d led them to expect.’

There’s no profit to be had from leaving a surprise in one’s will. Families are delicate flowers. I’ve helped such testators shield their families from the gusts and storms of contentious inheritance.

Almost Never

The chances there’d be a Jeremy Bamber in your family are, thankfully, as plentiful as snowflakes in the summer. Nonetheless, here goes.

Mr Bamber, who professes his innocence, was convicted of killing his adoptive parents and three other members of his family. The prosecution claimed he was motivated by the possible inheritance.

One is barred from inheriting if one is convicted of murdering the deceased. This rule holds if the murderer would have been a beneficiary under an existing will or the rules of intestacy.

Chapter 5[
**]Your Assets Are … All You Can Sell

‘[If you want to see what your
friends and family think of
you, die broke, and see who
comes to your funeral.’
Gregory Nunn]

You’ve dealt with the guardianship of minor children. Now, your will is the interaction of two entities: the people in your life and the things in your life. Which of your property is to go to which of your people.

Joint Home Ownership

Most of the people you or I will ever meet have their main home as their main asset. If you own a property with somebody, you must determine if you are joint tenants or tenants in common.

For this exercise, we’ll concentrate on one feature of either. With joint tenancy, on the death of one co-owner, the property passes automatically to the other co-owners. Tenants in common are free to dispose of their share of the property as they wish. Put another way, tenancy in common grants one testamentary freedom over one’s share of a jointly owned property.

Patrick had wretched credit history. In buying a house with his wife Alex, a friend, Jamie was listed as the mortgage applicant instead of Patrick. Patrick and Alex lived in the house, and met all the costs of owning and running it. Alex and Jamie owned the house – as joint tenants. Alex died in a walking accident at age 49. Her share of the house passed to Jamie. Patrick was made homeless.

The choice of joint tenancy or tenancy in common could have further implications for one’s liability to care or nursing fees in older age.

Everything that you own is considered part of your estate. It includes obvious assets such as your home, its contents, and any other property that you have (such as a holiday home or buy-to-let house). Your car(s) is also included, as are your savings and investments. Don’t forget your digital assets. In short, everything you can sell. However, the laws on digital assets are evolving at present. In the first proof of this work, Lindsay (my copy-editor) made an 89-word note of correct that sent me on a two-and-a-half-day research assignment. For now, digital products such as those on your Kindle and your iPod are yours on a ‘lease for life’ basis. On the death of the device owner, the device may be bequeathed, but the material thereon may not be transferred to another device. Personally, I believe this is merely an instance of technology moving at the speed of light while the governing regulation perambulates at the pace of a weekend jogger. Eventually, the law will catch up. For now, the technology companies, not the legislatures, make the rules. Your social media accounts and their contents aren’t yours.

Despite what you might have heard, there’s a rule of thumb: if you’ve not paid them money, there’s no contract, and they owe you nothing.

Except if you have a super-duper motor, like the Mercedes Benz 300 SL, cars are depreciating assets, they’re only worth a few thousand pounds.

Include your Rolex if you must. A client of mine said ‘I’ve £40,000 worth of bicycle in that shed’. He had three bikes. Some bikes!

A client of mine lives in the shadow of the Emirates football ground in north London – she had a violin. She gave it me to hold. After about half a minute, I returned it to her with the words, ‘I’ve never held in one hand a single object worth a hundred and fifty thousand pounds’.

Personally, I collect tea towels. As tea-towel collecting isn’t recognised as a hobby, my collection isn’t worth listing as a financial asset.

I cycled past a ‘vintage’ shop the other day. The proprietors have the word ‘vintage’ above the door believing it a fancy word for ‘house clearance’. This shop offered a draughtsman’s table for £35. I’m sure anyone who wanted such an item would value it higher than £35!

If you met Karen, you’d like her.

Promise.

Karen knits; she also spins her own wool. She has a top-of-the range spinning wheel, which, at £1,200, is six times as expensive as the common or garden spinning wheel.

Marie plans to retire on her 62nd birthday. She plans to spend her tax-free lump sum from her pension on a Fazioli. One would leave detailed instructions for the disposal of a Fazioli. What’s a Fazioli? It’s a piano. As well regarded as, and some would say better than, a Steinway.

Here’s the thing. If you own an unusual or uncommon item, leave clear instructions in your schedule of assets or statements of wishes.

Some advise you to list your assets as if you were preparing an insurance valuation. Unless you’ve a Chippendale or a Constable, your household contents would be worth little. Approximately £60,000 would be cost of replacing the contents of the standard home, if fire or flood destroyed them. On death, the contents of most homes couldn’t be given away. Seriously, the folk who clear the deceased’s homes are usually paid to empty the house. Undervaluation can be as unwise as overstating the value of one’s estate. Be realistic.

The Schedule of Assets in the appendix is a useful guide to listing one’s assets.

Cash Vs Sentiment

Many folk want their estate divided equally among their beneficiaries. That’s easy. Everything equally between my children. Straightforward. Some people want to give particular objects to certain people.

Items of great sentimental worth, but little financial value, are best disposed of using a statement of wishes as outlined elsewhere in this book. If you want dibs on my tea-towel collection, let me know.

Court Papers Reveal …

I have encountered this headline ‘Royle Family Star Caroline Aherne Left an Estate Worth £500,000 to Her Mother After Dying of Cancer Without a Will’ (Hunter, 2016). The rest of the article informs us the beneficiary had a liability to inheritance tax of £71,000. Fond as I was of The Mrs Merton Show when it ran on BBC1 all those years ago, I have no idea what the extent of Caroline’s assets were. Intestacy notwithstanding, I doubt the lady’s wealth was a mere £500,000. When she died, three-bedroom semis were going for £550,000 in her village. The moral here is not to pay much heed to what the court records reveal. The reports are accurate, truthful and honest. However, they’re often far from the full story.

Your assets are what they are; in the section on inheritance tax, we shall discuss how to minimise the possible inheritance tax bill to your estate. Where ‘court papers reveal …’, they take no account of what estate planning measures the testator had put in place. The motives might have included:

•Inheritance tax mitigation

•Income tax mitigation

•Allocation of assets as they were needed rather than waiting till death

•Privacy

•Ease of estate administration

•Reduction in probate fees

Download your asset calculator here

max-inheritance.co.uk/assets

Chapter 6[
**]Executors

‘[A son can bear with equanimity the
loss of his father, but the loss of
his inheritance may drive him to despair.’
Niccolo Machiavelli]

In the last few weeks, you’ve done several ordinary, everyday things. Paid some bills, most by direct debit. You’ve run your bank and credit card accounts. You’ve done lots of things that involve money. You’ve probably got a bill you don’t understand or don’t agree with, so you questioned it. And so on and so forth.

In some ways, life’s a series of contracts. We pay people (and the organisations they own, run and work for) money to do things for us. On the other hand, people pay us – incomes, grants, allowances and such like.

When someone dies, those contracts must be unwound and resolved. That’s the long and short of it.

The contracts must be settled. Monies owed to the deceased must be collected. Monies the deceased owed must be paid. The executor resolves those contracts and executes the provisions of the will. In simple terms, that’s what the executor does.

‘[He speaks to me as if I were a public meeting.’
Queen Victoria]

We’ve all seen it in films and on TV. The scene in which the interested parties of an estate gather in some office or study and a lawyer intones ‘I, Alfred Armstrong, of 13 Acacia Avenue, Alton, being of sound mind …’. There is no big ceremony called the ‘reading of the will’. The document is handed to the executors and they get on with it.

Dead people can’t own property or form contracts. At the moment of death, all the assets and liabilities of the deceased pass to the estate. No new contracts can be formed by a dead person or on behalf of a dead person. The executors act on behalf of the estate. The duties of the executors resemble running a small company.

A common misconception is that funeral costs are paid by the deceased. Janice dies. Her daughter Zoe walks into the local funeral directors to arrange the funeral. To whom will the bill be sent? With whom does the funeral director have a contract? Janice never have had a contract with the funeral director. Zoe will need to arrange with the executors of her mother’s estate how the bill will be paid. Zoe might be an executor of the estate – that would make the arrangements easier. Most wills contain a provision that the funeral and testamentary expenses be met from the estate. Nonetheless, the contract is with the living being, not with the deceased. Forming, or at least facilitating, this contract is usually one of the first duties of the executors.

Many regard being named an as executor an honour. But the conferment of the honour should not be the primary purpose of the appointment. If you want to honour your acquaintances, throw them a party, make an endowment or bursary to some local institution, or even leave a gift in your will. Just a short while ago, we saw that being an executor is like running a small company. Like all companies, we want this one to be run by the best person possible.

‘[Friendship is always a sweet
responsibility, never an opportunity.’
Khalil Gibran]

In all my years, I’ve only encountered one person who refused an appointment as executor while the testator was alive. However, it is not unknown for executors to resign after the death of the testator. Worse, the executor does not resign, but he simply fails to act promptly. The relationship between the executor and the testator could have been strained, or the executor realises the extent of the work involved and is unwilling to perform such work in the service of the estate.

Testators should arrange their affairs such that the management of the estate is as straightforward as possible. This involves four steps:

•drafting the will correctly – no unnecessary complications, no fancy clauses, no tying of the executor’s hands unnecessarily;

•keeping a schedule of assets;

•keeping an up-to-date Christmas card list; and

•resolving and simplifying the ownership of assets.

The executor’s duties will depend on the nature of your estate – the nature, number and dispersion of the beneficiaries; what form the assets (and the liabilities) of the estate take; and how long any trusts formed by the will had to run.

One should be interested in getting the best person for the job. Sentiment should not cloud judgement.

My experience informs me, as yours does you, that the best person to perform any task is someone who has an interest in the outcome.

I’m Hurt You Thought You Had to Ask

If you have young children, your appointed executors would be glad to take on the job of being executor. It would be a labour of love. Ask them. Don’t be surprised by such a response as, ‘I’m offended; I’m hurt that you thought you had to ask.’ A part of asking them to act as executors should be to tell them what financial provision you’ve made for your children. The least you should do is to, in outline form, tell them what cash there will be. Such information could be as basic as, ‘you know the twins, Quentin and Rosalind, are 5, if I died now, they’d get their money at 21 … in the meantime, there’s life insurance to clear the mortgage on the house … the house is worth half a million, so if nothing else, there’s enough cash to take care of them till they leave university.’

‘[The greatest gift of life is friendship
and I have received it.’
Hubert Humphrey]

A common error is to appoint the same people to the offices of executor and guardian. It’s often a mistake verging on the irresponsible. There’s no oversight.

Most wills have some form of the words ‘I appoint my friend Zac to be my executor and trustee ….’ The trustee holds and administers property on behalf of the beneficiaries, in accordance with the provision of a trust document. Commonly, a trust will arise where children are minors. In such a case, the trustees would hold the property till the children come of age.

The executor’s duties are no mere formalities. Once the executor starts to act, he becomes personally liable for the estate for the rest of his life. The executor will be on the hook if he misinterprets or misunderstands the will, or he mucks up the taxes involved. Give the assets to the wrong person, and the executor will be in all shades of trouble he couldn’t even think of.

The executor:

•collects the assets of the estate;

•pays the liabilities of the estate;

•attends to the relevant paperwork; and

•distributes the property in the estate as specified in the will.

The executor must:

•be over 18;

•not be bankrupt; and

•not have a criminal conviction.

I’ll review your will free of charge

max-inheritance.co.uk/update

Chapter 7
My Mum’s Christmas Card List

‘[Form ever follows function.’
Louis Sullivan]

I used to be tardy at sending Christmas cards. Some years, by the time I got round to it, it was already the 21st of December; too late to expect the cards to be delivered before Christmas day. But, the thought counts, right? My excuse used to be that life got in the way. A pants excuse if you ask me.

The Christmas card list, and the names of the institutions listed in the schedule of assets will generally constitute a list of parties to be informed of one’s death.

You might be one of those who do not celebrate Christmas or send cards. My friend Jemima makes a big song and dance about not sending cards, but makes charitable contributions instead. Fair enough. But that would be to miss the point. Forget the Christmas card list, any good old-fashioned address book would do.

Most wills have the names of several people. The average will names seven people. Estate agents say the average person moves house once every seven years. If you kept your will up to date, you would change your will on average once a year till you your 66 birthday. I mean, seriously, who wants that hassle?

As a matter of policy, I don’t write people’s addresses in wills. I want the will kept clean, up to date and relevant. I want to save amendments till when they’re needed. I mean, what’s the point of an out-of-date address? Seriously, if the address is out of date it might as well not be there. That’s why I’d keep an up-to-date list of names and addresses.

Some are confident the contact list on their phones would do the job; I’ll not disagree with them, or even those who maintain their list on the laptop or iPad.

Personally speaking, as far as such life and death records are concerned, I’m a pencil-and-paper sort of fellow. My mum had a Christmas card and gift book – we’ll see how this can help with inheritance planning in the chapters on inheritance tax and lasting power of attorney.

Form forever follows function. Mine’s a Christmas list, but, whatever form, make the list.

[Chapter 8
The Wisdom of Doing It Yourself]

‘[If you think it’s expensive to
hire a professional to do the job,
wait until you hire an amateur.
Paul ‘Red’ Adair
oil-well firefighter]

On Good Friday 2016, I took my niece and nephew to Legoland in Windsor. The weather was delightful and we had a fantastic time.

Now, anyone who is not lame or mute, can dance and sing. But you wouldn’t want to see me on The Voice or The X Factor. So, anyone of above average intelligence can write their own will. But would they want to?

They’re chemists, they’re marketing folk or they’re IT analysts. Sometimes they’re teachers, shop owners or financial advisers. Some are in the police force. Many of my clients are retired.

You get the picture. My clients are from all occupations. Their professions follow no pattern. They follow every manner of occupation and vocation. Some people find it remarkable that I number solicitors and lawyers among my clients. A couple of my recent clients are clerks of barristers’ chambers.

The Chief Justice

I’m put in mind of Warren Earl Burger. Mr Burger, was, for 17 years, Chief Justice of the United States (not to be confused with his immediate predecessor, Earl Warren) On his death in 1995, he left a one-page, 176-word will he’d drafted and typed himself. His family paid $450,000 in estate taxes and fees. His estate was worth $1.8 million. My American colleagues tell me his family could have kept 98% of his estate. As it turned out they ended up with about 75%.

Yes, I number lawyers among my clients.

Why, I hear you ask, with all their legal knowledge do these professionals come to me? Why don’t they simply write their own wills? Simply put, they are not inheritance professionals. They recognise their skill, experience and training in their own specialisms. They understand the liability they would be assuming. They know they would not trust their family’s financial future to an amateur. They want someone with the training, skills and experience to plan their family’s inheritance. They don’t want their families to end up like the Chief Justice’s. They want their beneficiaries to avoid any and every uncertainty regarding the distribution of their estate. They want someone who can be held to account.

And, above all, they’re transferring the liability.

After all, what sort of lawyer would want himself for a client?

‘[A little learning is a dangerous thing;
drink deep, or taste not the Pierian spring:
there shallow draughts intoxicate the brain,
and drinking largely sobers us again.’
Alexander Pope]

You might have heard of people who worked with asbestos, or other dangerous chemicals or minerals, but the resultant illnesses came to light several years or decades after the contact. Despite the time lag, the victims of such cases can bring claims, which are honoured by the relevant insurers. At the time of the incident or contact, the insurers, the insured or the victims had no idea that asbestos was dangerous and could cause disease. Nonetheless, the insurers covered the risk.

No matter how simple you think your will is, what if you get it wrong? You wouldn’t know. You’d never know. You’d be dead before it came to light.

You’ll have just one chance; you’ve no opportunity to be heuristic.

Hello Ade,

Happy New Year!

I am preparing your 2015-16 tax return.

Would you like to add home office costs, and if so can you let me know the amounts for: mortgage interest, gas, electricity, service charge, council tax.

Can you also let me know your mileage and telephone and broadband costs.

Thanks

Ingrid

I get an email like the one above from my accountant, Ingrid, every year. I could save a few hundred pounds by doing my taxes myself, but it would be false economy verging on the foolish.

Folk are like fingerprints. Unique.

No two clients of mine are identical – I’ve been around a long time, but I’m yet to meet two people in identical circumstances. Therefore, the conversation with each client is unique.

Wills downloaded from the internet have a special class of possibility for mischief. I’ve encountered UK websites displaying will templates that were drafted for overseas jurisdictions, mostly the United States.

It turns out that the cost of a day out at Legoland with two children exceeds the cost of a will. Paul Adair might well have been right.

You are one of a kind. Will kits and internet wills presume one size fits all. For the sake of less than the cost of a day out with the kids, how could anyone reconcile the two principles?

Chapter 9[
**]Updating Your Will

‘[If you think no one cares if
you’re alive, try missing a
couple of car repayments.’
Earl Wilson]

The good news: it is rare that a well-written will needs to be updated in the short to medium term. A well-drafted will would have lots of redundancy – with lots of substitute provisions. Nonetheless, relationships evolve, wealth levels fluctuate and love alters.

Children are born. Children are adopted. Romantic attachments move to different levels.

With the aforementioned in mind, wills might, on occasion, need to be amended. An out-of-date will is useless.

If you have changed your mind about the provisions of your will, such as who gets gifts under your will and in what proportions, or who performs the duties and functions in your will (which you are free do), you should change your will to reflect this change in your sentiments.

The people in your life and the things in your life – that’s all you need to consider.

Life Changes

Ignore Christmas and birthdays. Cards are an approximate indicator of when you might need to change your will. Greetings cards you receive and those you send, apart from commiserating a bereavement, are often a celebration of births, marriages or a dramatic increase in fortune.

A change of job or a change of posting might be cause for a review of one’s will. Some jobs are inherently dangerous. A client of mine worked for an oil services company – he was in places where he and his colleagues ran a high risk of being kidnaped and even been killed. And there is also that landmark – retirement. And, perhaps the biggest of life changes, divorce.

Oh, by the way, a card wishing you ‘every happiness in your new home’ should not ordinarily be reason to change your will. All the provisions of your old will, if it has been properly drafted, should carry through to your new home.

I’m reminded of the sad case of Private Daniel Wade (British Broadcasting Corporation [BBC], 2012; Ministry of Defence, 2012; Mendick, 2015).

Private Daniel Wade, a member of the Yorkshire Regiment was posted to Afghanistan. His girlfriend, Emma Hickman sent him scans of their unborn baby. He posted the pictures on his Facebook page.

On 6th March 2012, Daniel was killed on duty.

Warrant Officer Class 2 Eric Whitehouse, Wade’s Company Sergeant Major said:

‘Private Wade was a quality soldier. He was reliable, honest and hardworking. He was a family-orientated man who cared greatly for his girlfriend and talked warmly of looking forward to seeing his unborn child at the end of the tour.’ (Ministry of Defence, 2012)

Private James Butler, 7 Platoon, Corunna Company, 3rd Battalion, The Yorkshire Regiment, said:

‘What am I going to do for a lift home on weekends now buddy? You can now watch over your new baby and girlfriend and keep them safe on their journey of grievance and lives together. Love you mate.’ (Ministry of Defence, 2012)

Emma gave birth to Lexie-Mai shortly after the soldier’s death. The baby was thus en ventre sa mere.

Private Wade had signed a will in which his mother was sole beneficiary and executor of his estate – apparently, a life insurance policy formed part of the estate. He had failed to update his will in light of his girlfriend’s pregnancy.

The soldier’s mother, Lisa Billing had a court ruling against her in August 2014 ordering her to pay £250,000 to Emma to care for the late soldier’s daughter, Lexie-Mai (The Gazette, 2015).

Ms Billing’s contention is something to the effect of ‘the terms of the will are clear – everything to me.’ She said, ‘He gave me a load of paperwork. He signed a will and he named me the beneficiary and executor of the will.’ All told, Private Wade’s death led to payments of just over £300,000. Ms Billing got the cash – she ‘fesses up to spending a large chunk on a car, a motor home and a new house.

You and I know how this could have been avoided, and easily too. For now, I’ll leave you to make up your mind about how this should be resolved.

If you get married, you must re-write your will. The only exception would be if your will was written ‘in anticipation of marriage’. A will written in anticipation (or contemplation) of marriage should include such a phrase as ‘this will shall not be invalidated if my proposed marriage to Miss Right goes ahead’.

Xavier wrote a will in 2009. He married Wendy in 2016. His marriage automatically invalidated his will. He now has to write a new will.

Sally and Tammy had been in a stable relationship with a view to getting married. They wrote wills in 2015. Their wills were written ‘in anticipation of marriage’. They got married in February 2017. There was no need to make any changes to their wills because of their marriage. Their friends Lenny and Max wrote were in a civil partnership when they wrote their wills in 2007. The Marriage Equality Act came into force and they converted their civil partnership to a marriage. There is no need to amend their will because of this change.

Your named guardians might have gone sour on you – life’s a messy business. The executors might have died, lost mental capacity or gone to live in Australia – these things happen. For good or for ill, your family structures or fortunes might have changed such that you want to leave more cash to, say, Bob, not Jim. If it’s your money, you can do with it as you wish. Give it to anyone you desire.

Pattie, a single parent, named her brother Quentin as guardian to her two children Gemma and Alice. Pattie died when the girls were seven and nine, respectively. Quentin, therefore, became guardian to the girls. As he had sole parental responsibility for the children, he updated his will to appoint guardians for them.

When you think your will needs to be updated, like the running shoe company says ‘Just do it’.

‘[Life is what happens to you when you’re planning something else.’
John Lennon]

Some advise that you should update your will every three years, others say every five years. This is plain balderdash. For goodness’ sake, your life is nothing like a fixed economy. Don’t wait for some five-year anniversary, just do it. Now.

You might have heard of the codicil. A codicil may be used to amend a will.

Briefly, codicils are a poor way of updating a will. They are a device easily exploited by the fraudulent. Codicils must be drafted correctly. The draftsman must ensure that they do not conflict with the will. Codicils must be witnessed correctly. They are no cheaper. They have nothing to recommend them. So why use them? There is no point to the codicil.

Remember, the first rule of codicils is ‘we don’t do codicils’.

So, you’ve contacted a professional, and you’ve got your will drafted correctly and competently. In the fullness of time, you need an update to the document; after all, life is not static. Things change.

Free

You should update your will as often as you need to. However, you should only ever pay once to have your will drafted. Let me repeat – you should pay only once.

Yes. You did not misread that. Updates to your will should be made free of charge. All updates to your will are free. The cost barrier to having your will professionally updated has been vanquished – what then is the point of the codicil?

A will that can’t be found is a waste of time and effort. The beneficiaries and executors of your will should be certain where your will is. You might keep it with the rest of your papers. Otherwise, your will draughtsman should store it for you. There should be no payment in cash or in kind for storing your will.

You read me correctly – no one should charge you anything for storing your will or related paperwork.

Clarity

Clarity is the essential purpose of the will. We want to be clear about who gets what and in what circumstances. Remember, earlier, we said a will was about the people in your life and the things in your life. We want to be clear about those people and those things.

‘[All meanings, we know, depend
on the key of interpretation.’
George Eliot]

The words of your will should mean what you say and they should say what you mean. There should be no ambiguity or scope for interpretation.

I read a will the other day, the testator had used the phrase ‘where possible’.

Ouch.

Do not use phrases like ‘I wish’ or ‘I hope’. Do not ask your executor to put ‘a bit of money towards repairing the local scout hut’. Be clear. Be specific.

Your beneficiaries

Few words in succession and inheritance are so pregnant with meaning as ‘my children’. Phrases like ‘my children’, ‘my next door neighbours’ or ‘my bandmates, November 2012’ constitute classes of beneficiaries. A class in this sense is simply a group. If it’s worth their while any Tom, Dick or Harriet could claim to be a member of that class, or, worse, there could be a dispute borne of sincerely held beliefs. Naming a class of beneficiaries is depriving your will of the clarity you could otherwise have obtained at no cost.

In the last five years, I’ve written only three wills using the phrase ‘my children’. In each one, the testator was pregnant. The wills were updated after the birth of each respective baby. After all, updates cost nothing.

Gifts to charities should be clear.

Your Bequests

Be specific in describing the gifts in your will. Phrases like ‘some money’, ‘a fair amount of money’ or ‘a fair recompense’ rob your will of clarity. Be clear about your bequests.

A client of mine races cars at the weekend. He’s left his entire estate to his wife and daughter. He, however, left his racing car collection, worth about £20,000 to the friend with whom he goes racing. He further left his racing accessories and paraphernalia to this friend using a statement of wishes. The cars are serious bits of kit, they are easy to locate and are listed in the schedule of assets. The accessories include things like gloves, boots and sets of tools, which, by their nature, are small, of relatively low value and the testator might not have for long.

It poor practice to list several small items in your will. If you must dispose of such small items in your will, I’ll show you how to do that.

It is not advisable to name specific bank or savings accounts in your will. For administrative, security or technical reasons, your bank or building society might change the number of your account – that would make a mess of the provision in your will relating to that account.

In an earlier section, we said you could choose the beneficiary of your estate on whom the burden of inheritance fell. Be clear if the bequests in your will are to be ‘free of tax’.

I’ll review your will free of charge, just ask me at

max-inheritance.co.uk/update

[Chapter 10
Life Insurance]

‘[I detest life-insurance agents:
they always argue that I shall
someday die, which is not so.’
Stephen Butler Leacock]

The proceeds of life insurance policies constitute 15% of the inheritance tax paid. Put another way, for every estate that pays inheritance tax on life insurance policies, they’re throwing away 40p of every potential pound.

We’ll see in the section on inheritance tax how to shield insurance policies from this tax.

Sarah and Tom earn £45,000 and £38,000 respectively. Their net monthly incomes are £2,797 and £2,417. They have a £400,000 mortgage. In their prudence, they’re considering life insurance.

Instinctively they consider a £400,000 joint policy. Rum idea. This could create inheritance tax liabilities.

Second Best

Better would be two single £200,000 policies. The survivor would be left with a £200,000 mortgage. They could each say, ‘if I died I’d want the mortgage to be paid off’. Well, simply get two policies for the full amount of the mortgage. The key here is to take two single life policies not a joint policy. Two single life policies are better value than a joint policy for the same amount of cover. A single life policy can be put in trust. Putting a life insurance policy in trust is a key insurance-tax-saving device. That was the second-best way to tackle the problem. We’ll see shortly why we put life policies in trust.

My Preferred Method

The ideal solution would be to take to take out a family income benefit (FIB) life insurance policy. An FIB policy pays an income to the beneficiaries. The FIB wins on several counts. The administration is a doddle; your beneficiaries simply get a monthly income. And the income is tax free. The premiums on an FIB are considerably lower than the premiums of lump sum policies. Yes, the survivor would still have to bear the mortgage for the full term, but they were going to pay the mortgage till the end of the term anyway.

When Zoe’s father, Yanik, became a widower, he got an FIB policy. The family was of modest means: the policy was for 15 years starting on Zoe’s 6th birthday. The policy cost less than a fiver a month, with a benefit of £1,000 a month. Yanik died a year later. The policy paid the benefit to the little girl’s guardian. If Yanik had gone down the traditional route of getting a lump-sum policy, the executors would have had the headache of acting as trustees till Zoe came of age. They would have had to engage financial advisers to invest the lump sum to produce the required income of £1000. The relative cost of such small investments is high.

Some choose the second best option, as outlined above; it might be that you’d rather the mortgage were paid off, or that you’ve got an old life insurance policy and converting it to a family-income-benefit-type policy is impractical or impossible. If you have a financial adviser or insurance broker, he or she should be able to put your life policy in trust.

How quickly would you like the proceeds of your life policy be paid – in a week or two, or in several months, even years?

Weeks; I thought so.

Put your policy in trust. It’s free. Ask your insurance broker, call your agent or talk to your financial adviser. They’ll sort your insurance policy out pronto.

Oscar had been ill for a while, he died in hospital on Sunday 30th September. His death certificate was signed on Monday 1st October, and it was delivered with the details of the life insurance policy, by messenger, to the insurance company. The beneficiaries received a cheque on Friday 5th October.

Granted, this is quicker than usual. Nonetheless, insurance companies make payments in respect of valid claims promptly.

‘[If a child, a spouse, a life partner, or a parent depends
on you and your income, you need life insurance.’
Suze Orman]

As most insurance policies are not written in trust, even a swift payment would still get stuck in probate, thus taking months, or even years, before your family gets the cash.

Employer Schemes

Many big employers provide pension and death-in-service benefits.

Death in service was a cheap fringe benefit – if an employee died while on the payroll, a sum of money (a multiple of the employee’s basic salary) is paid consequent upon the death. A typical multiple is three. So, Tom’s basic pay of £38,000 would attract a death-in-service benefit of £114,000. Tom’s died, the company is making out a cheque for £114,000, and the question arises ‘to whom should we send this cheque?’ To whom would Tom have wanted the money paid? His employers have no way of knowing what his wishes were. He should simply have asked his HR or payroll department for a beneficiary nomination form.

Simple form; fill and return. Without such information, the employer might pay the benefit to the scheme’s default beneficiary. It might not have been what the employee wanted or it might be ruinous from an inheritance tax point of view.

Some employers have death-in-service schemes distinct from the pension scheme. Check. If you are in a money purchase pension scheme and die before you’ve started to take your benefits, the value of the pension pot will be paid to the beneficiaries.

A common mistake when nominating the potential beneficiaries of these schemes is to name one’s spouse. This could create inheritance tax liabilities. A spousal bypass trust is advised. A regular review of such nominations prevents problems and disputes.

Giving It Up

Life insurance policies have a surrender value and a death benefit. The surrender value is derisory, often zero.

Enter the viatical settlement. This is an arrangement in which a third party buys the insurance policy from the policy owner. The sale price is higher than the surrender value, but lower than the death benefit. The policy owner pockets the cash. End of story.

The value to the buyer of the policy exists in collecting the death benefit when the life-insured person died. The onus is on the new owner to continue to pay the premiums on the policy.

Edward had a £1 million policy. After his health declined suddenly, he was sacked from his job. With the loss of Edward’s income, he couldn’t afford the premiums. The policy had no cash value, but if he’d simply stopped paying the premiums, he’d get nothing. He sold the policy for £130,000.

[Chapter 11
Common-law Spouse]

[A surviving partner who wasn’t
married or in a civil partnership
with the deceased has no
automatic right to inherit.
Them’s the rules.]

On Monday, May bank holiday, 2011, my telephone rang. Thus, I was introduced a tearful lady, Alice. The house in which she lived, to which she’d made a contribution for the last 11.5 years had gone. She’d been turfed out of her home.

She’d lived with her partner, James. James had died intestate. James’s sister Zoe had thrown Alice out. Alice and Zoe had had such an intense dislike for each other, they could barely stay in the same room at family gatherings.

Certain intestacy protections are available to married folk (nevertheless, they should not be relied upon). Such protections are meagre, unreliable and inadequate as they are not available to cohabitees.

There is in law, the doctrine of common-law marriage. It’s nothing to do with cohabitation. If you live with someone ‘as if you were married’ (but are not married to each other), you are not in a common-law marriage. The moral of the story is not to rely on stuff you hear down the pub or read on the internet.

Dependence on the laws of intestacy is unwise. Reliance on the rules of intestacy is foolish. The rules of intestacy don’t recognise the contribution you’ve made to your joint household. You’ve invested cash, sweat and tears in making your home – intestacy laws don’t care. Say what you will about the law being out of touch, we deal with life and the law as they are.

‘[Arrange whatever pieces come your way.’
Virginia Woolf]

Without a will, if your partner dies, you’ll be entitled to nothing from his or her estate. Your partner’s assets will go to his or her ‘family’. To me, there’s an especial cruelty to having to rely on their munificence. You’d be asking them to give up their entitlement to your partner’s estate. Seriously? Do you want to depend on their goodwill? That’s one effect of the rules of intestacy. To my way of thinking, that’s positively wicked.

If your partner’s family hold on to the assets, they have asserted their right to your late partner’s estate and employer’s death benefits. Then what? You’ll petition the courts, asking for a ‘fair share’ of your partner’s estate.

Really? Is that what you’d want: a long, expensive, unpredictable court case? And, there’s the ill will such litigation would breed and aggravate.

You and your partner can control how both your assets are distributed. It’s for you to urge your partner not to leave you at the mercy of his family, or, worse, an arbitrator, mediator or judge.

Another Telephone Call

I got a telephone call a while ago. Jack was telling me his partner had died. They were not married. They were together for over 20 years, and they’d bought a fine house in Cobham.

They’d fallen victim to the most pernicious of myths. The myth of the common-law marriage. Gifts between people who are not married to each other normally attract inheritance tax – at the rate of 40%. So, the deceased’s assets attracted £290,000 in inheritance tax. Jack only just managed to keep the house.

The Tail Wagging the Dog

I tell co-habiting couples, ‘I’m not here to advise you to get married. Nonetheless, it would be irresponsible and wrong of me not to highlight the inheritance tax advantages of marriage. My duty is to explain, illustrate and spell out everything that could affect their inheritance. It’s my life’s work to help you maximise your inheritance to your family.

However, I wouldn’t normally advise marriage if the sole or main intention was to avoid inheritance tax.

Major Denis James, Officer Commanding D (the ‘Green Horse’) Squadron, The Viking Group, said of James Leverett (Ministry of Defence, 2010):

‘Trooper James ‘Levy’ Leverett was one of life’s characters. He was great company, had a wicked sense of humour, and was totally suited to life in the regiment. He had been steadfast throughout our intensive training and during operations on the tour, and was an extremely tough and resilient soldier. He was a man of the highest quality and was to be recommended for promotion to Lance Corporal.’

By all accounts, James Leverett was a fine young man and top class soldier. When Trooper Leverett died, he left an estate valued at £330,000. His girlfriend, Tiffany was heavily pregnant. In his will, he asked that his mother buy his girlfriend a house for £90,000 and put £5,000 in an account for his unborn child. (The Star, 2013)

Tiffany brought a court case contending that the baby girl was due a greater share of her father’s estate. The court found in favour of Trooper Leverett’s girlfriend and child. Mrs Leverett was left with £60,000 costs, which she paid out of her eventual share of the estate. (The Star, 2013)

Captain Iain Monk, 1st Troop Leader, D (the ‘Green Horse’) Squadron, The Viking Group, said of the private (Ministry of Defence, 2010):

‘He would talk to me about his unborn baby and how he was looking forward to watching his child grow up. He was a friend to all and we will miss him greatly. A massive hole has been left in the troop which will never be filled. Quis Separabit.’

[Chapter 12
Inheritance Tax]

‘[I like to pay taxes. With them,
I buy civilization.’
Oliver Wendell Holmes Jr]

One of our many obligations as citizens of a democratic society is to pay our taxes. I doubt we’d want to live in a land in which people didn’t pay their taxes. Nonetheless, I’m yet to see any sense in paying more than one’s fair share.

With the exception of John Major’s tax, The National Lottery, taxes are universally unpopular. However, by some way, the most unpopular tax is inheritance tax. The financial services company NFU Mutual’s July 2015 survey shows that 47% think inheritance tax is the ‘most unfair’ tax. The second most unfair is council tax, at 13%.

Many feel no government has any business taxing a gift one makes to one’s family.

Where I live, we’ve a rare thing – fine civic architecture in the form of the old town hall. It’s compact and Palladian. This elegant erection is the core of a complex of municipal buildings; it’s even got a car park. This car park has a simple and elegant charging structure. The first 30 minutes are free. Then the charges clobber you. The parking attendants are hawk-eyed. No messing.

This car park charging structure is similar to the manner in which inheritance tax is levied. You are allowed a certain leeway – the inheritance tax allowance, then the tax clobbers you. Hard. HMRC has unlimited money to chase you. With HMRC, there’s no messing; therefore, we’ll do everything by the book.

Inheritance tax (IHT) is a misnomer. It is a gift tax. Most taxable gifts are made in wills; nonetheless, it is a gift tax. The tax includes gifts made in the lifetime of the donor.

Also called ‘death duties’ or ‘death taxes’, inheritance tax is sometimes called a voluntary tax as it is relatively easy to avoid – especially by the rich. There are rich folk to the left of us, paupers on our right, and in the middle are you and I, everyday folk, so we need to take steps.

In the financial year 2013–14, 565,500 deaths were recorded in the UK. Only 3.4% of all deaths led to the payment of inheritance tax. There’s a reason such a small proportion of estates paid this tax. They took steps.

The liability for paying the inheritance bill will normally fall on your heirs; they might have to make the payment to HMRC before they take possession of what you left them. At what would already be a difficult time, this problem could cause a significant level of anxiety and stress. If you leave someone a house, for instance, the house might have to be mortgaged or even sold to pay the tax bill. The executor of your estate should pay the inheritance tax bill within six months of your death – after which, interest is chargeable.

Inheritance tax is probably the most pernicious of taxes. You may skip this chapter if you don’t mind your heirs paying.

I will show you how to reduce the amount of inheritance payable on your estate. We might even reduce it to zero.

Inheritance tax is payable at the rate of 40% on all estates worth more than the inheritance tax allowance (or nil rate band). Every individual has an inheritance tax allowance. The value of the allowance is £325,000 at time of writing.

No Inheritance Tax Due

On Ursula’s 55th birthday, Simon, her husband gave her a £400,000 house. This is the only gift he ever made. He died two years after the gift, leaving £376,000 to his wife. No inheritance tax is due on any of these gifts because they were between a married couple. The value of the gifts is impertinent. We’re concerned with the relationship between the parties to the gift.

One gift was in his lifetime, and the second was on his death. Still, no tax is payable. The other gifts Simon made in his will were £2,500 to the local ‘hospice at home’ charity, and £1,000 to each of the Conservative and Unionist Party, The Labour Party and the Liberal Democrats. He gave £500 to the local church. In sum, he made gifts of £6,000 in his will to exempt entities. These gifts would not have attracted any inheritance tax; therefore, he did not use any part of his inheritance tax allowance.

Wag the Dog

Ursula got the unused portion of Simon’s inheritance tax allowance. When Ursula died, she could give £650,000 away in her will before any inheritance tax was payable on her estate. At 55, Ursula is alive and well, her estate today is valued at £930,000, and £180,000 would be liable to tax. The bill would be £72,000. She’s of the view that, in leading a life of reasonable comfort with her children and grandchildren, there’d be little to pay by way of inheritance tax. Put another way, she plans to have spent enough of her wealth such that by the time she dies there will be little, if any, inheritance tax to pay on her estate. Like me, Ursula believes one should not let the tail of inheritance tax wag the dog of one’s life.

Most people’s main asset is their residence. Almost all readers of this book will have their homes as their principal asset. We shall discuss the special treatment of the family home later.

How Many?

At last count, there were 119 different, separate, often contradictory rules on exemptions and allowances to inheritance tax. Sometimes such rules are unjust. You can’t be certain if these rules were designed to lift your heart or pick your pocket. Some of the rules are loopholes so big you could drive a double-decker bus through them. The rules of intestacy – treated elsewhere in this volume – might create an inheritance tax liability that might have been eliminated with the simplest of wills.

The Seven-Year Rule

If you want to reduce inheritance tax you must keep faithful records of your transactions with a bearing on inheritance tax. You must be assiduous in your record keeping. They must bear fidelity to the nature, purpose and value of your transactions.

One of the best-known means of avoiding inheritance tax is the seven-year rule. It can be summarised thus:

If someone, a donor, gave a gift to someone, on the death of the donor the gift would give rise to a liability to inheritance tax. However, if the gap between the date of the gift and the death of the donor exceeded 7 years, no tax would be payable.

[_ The tax liability reduces depending on the gap between the two dates. If the donor dies within the first three years after receiving the gift, the tax is payable in full. If the death occurs in the fourth year, 80% of the tax is payable; in the fifth year, 60%; in the sixth year, 40%; and in the seventh year 20%. _]

The formal name for the seven-year rule is the making of a potentially exempt transfer (PET). The transfer (of the asset between two people) is subject to the donor’s survival for seven years, and is potentially exempt from inheritance tax.

You may choose who pays the tax – the recipient of specific gifts or any combination of your beneficiaries. You can also make an election of who bears the tax liability on potentially exempt transfers.

This question often arises: ‘Could you do without this particular asset, and could you give it away now without suffering any loss of amenity or reduction in your standard of living?’ If the answer is in the affirmative, I would encourage making the gift now.

One does not make a gift in the expectation of expressions of gratitude. Nonetheless, all things being equal, a recipient would rather thank a live benefactor or donor. The glow of gratitude can be a beautiful thing. Most people would rather get a gift sooner than later.

Ordinary Language

Such a gift must be a gift in the ordinary sense of the word. It must be an outright gift. The donor should not get or expect anything in return.

For instance, my mother, whose annual mileage is of the order of 800 miles, couldn’t give me her car on condition that it was available for her use (with her, me or a third party behind the wheel). She could, for inheritance tax purposes, not make it a condition that I arranged – in cash or in kind – for her to be able to travel in any degree of comfort, style or convenience.

Making the gift subject to any such conditions would create a gift with reservation of benefit. It ties all concerned in knots, it is expensive and it is a bureaucratic nuisance. ‘Avoid it at all costs’ would be insufficiently strong a warning injunction. If my mother gave me her car, she’d be making the gift in the knowledge it was to become mine, and I could do with it as I pleased. I could use it for my own benefit, I could sell it or I could further give it away.

How Not to Exploit the Seven-year Rule

Many have exploited the seven-year rule by giving their homes to their children while they continued to live in the houses.

Alice and Charles Hunter are both 83. On Charles’s 75th birthday, they signed over their house to their two children Bianca and Ade. The house is worth £1,000,000 – before we get unduly excited, it’s only a three-bedroom maisonette on Lavender Hill.

Bianca and Ade became owners of the property, free to do with it as they pleased, even though their parents continued to live in the house. The presence of the elderly Hunters created a gift with reservation of benefit. The way to avoid this was for the parents to pay rent to the owners of the property at the full market rate – but what would have been the sense in that?

To spell it out: if the parents paid rent, the transaction might save someone inheritance tax down the line, but it would be a positively silly move; the rent would be paid out of income that had been subject to income tax and the new owners of the property would have to pay income tax on the rent. The parents would have lost the capital gains tax exemption that the principal private residence would normally enjoy.

It did not provide any savings in inheritance tax. It merely created an administrative inconvenience. Last year, Bianca came off second best in a legal dispute. She was lumbered with damages and costs that exceeded her personal assets. Her creditors pressed their claim. The only way she could pay was if she turfed out her parents. She was part owner in her the Lavender Hill maisonette. Ouch.

Do not, under any circumstances, for any purpose, give away the house in which you live. Except if you’re prepared to live in a tent.

Fiscal Drag

When I started in this industry, inheritance tax was the problem of the rich. It was a subject on which we were examined, but had scant experience.

Inheritance tax was not meant to be a bother for police sergeants, staff nurses or jobbing actors. Alas, those of modest means are now caught in its web. Janet and John King are retired teachers. They were never rich, yet their estates would ordinarily be subject to inheritance tax. They’re victims of fiscal drag.

‘[A person doesn’t know how much he has
to be thankful for until he has to pay taxes on it.’
Anonymous]

You should be aware that:

•Married couples or members of civil partnerships have their allowances added together. They would, therefore, be two individuals with a joint allowance of £650,000.

•Widowed people get the unused portion of the deceased spouse’s allowance – the widowed person could give away up to £650,000 on death.

•If you get divorced, you and your former spouse will be back to your individual allowances of £325,000.

A quick example: if, as a single person, your estate is valued at £600,000, your estate will be liable to a tax of £110,000 ((£600,000 - £325, 000) = £275,000; 40% of £275,000 = £110,000).

Early in this book, there’s a quote about the contemplation of one’s mortality being a spur to generosity. This is when people think of their family one or two generations down the line. What if your children were of sufficient wealth that you could skip a generation? Simply leave the bequests or the benefit of the bequests to your grandchildren, potentially avoiding the double incidence of inheritance tax.

Skipping a generation could provide income tax advantages if the grandchildren came into their inheritance during their minority. If a parent transfers capital to a child and the capital generates income over £100, the income would be taxed as if it were the parent’s income. But, if the capital had been transferred from the grandparent, it would be taxed as if it were the child’s income – irrespective of the amount of the income.

Things Were Too Straightforward

From April 2017, a new ‘main residence’ nil rate band is being phased in. The additional allowance will be £100,000, increasing in 2018, 2019 and 2020 by £25,000 each year. By April 2020, the total increase will be £175,000. This increased allowance will only apply to the main residence, if it is being passed to direct descendants. The beneficiaries of this increase will be a handful of estates in which the relevant deaths occur between 2017 and 2020. The main reason is that the increase in the allowance is likely to contribute to increase in house prices. People expect prices to rise, by a lot. This is all very well for each individual property’s owner(s), but economists are uncertain it would be a desirable thing in the aggregate.

One of the immediate questions is ‘What if I downsize my home?’ If you move to a smaller property, you will be eligible for an ‘inheritance tax credit’, so you would still qualify for the new threshold as long as the other conditions are met.

The increase only applies to the main residence. If, as a single person, I lived in a house worth £325,000, at the time of my death my car was worth £25,000, and I had cash and other assets worth £150,000, then my estate would be worth £500,000. If I gave my estate to my friend Linda, she’d have to pay inheritance tax of £70,000, as she’s not a descendant.

This measure further muddies the water (personally, I consider our tax rules are complicated enough); it distorts the market and it discriminates in favour of a certain class of asset. The master of all markets distorting positively unfair inheritance schemes is acceptance in lieu as will be discussed later in this chapter. Onwards.

Annual gift allowance – everyone can give away £3,000 exempt from inheritance tax, per tax year.

Marriage gifts exemption – you can to give a wedding gift of up to £5,000 to each child on marriage. If it is your grandchild, you can give up to £2,500. For other family members or friends, you can give up to £1,000. This can be combined with your annual exemption.

Small gifts exemption – I wrote this section at Christmastime. I had this aunt who used to give each of her nieces and nephews a £10 note (in today’s money about £430), she didn’t know it at the time, but she was practicing inheritance tax planning. You may make any number of gifts to different people, up to £250 each.

Charitable donations exemption – if you leave at least 10% of your taxable estate to charity, the inheritance tax rate on your estate will be reduced from 40% to 36%. This is a dubious allowance. If the object of the exercise is to maximise the amount that the non-charity beneficiaries will get, then it’s a pointless task. Feel free, take a pen and some paper, and do the arithmetic. If you’re a whiz with spreadsheets do it.

If you want to support charities, all well and good. I’ll help you. I’ve ways of making small donations support local causes meaningfully. All you’ve to do is ask me.

Armed Forces and Emergency Services Personnel – For members of the armed forces whose death is caused or hastened by injury while on active service, members of the emergency services responding to emergencies, and humanitarian aid workers responding to humanitarian emergencies, their estates are not liable to inheritance tax.

Excess of Income – My favourite inheritance tax avoidance measure is gifts out of excess income over expenditure as long as such gifts do not reduce the standard of living of the donor. You’ve spotted the flaw haven’t you? How is anyone to determine what your standard of living should have been?

The gifts should be regular. Keep records. No records and your beneficiaries could be hammered.

Maria, a 54-year-old osteopath has twin grandchildren Naomi and Oliver. The girls are in their second year at the local independent school. The fees are £5,820 a term. The girls’ parents could just about stretch to £35,000 a year in school fees, but Maria can – and comfortably. She pays the fees. She keeps records. We’ll see the importance of record keeping in this context when we address lasting powers of attorney (LPA) later in this book.

Life Insurance

We’ve discussed life insurance elsewhere– these are a means of replacing an income or asset lost on the death of the life assured. Here, we use life insurance to meet any potential inheritance tax liability.

To cover inheritance liabilities, life insurance policies typically come in two flavours.

A whole of life policy has a sum assured, which is paid to the beneficiaries on death. The policy runs for the life of the life assured. Compare a whole of life policy to a term policy. We discuss term policies for ‘parking the problem’ on the next page. Term policies run for a specified term.

Then there is the gift inter vivos policy. Just like life insurance companies provide mortgage protection policies in which the sum assured matches the amount outstanding on the mortgage, there are policies that match the amount of inheritance tax due if the donor dies within seven years of making a potentially exempt transfer.

The premiums on insurance policies written in trust are gifts to the trust.

Carol’s estate would ordinarily have generated an inheritance tax liability. She was 48 years old, and she had two children in their twenties. She had substantial assets that she was willing to give to her children when each left university, to help them get on the property ladder. The most straightforward and most cost-effective solution was to give the gifts – of £600,000 each – outright to the child and on the date of the gift, started a gift inter vivos policy to cover each gift. The policies were owned by the children, although Carol’s was the life insured. They had an insurable interest in their mother’s life. For the abundance of caution, the policies were further put in trust; otherwise, the payment of these policies could have triggered inheritance bills in their own right.

A financial adviser introduced me to a client of hers and we ‘parked the problem’. The parking device was a life insurance policy. Mark wanted to give assets to his children, but not just yet. He had come into a million pounds. Their ages, 19 and 20, made such an immediate gift unwise. He was happy to give to give the gift when the younger of the children turned 25. He simply parked the problem by taking out a life policy for a 13-year term (it would be six years before he made the gift, and the seven-year clock starts ticking only after the gift has been made). The total cost of life insurance premiums was £11,470, and the amount of potential inheritance tax was £400,000.

We mention three other ways of making gifts. The treatment here is cursory as they are sophisticated and require the input of a suitably qualified adviser:

•Gifts to a trust

•Loan trust

•Discounted gift schemes

Acceptance in lieu - inheritance tax debts can be written off in exchange for the acquisition of objects of national importance, usually art. If you are wealthy enough to have art worthy of the name, pay your bl***y taxes. Go through the hassle of arranging the sale, pay the dealer’s commission at 15% of the hammer price, plus VAT. Grrr. The iniquity of it, seriously, don’t get me started!

Equity Release – I mention equity release here with some reluctance as it is a means for getting at the cash tied up in your house, rather than preventing the tax authorities from get their grubby hands on your wealth.

Here’s the logic: one way or another, it involves giving away a part of your house. If you’ve given away a portion of your house, and spent the money, you can’t be taxed on it. Equity release is a financial product for those who aren’t bothered about the amount that would be available to their heirs.

There are two main types of equity release: lifetime mortgages and home reversion.

Lifetime Mortgage

You borrow a proportion of your home’s value. Interest is charged on the loan, but no repayments on the loan are paid until you die or sell your home. The typical interest rate on a lifetime mortgage is 5.7% – this means the outstanding loan would double in just over 12 years.

Home Reversion Scheme

You sell a share of your property for less than the market value. You have the right to stay in your home for the rest of your life, if you wish. When the property is sold the buyer gets the same share of whatever your home sells for as repayment. For example, if you sold 45% of your property to the provider, it would get 45% of the sale price.

During the scheme, you would still be liable for council tax and insuring the property. Participation in an equity release scheme might affect a third party, such as a child, partner or other carer who lives with you. Such a third party might have to move at the end of your scheme: when you died or moved to a nursing home. While on the subject of nursing homes and paying for care, if you gave away the cash you got paid under an equity release scheme, you need to beware of the deliberate deprivation rules.

Inheritance Tax ISA Allowance

Previously, your ISA allowance died with you. If your spouse wanted to reinvest the savings you’d built up, they could only do so up to their maximum ISA allowance for that year.

Your spouse or civil partner is now entitled to keep the tax efficiencies of your ISA.

Anyone whose spouse or civil partner died on or after 3rd December 2014 is eligible for a one-off additional ISA allowance equivalent to the value of the deceased person’s ISA at the time of death. This is referred to as an additional permitted subscription or APS allowance.

The spouse gets the allowance irrespective of who inherited the ISA that is the subject of the allowance.

On Steve’s death, he left all his ISA accounts, valued at £97,014, to his daughter Ellie. His wife Mary gets his APS allowance. Mary would, therefore, be able to make an additional contribution to her ISA of up to £97,014 in addition to her own ISA allowance for the year.

Use the free inheritance tax calculator at

max-inheritance.co.uk/iht

‘[The man that did sell the lion’s skin,
While the beast liv’d, was
Kill’d with hunting him.’
William Shakespeare,
Henry V, Act IV, Scene III]

The Two Davids

If you are fortunate enough to inherit – congratulations. Your first instinct is to take the cheque and run to the bank. Follow that instinct, and you might lay your family open to inheritance tax liabilities. If, somehow, you don’t pay the ghastly tax to receive the gift, your heirs might pay the tax to get the gift. You could, of course, blow the lot at once – that would solve the problem.

Before you throw your saddle on that gift horse, look it in the mouth. Did you know that you are not bound to accept a gift in a will? You would be said to be declaiming the gift.

David the First

Remember David Miliband? His father Ralph died in 1994. Miliband the elder’s will left everything to his wife. So far, so ordinary. The inheritance tax rules of the day would have clobbered the family for inheritance tax. The family solved the problem by writing a deed of family arrangement by which the provisions of the will were altered such that the inheritance tax treatment was more favourable.

David the Second

Remember David Cameron? His father Ian died in 2010. Shortly after his death, David’s mother gave the then prime minister a gift of £200,000. Although the gift might have been prompted by a death in the family, it was a potential exempt transfer; if Mrs Cameron lived seven years after the gift there would be no inheritance tax liability on this gift.

Inheritance tax is like an iceberg, most of it is out of sight. Steer the ship of your family’s financial wellbeing away from the ice.

Before you take the cheque and run, or accept the bank transfer, talk to me. Talk is free. You might be able to avoid tens, even thousands, in inheritance tax by post death planning.

[Chapter 13
Separation and Divorce]

‘[Conrad Hilton was very generous
to me in the divorce settlement.
He gave me 5,000 Gideon Bibles.’
Zsa Zsa Gabor]

The Case of Joy Williams

Joy set up home with Norman Martin. Norman had been married to (but not divorced from) a woman from an earlier relationship. Joy and Norman joined their finances as people in stable relationships tend to do – they were together for 18 years. They bought a house. On Norman’s death, Mrs Martin dragged Joy to court claiming she was entitled to her husband’s share of the house he and Joy had bought together.

I don’t know why Joy and Norman failed to write wills protecting the survivor of their relationship.

A wise person once said, ‘real tragedy is conflict of right and right’. Email me at [email protected] and I’ll tell you what judgement the court handed down.

Separation, Not Divorce

When he separated from his wife, it was a safe bet that he did not want her inheriting his assets. He should have written a will that directed his assets as he wanted. If you separated from your spouse would you want your estate to go to that spouse (from whom you’ve just separated)? You don’t want to live under the same roof as this person, so would you want him or her inheriting your stuff? I didn’t think so.

The moral of the story is that if you separate from your spouse, re-write your will so it reflects your current wishes.

First the sensible thing. When a couple write a will, they end up with two separate documents. Couples by the nature of their relationship often have joint children and joint assets. It’s good that you’re being all grown up about the divorce, or the separation; nonetheless, do you want your ex’s relatives having a hand in your will?

The moment you contemplate divorce, the first night you spend apart should be a spur to reviewing and, possibly, rewriting your will. Lest one end up like the actor Peter Sellers – more of whom is to come in the next couple of pages.

Divorced Testators

The ordinary format of a will is ‘I give my Mercedes Benz 300 SL Gullwing to my husband Charles, but if my husband dies before me, I give the Mercedes Benz 300 SL Gullwing to my children, Gladys, Ivy and Ken, in equal shares’. When a testator divorces, the will is read as the spouse had died. So, the will would be read as if Charles had died; the car – worth £800,000 – would go to the children. Ordinarily, no one would want a third of a car, so it would be sold and the proceeds of the sale divided equally. Alternatively, if any one of the children wanted to keep the car, he or she would simply buy out his or her siblings.

Nonetheless, for the sake of clarity, when a couple divorce, they should amend their wills as to remove all references to their ex-spouses.

I’ve been in this business nearly 30 years. None of my clients who were a married couple have divorced. Some marriages have come to the natural end: death did them part. Some cohabiting couples have parted company. No married couples have divorced.

Correlation is not causation; nonetheless, there it is.

‘[If you ask me to play myself,
I will not know what to do.
I do not know who or what I am.’
Peter Sellers]

Peter Sellers

I bet you never heard of Cassie Unger.

OK, let’s talk about Peter Sellers. Peter had three children, Michael, Sarah and Victoria, before his fourth marriage. Lynne Frederick became the fourth Mrs Peter Sellers in 1977.

The marriage hadn’t worked; they were getting divorced. They’d reached a financial agreement. Lynne would have got £327,000 and their house in Los Angeles. Alas, Sellers died in July 1980, before the decree absolute. His will left each of his three children a bequest of £750. The rest of the estate, £4.5m in 1980 (about £32m in 2017) went to Lynne Frederick. To quote Spike Milligan, ‘She copped the lot’. Sellers’s assets outside the UK were disposed of in other wills. Obviously, the relationship between the actor and his children was poor. Michael claims his father had written him a letter, the last lines of which were ‘I no longer wish to be thought of as your father. The time has come for you to continue on your own way. My final suggestion is you change your surname.’

Do we imagine Peter said to himself, ‘this woman Lynne, the soon to be my ex, this lady to whom I’m planning to give as small a settlement as possible, really, I’d like her to get all of my estate, all four and a half million of it?’

She married and shortly afterwards divorced David Frost. At age 28, now a wealthy woman thanks to her inheritance from Peter, she married her third husband, a certain Barry Unger. Lynne’s only child, Cassie Unger was born in 1983. Lynne died in 1994, just shy of her 40th birthday. Her sole beneficiary was … Miss Cassie Unger.

The actor’s children got couch change.

So, do we suppose Peter Sellers wanted to leave his wealth to a soon to be ex-wife, and to her yet unborn children?

Nor Hell a fury, like a woman scorn’d.’

William Congreve

Mrs Elizabeth Edwards‘

You might have forgotten John Edwards. Mr Edwards was a United States senator. He came to prominence when he sought the nomination of his party (the Democratic Party) to be its candidate in the 2008 presidential election. The last three standing in that contest were:

•Barack Obama – 17,869,542 (48.2%)

•Hillary Clinton – 17,717,698 (47.8%)

•John Edwards – 1,006,289 (2.65%)

There was talk of Mr Obama selecting Mr Edwards as Obama’s running mate in 2008. Things got interesting when two events coincided: Mr Edwards had an extra marital affair with Rielle Hunter and his wife Elizabeth was diagnosed with cancer.

Elizabeth Edwards died in December 2010, by which time her husband had passed his 57th birthday. Her last will and testament was executed six days before her death. The popular press was rent with such headlines as ‘Elizabeth Edwards Cut John Out of Her Will’, ‘Elizabeth Edwards Wrote Estranged Husband Out Of Will’ and ‘Elizabeth Edwards Snubs her John in Her Will – She Leaves Her $1.5m Estate to Children’. Three children survived Elizabeth: Cate (born in 1982), Emma (born in 1998) and Jack (born in 2000).

Mrs Edwards could hardly have been delighted with the affair. Many say the will was a snub to her husband. If I’d written the will, I’d have written it the way it turned out, irrespective of whether Elizabeth had known of her husband’s affair. Her husband was well to do in his own right, perhaps wealthy. There would have been little sense in leaving her estate to her husband. The money would have had better use going to the children. Her 28-year-old daughter Cate was appointed executor of the estate, and she was further appointed guardian to the testator’s youngest child, who was ten years old at the time of the death. As the appointment of the guardian is conditional upon her husband predeceasing her, an improbable occurrence – as her will says, ‘if I am the surviving parent of any child of mine who shall be a minor at the time of my death…’ – the appointment of her daughter as guardian was perfectly reasonable.

It is possible that Elizabeth Edwards’ will might have been written just the way it would have been written if she hadn’t known of the affair, if they’d been no affair, or if her marriage to John had been perfectly happy.

Chapter 14[
**]Subsequent Marriage (Disinheriting Your Children)

‘[If the second marriage really
succeeds, the first one
didn’t really fail.’
Mignon McLaughlin]

Ah, the Oxo mum.

Lynda Bellingham died in October 2014 at the age of 66. Shortly before her death, she wrote a will by which her entire estate was left to her third husband, Michael Pattemore. By the summer of 2016, her children from an earlier marriage, Robert and Michael Peluso, had brought a claim in the courts against the estate.

Lynda’s sons, in several newspaper and television interviews, said she left the entire estate to her husband (they had got married six years before her death) to save on inheritance tax. They said Lynda trusted her husband to distribute the estate to them and allege that their step-father Mr Pattemore spent a considerable part estate. Furthermore, they claim he has offered them only £750 from the estate and is looking to evict them from their home. The sons petitioned the court to redistribute Lynda’s estate in their favour. They sought ‘reasonable financial provision’ from the estate.

If the case were conducted in the court of public opinion then Lynda’s sons would win without breaking a sweat. But that would be to miss the point. Such cases are not a matter of public sentiment or affection.

At the time of writing, the case is a considerable distance from a judgement. The widower’s thinking is something like ‘Here’s a document that all agree was Lynda’s last will and testament. There is no dispute about its provenance; there’s no talk of undue influence. The will says I should get everything. End of story.’

If Lynda had trusted her husband to ‘do the right’ thing, there is no record of such sentiment by way of discussion or written document.

Apparently, there was no discussion, at least not with the boys, on the will. It would appear she put off writing the will. She should have done it when she got married. It appears she wrote the will in the last ten months of her life – after she’d been diagnosed with the cancer from which she died.

Her marriage would have revoked whatever will she might have had previously.

I don’t imagine Lynda Bellingham woke up one morning, looked at herself in the mirror while brushing her teeth and thought, ‘today’s the day I’ll get round to writing my will. I’ll leave nothing to the boys.’ However, the will she executed said exactly that. It left everything to her husband. There’s no nice way of saying this: it was a badly written will. Whatever her wishes were, they could have been achieved in a 45-minute consultation with me.

The Principal Asset

Like most of my clients, your home is your main asset. If you’re single and you plan to remain so, skip this section.

Like most people in a relationship, you’d want your survivor to have a happy life, and, when both of you pass away, for your children to inherit your assets.

Remember earlier we talked about tenancy in common – a feature of which is the ability of a part owner of a property to leave his share of the property as he pleases. If Lynda had been my client, I’d have advised her to leave her share of the house in trust for the benefit her children, and her husband would have a right to occupy the property for a period. At the end of the period, the house would revert to the boys.

With a couple whose moral and financial ownership of the house is roughly equal, the survivor would have the right to live in the property for the rest of his or her life. If the survivor remarried, the children of the deceased party would be sure to inherit at least the deceased’s share of the house.

[Chapter 15
Your Business & Your Will]

‘[It is not from the benevolence of
the butcher, the brewer, or the
baker that we expect our dinner,
but from their regard to their
own interest.’
Adam Smith]

And so you decided to be master of your own fortune. Several of my clients have businesses and many are self-employed. A business is merely a certain class of asset. You can dispose of your interest in a business as you please. There’s no such thing as a business will, only a business owner’s will.

Inheritance Tax and …

Remember the Olympic games: London, Rio de Janeiro, even Beijing? Didn’t we do well? Just after an event, the competitor has a microphone stuck under his or her nose. The poor sausage. Still breathless from exertion. Did you notice that after mumbling something regarding the exhilaration – or disappointment – all the interviews had a theme? All the participants thanked their families. They thanked their parents. The older competitors talked about being away from their spouses, partners and children. They acknowledged the sacrifice and contribution, sometimes indirect, their family had made to their efforts and success.

‘[It’s important to take a second to appreciate
what’s happening here. You’re at the Oscars
, The Academy Awards. You’ve been nominated.
Your families have been nominated.’
Jimmy Kimmel]

A world-class athlete has much in common with an entrepreneur. It can be lonely. Almost no enterprise is built without the sacrifice and input of the entrepreneur’s family.

If your business is doing more than ticking along, if it’s more than merely surviving, if it’s thriving, you have an inheritance tax problem.

Some say, ‘nice problem to have’.

Your business can be shielded from inheritance tax. The result being that the beneficiaries of your estate can legally avoid paying inheritance tax on the value of their businesses.

My clients Pat and Keren live with three of their children. Their older children, Robert and Sian, have left home. Pat owns the marital home jointly with his wife. He has a £300,000 flat, from which he gets a rental income. He owns a couple of McDonald’s restaurants, valued at £780,000. The older children work in the business.

He plans to acquire five restaurants, and each of his children would own one. His estate would generate a substantial inheritance tax liability.

Ultimately, he plans to leave each child a restaurant. They get the gifts of the restaurants in age order. There are currently two restaurants; the oldest two children, Robert and Sian, would get those. When the third restaurant franchise is acquired, the third child will stand to inherit that restaurant, and so on. In the meantime, the rental property would be divided among the children who are not currently due to inherit any of the restaurant businesses.

Inheritance tax would fall due when the children inherited the businesses or if Pat died within seven years of any gift. On average, the restaurants are each worth £390,000; therefore, they would normally generate a tax bill of £156,000. This would be a serious dent in the finances of most business. They might have to take a loan, or even sell the business to pay the tax bill.

Pat is a client of mine, so he updates his will free of charge. There’s no limit to the number of changes he can make. We created a business property relief trust (BPRT) for Pat. On his death, all his relevant business assets that qualify will be inherited free of tax.

Vicky, 37, is a successful distributor for Utility Warehouse with a residual monthly income of £7,000. This income will continue in perpetuity. She could sell her distributorship. She could assign her income to whomever she pleased. I’ve heard the business described as ‘willable’. The business is £1,183,891.34, ordinarily liable to inheritance tax at 40%; that is, £473,556.56. The liability has been eliminated by setting up a business property relief trust.

Agricultural property is also eligible for relief on inheritance tax. You own a farm? Contact me on [email protected] and we’ll talk.

It was going so well, and now I’ve to let you down, not even gently but with a bump so hard as to border on violent. I apologise in advance.

Your portfolio of buy-to-let property would not benefit from BPRT. Them’s the rules. Don’t bother looking for loopholes; there aren’t any. I’ve looked.

I’m with Ray Bradbury when he says ‘we need the arts to teach us how to breathe’. Those at one with Theophile Gauter in ‘L’art pour l’art’ may not be muffled. Art being the stimulus to life, that is, if there’s money in it, shouldn’t your heirs get it tax free?

As a writer, artist, musician or practitioner of any of the creative arts, you run a business. If you think of the royalties and repeat fees they are the income that arise from your body of work: the asset. Would you want your heirs to pay tax on inheriting the asset? Remember, you’re in business … talk to me about shielding your life’s work from the grubby hands of the taxman.

Roger Lloyd-Pack, Rik Mayall and Amy Winehouse all died intestate. Their families likely lost out on inheritance tax reliefs. Bigly. Big league.

The BPRT described above is available only to owner-managers. BPRTs are also available to investors. This is beyond the scope of this book.

The Contempt of Enforced Familiarity

Phillipa is part owner of a thriving marketing business. She is not thrilled at the prospect of having the spouses of her co-owners involved in running the business in the event one of them was too ill continue in the business. If one of her fellow owners died, she would have to work with them for good. She was just as appalled at the thought of her husband having to work with her fellow directors.

The problem was bound to come to pass sooner or later. The solution was to draw up cross-option agreements through which the surviving shareholder has the option to buy the shares of the unwell/deceased shareholder, and a corresponding clause that gives the personal representatives or next of kin an option to compel the surviving shareholder to buy the shares.

Get the inside story on avoiding inheritance tax on your business

max-inheritance.co.uk/bprt

Chapter 16[
**]Trusts

‘[The trick is to stop thinking
of it as your money.’
Unknown]

Trusts have been around since the time of the Crusades, when lords and knights wanted to keep their castles out of the hands of the taxman or crooked relatives while they were away at war.

At its simplest, a trust is a legal arrangement where the benefit of an asset is separated from its ownership.

Business Property Relief Trusts were discussed in the chapter on business assets.

Bereaved Young Person’s Trust

When a child receives a gift in a will, the testator will have set an age at which the child could get the gift – this is usually somewhere between 18 and 25. There must be a good reason for a minor to receive a substantial inheritance at the tender age of 18. A bereaved young person’s trust will hold the asset till the child attains the age set in the will. For the purpose of this exercise, youth ends on one’s 25th birthday; beyond this date, inheritance tax becomes a serious bother. 

Vulnerable Person Trust

Sally is widowed. Although a homeowner, she has little else. For almost 40 years she’s been the full-time carer of her son Ben, who has cerebral palsy. He gets some support from central and local government. Sally’s worried that if she leaves her estate, the £400,000 house, to her son, it will disqualify him from the means-tested support to which he’d otherwise be entitled. When the money runs out, in about two years, he would then be eligible for means tested benefits. She feels the inheritance would be wasted.

Sally wants her inheritance to make her son’s life a bit more pleasant; his needs are basic and his wants are few. Just to be able to fund holidays and to follow Crystal Palace football club. Masochist!

The solution to the problem is a vulnerable person trust – Ben would get the benefit of the inheritance and would not be the victim of means-testing.

Life Interest Trusts

The main use of life interest trusts is as discussed in the chapter on accidental disinheritance and subsequent marriage.

Several times a year I get tearful telephone calls, the gist of which is ‘when my dad died, Mum inherited everything; now she has to go into care, we fear that the house, which is the family’s main asset, would need to be sold to pay for her care’. Couples wishing to prevent such a scenario should write a will with life interest trust provisions, such that the deceased’s share of the house goes into a trust of which the children are the beneficiaries, but the survivor has to right to live in the property. If the survivor needs to go into care, the share of the property already in trust cannot be used to pay for care.

[Chapter 17
Lasting Powers of Attorney]

‘[You promised me you would help me
when I could no longer carry on.
It is only torture now and
it no longer has any sense.’
Sigmund Freud]

Bonnie called me in January 2015. Her husband, Jack, had suffered a stroke two months previously. Jack’s stroke left him without his sight, he had lost his power of speech and he was paralysed down one side of his body. Bonnie was enquiring about the possibility of making arrangements to manage her husband’s financial affairs. She had a specific question.

We’ll return to Bonnie and Jack presently.

Generally, Court of Protection cases are private. In ordinary circumstances, you or I would never have heard of Paul Briggs.

Mr Briggs enlisted in the army at 16; he served in Northern Ireland and Afghanistan. On leaving the armed forces, he joined his local police force on Merseyside. In July 2015, while on his way to work, he was struck by a car driven by Chelsea Rowe (Ms Rowe subsequently pleaded guilty to, was convicted of, and sentenced to a term of imprisonment for dangerous driving.

Paul suffered several serious injuries, including a bleed on the brain, five spinal fractures and bruising to his internal organs. The accident left him in a minimally conscious state. Paul’s wife, Lindsey Briggs, petitioned the Court of Protection that his life support systems be turned off. On the opposing side of the case were the Hospital Trust where he was being treated and the Official Solicitor. Lindsey said, ‘I think he would see it as torture, just as hell, that everything he believes in and he lives for would just be taken away from him. He would be living for no reason. I don’t want him to suffer any more.’

She further said, ‘He used to talk about the horrible things he’d seen at accidents – the dead and the victims who ended up brain-damaged in the centre where he is now. Paul visited them and said, in those situations, it would have been kinder if they had just died at the scene. I wish Paul had not been resuscitated after the accident. In films, people survive and recover – in real life there is no Hollywood outcome.

‘He can’t be some medical experiment or a legal file on a desk. If there had been a document, a statement of his wishes, his death would have been non-negotiable. But Paul didn’t have one. Who does? You think as a wife you’ll be able to speak for your husband, that you can be their voice. It’s shocking to find you’re not.’

A judge ruled in December 2016 that it was not in Paul’s best interest for treatment to continue, and it was lawful to withdraw treatment.

The Official Solicitor sought leave to appeal the judge’s decision, but thought better of it. Paul was moved to a hospice, where he died in January 2017.

Remember Bonnie and Jack? They had a £10,000 mortgage – some would say that was hardly a mortgage, but a large credit card bill. Like most people, he had direct debits for small but non-essential payments, such as £3 a month to Oxfam, £5 to Unison and £11 a month for some magazine the name of which escapes me. He even had a £49-a-month mobile phone contract. She called the mobile phone company in tears, saying, ‘the man is blind, deaf and mute – he can’t even lift the bloody handset. As you can see from your records, he’s not used the phone since the second month of the contract’. No joy. Her pleas were for nought.

From the mobile company’s point of view, any subscriber who’d developed buyer’s remorse could feign infirmity to get out of the contract.

The illness reduced this gentleman’s income – it would make sense for him to cancel the non-essential payments. Even without a reduced income, illness or dying can be an expensive business. Bonnie couldn’t manage her husband’s bank account or any of his financial affairs, with one exception: the mortgage lender allowed her to make manual payments by sending in a cheque every month. What a palaver.

One month rolled into the next, Jack became overdrawn at the bank, fees were charged on the unauthorised overdraft, and fees were charged on the fees. In time, the debt on the account ballooned to such a size as to be able to pay for a small wedding. Bonnie was driven to the edge of madness. When her husband died in January 2016, it was quietus.

Remember, Bonnie had asked a question during the January 2015 telephone call. It was ‘Did my husband and I have lasting power of attorney, or can we get it now?’ The question was one more of hope than expectation.

The problems illustrated by these cases are financial in the case of Bonnie’s and Jack’s, and of Paul Briggs’s health and welfare. Both sets of problems could have been prevented if they’d had lasting powers of attorney (LPA).

My Will and Its Complement

My will is dormant. It will be activated on my death – until then, it’s inactive. Between now and my death, I have an LPA. The LPA and the will complement each other.

The LPA is a suite of documents that allows me (the donor) to appoint someone (the attorney(s)) I trust to act on my behalf during my lifetime. Enough of me.

The Two Types of LPA

1.LPA for Health and Welfare: This can be used to make decisions such as where the donor would live, or what medical, nursing or care they would receive. This kind of power of attorney would have been useful in the case of Paul Briggs.

2.LPA for Property and Financial Affairs. If Jack and Bonnie had had this kind of LPA, she’d not have encountered the mountains of costly nonsense strewn in her path to gain control of her husband’s finances. This kind of LPA can be used to make decisions regarding all matters relating to money, property and finances.

LPAs must be put in place while one is of sound mind. One must be past one’s 18th birthday and not be an undischarged bankrupt.

The LPA must be registered with the Office of the Public Guardian before the attorney can exercise the powers granted by the documents.

Your attorney must act in your best interests: they must assume you can make your own decisions. People find it mirth inducing that ‘your attorneys must not treat you as unable to make a decision simply because you make an unwise decision’. When one thinks about it, we make decisions every day that turn out to be unwise, foolish or even dangerous. It is possible to provide protections in your LPA, regarding under which circumstances your attorneys may do certain things.

Enduring, Not Lasting

You might have heard of Enduring Power of Attorney (EPA), this is the old style of the LPA. The powers of the EPA are limited to financial matters. It is not possible to draft a new EPA, although an EPA written before the LPA superseded them may still be registered. EPAs that have been registered can be used.

The Eloquence of Records

Your attorneys may not of their own initiative use the LPA for inheritance tax planning. If you remember, in the section on inheritance tax, we talked about keeping records. Your attorneys may make gifts that your records showed you’d made. Your attorneys may make gifts out of your assets that are appropriate in the context of your assets and wealth on birthdays, weddings and other customary occasions that you would normally have made. Remember we mentioned my mum’s Christmas card and gift book. The records have a certain eloquence of their own.

A final word on Bonnie and Jack: many might say, ‘we wouldn’t have such a problem, we have joint bank accounts’. The logic of the joint bank account is such that all parties to the account are responsible for the actions of all the other parties. How could one party to a joint account who has now lost mental capacity be responsible for the actions of the others? The guidance from the British Bankers’ Association is ‘if one joint account holder loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only (for example, living expenses and medical or residential-care bills) until a power of attorney is registered.’

For more information of the lasting power of attorney visit

max-inheritance.co.uk/lpa

[Chapter 18
Statement of Wishes]

‘[Documents create a paper
reality we call proof.
Mason Cooley]

Your will is a precise legal document in which we do not list specific property. This is deliberate. (In a previous chapter, we discussed a schedule of assets – for listing the things you owned).

Small Gifts

Some people make gifts of specific items to certain individuals. These are items that have emotional and sentimental significance, but relatively small financial value. These are usually things like small amounts of jewellery, paintings, collections and keepsakes. Remember my tea-towel collection?

Your Relative Youth

You are of such youth that there is plenty of time for people and things to come into and go out of your life. You don’t want to have to rewrite your will because some artefact or other worth a few hundred pounds got lost, stolen or damaged, or was even sold, given away or exchanged. Human relationships are fluid – people can fall out with you, die, or become unable to use or appreciate the item in question.

Dear Executors …

You can make such gifts without complicating your will. The statement of wishes, sometimes called an ‘expression of wishes’ could be described as a ‘letter to the executors’. It is saying ‘Dear Executors, please, if it’s OK, if it’s not too much trouble, if you could see a way clear, would you be a darling and give my collection of tea towels to my friend Jean.’ It does not have the force of law behind it, and the executors are not bound to honour it. Put another way, the testator means ‘If the executors didn’t abide by the statement of wishes, well, it’s just one of those things; don’t sweat the small stuff.’

Contrast the statement of wishes with the will. The will is a legal document the provisions of which the executors must follow on pain of severe consequences. The will must be followed save for a deed of family or family arrangement, or a court order.

There is a second major use for the statement of wishes. Remember, in an earlier chapter, we said the will was not a device for ‘getting even’ or keeping score. No, don’t fight in a pub car park. If you must have the final word in your will, don’t use the will, do it in the statement of wishes. Some testators use a statement of wishes for directing what would happen to their pets. Before 2007, testators used sometimes used the statement of wishes as an inheritance tax planning device, but the introduction of the transferable nil rate band has made this largely redundant.

The statement of wishes is flexible, and can be altered at will. It keeps the will tidy, and it makes the job of the executors easier.

Diana, Princess of Wales

‘[They say it is better to be poor
and happy than rich and
miserable, but how about a
compromise like moderately
rich and just moody?’
Unknown]

Born July 1961

MarriedJuly 1981

Prince William bornJune 1982

Prince Henry bornSept 1984

SeparationDec 1992

Will signedJune 1993

Memorandum of WishesJune 1993

Panorama interviewNov 1995

Commander Jephson leavesJan 1996

Codicil signedFeb 1996

DivorceAug 1996

DiedAug 1997

Variation ObtainedDec 1997

Paul Burrell TrialOct 2002

Dates of Signatures

Diana, Princess of Wales, signed her will on 1st June 1993 – 30 days shy of her 30th birthday. She appointed two executors, one of whom was a Commander Patrick Jephson, her equerry. Patrick left the princes in January 1996. The circumstances of the parting, which occurred shortly after the princess’s Panorama interview, is beyond the scope of this book.

Codicil

The princess executed a codicil in February 1996. By the codicil, the princess removed the commander as one of her executors. She replaced him with one of her sisters. That, ladies and gentlemen is how one should change one’s will. As soon as the circumstances demand it, just do it.

The phrases ‘any child of mine’, ‘that child’ and ‘our children’ could have been used in the guardianship clause rather than listing the children by name. It wouldn’t have mattered because the whole world knew who she meant. But for the likes of you and me, please, list your children by name.

Loss of Oversight

Moving on to the executor and guardianship appointments. The princess appointed her mother, The Honourable Mrs Frances Ruth Shand Kydd, as both executor of the estate and guardian of her children. I would normally not appoint the same person to the two offices. Such an appointment robs the estate of oversight.

In this will, it would have been a trifling matter. The princess’s mother, born in 1936, was 57 when the will was signed – the younger of the children over whom she’d been appointed guardian was eight years old. In such households, there are several people to whom the heavy lifting could be devolved. Nonetheless, such appointments should cause agitation in the breast of a competent draftsman.

I doubt suitable people of more tender years could not have been appointed to any of these offices.

Was That Really Necessary?

The will was signed after the separation of the princess and her husband. Generally, people experiencing marital difficulties are not well disposed to their spouses. But still, the guardianship clause from the princess’s will reads:

‘SHOULD any child of mine be under age at the date of the death of the survivor of myself and my husband I APPOINT my mother and my brother EARL SPENCER to be the guardians of that child and I express the wish that should I predecease my husband he will consult with my mother with regard to the upbringing education and welfare of our children’.

What person would consult the mother of an estranged spouse about the upbringing, education and welfare of his children?

Qui Bono

The meat in the sandwich of any will is the distribution. It’s the ‘who gets what?’, and ‘under what circumstances?’ Here, the distribution was a perfectly simple ‘everything equally between my children Prince William and Prince Henry’. They get their dosh when they turn 25. That is exactly as I’ve done it.

Even if the marriage between the princess and her husband had been the most blissfully happy of unions, this, still, is how I’d have drafted the will. Like the case of Elizabeth Edwards, the testator’s husband had such wealth, there was nothing to be gained from giving her estate first to her husband. No point.

The will hands the testator’s chattels to the executors and asks them to dispose of these chattels within two years, in accordance with ‘any written memoranda or notes of wishes of mine with regard to any of my chattels’. Nothing spectacular.

The will refers to a memorandum of wishes.

The memorandum signed on 2nd June 1993, one day after the will, read ‘I would like you to divide at your discretion my personal chattels between my sons and my godchildren’ and ‘the division is to be three-quarters in value to my sons, and one quarter between my godchildren’.

Irrespective of the proportions or relative values of the items considered chattels, they are disposed of, not in the will, but in the statement of wishes.

Variation Order of December 1997

The executors obtained an instrument of variation from the High Court of Justice.

Under the terms of ‘The Arrangement’ approved by the High Court, Princess Diana’s estate ended up being distributed thus:

•Specific Bequest of Cash. The sum of £50,000 was left to Princess Diana’s butler, Paul Burrell.

•Specific Bequest of Chattels. Certain chattels were left to Princess Diana’s 17 godchildren.

A ‘Discretionary Fund’ was established for the benefit of Prince William, Prince Harry, their respective future descendants and spouses, and charities as selected by the co-trustees.

The Residuary Estate

The two princes got the residue of the estate as per the original will. The only difference was that Prince William and Prince Henry came into their money when they turned 30, not 25. It’s hardly that they were short of a bob or two.

Instruments of variation, deeds of family arrangement or deeds of variation need the consent of the beneficiaries to the will. No one else. The executors were under no obligation either in law or in practice to inform anyone of the existence of such an instrument. It would appear the executors did not publicise the use of this instrument of variation. Its existence only came to light at the trial of Paul Burrell for theft. The prosecution collapsed.

The testator’s godchildren were each given a gift of an item that once belonged to the princess.

To my eye, the only besmirchment, if it could be so described, would be that the instrument of variation was unpublicised, but the executors had no duty to do so.

The result of the toing and froing was that the interests of the beneficiaries of the will were protected. The criticisms of the will did not cause any loss to the estate.

[Chapter 19
Disputes & Problems]

‘[I hope you’re not reading this section
because things have gone wrong!
It’s here to try to prevent that
happening or at least to reassure you.
Delia Smith]

Like Delia, my intention is to reassure you and help prevent problems.

Nothing in your will should be a surprise to the beneficiaries.

The main way to avoid disputes is this: follow the advice I give all my clients. It’s like a dance, there are three simple steps to it – get in touch and I’ll show you.

Research from Macmillan Cancer Support estimates that more than a million people have had a serious family argument after a relative died intestate.

‘17% of these feuds led to a family break up with relatives not speaking to each another.’

Macmillan Cancer Support

Report Name

The aforementioned research shows that, of the 2,000 people that took part in the research, 30% promised a gift to a relative, but they had done nothing about it.

Most disputes and problems arise from a poorly drafted will. At bottom, often the issue is not the inheritance. The inheritance might have brought forth the dispute; however, the relationship among the participants is often a bigger and more fundamental problem.

[. Disputes about money are rarely about money.
When you sort of start unpacking the issues
involved, they’re almost about emotional issues.’
Judge Rinder]

A good proportion of disputes arise from not doing it now and thus sleepwalking into intestacy. The other main fount of dispute is the death-bed will. The death-bed will is often challenged on the grounds of the testator’s diminished mental capacity. People who are on the verge of death are likely to be easily influenced. The mental capacity of the testator is then questioned.

Many years ago, I visited a gentleman who lived just down the road from me. After a bit of small talk, I asked if there was another person joining us. He replied his partner, a hairdresser, was out at work. He further revealed the lady had moved in with him a few months after he had bought the house. The mortgage was in his name, so he paid the mortgage, but she paid all the other bills – so they were about even on the costs of running the home. In those days a 6% mortgage was a fantastic deal.

I told him we could not write the will if one party was absent, as we would be talking of disposing of assets of which she was part owner. Still warming up my hands with my mug of tea I asked what provisions he intended for the will – to me it was just idle conversation. I expected something like ‘all to my girlfriend’. I was surprised to hear, ‘I want to leave everything to my sister’. It was hard to impress upon him the need to acknowledge his partner’s contribution to running the house. The concept of his girlfriend’s moral claim to the household escaped him. He could not be persuaded to the right thing by her. I walked from the case.

Twenty years have passed. Word on the street is that this fellow died six weeks before I wrote this, and, you guessed it, there is a big dispute between the girlfriend and the sister. From what I hear, the testator wrote a will leaving everything to his sister.

Earlier, we encountered the word ‘clarity’. Your will provides clarity for your intentions. Avoid all ambiguity. Every word in your will must go towards meaning what you say and saying what you mean. Avoid referring to classes of beneficiary. There is nothing wrong with classes of beneficiary, they just have the imprecision that bears disputes. If you’ve gone to the trouble of writing a will, what harm is there is listing your beneficiaries by name?

DDIY (Don’t Do It Yourself)

Most problems are a consequence of the DIY will. The solution to the problem of the DIY is a simple one – engage a professional. At the very least, you’ll be transferring the liability. If you get things wrong, you’ll not realise. The problems or errors will only come to light after your death. Too late. In the unlikely event that a professional made a mistake, you’d be covered by professional liability insurance of up £2 million. If I caused a loss to your estate, the insurance company would cough up – up to £2 million. DIY wills are the embodiment of the term ‘false economy’.

Will disputes often arise from home-made wills that have not been prepared correctly. Home-made, internet or DIY wills are the root of many disputes as it is an abundance of opportunities for failure to dot Is or cross Ts.

An out-of-date will is no good – refer to the chapter on updating your will.

Signatures

Around 40% of all the wills in this country could be rendered invalid by want of proper signatures.

Naomi and her husband wrote wills in 2007 after their second child was born. She was widowed shortly afterwards. In the fullness of time she met Jo, and then built a thriving osteopath’s practice. The couple and Naomi’s two children got on well – they formed a happy family unit.

The relationship between Naomi on the one hand, and the guardians and executors in the 2007 will on the other hand soured. Naomi and Jo had talked about writing new wills. A local solicitor wrote their wills and sent them drafts. A few months later, the lawyer sent them a letter to the effect that ‘You’ve written your wills, but they’ve not been signed; please pop into my office at your earliest convenience so we may finalise this matter.’ Jo, Naomi and the two children went skiing in the Alps. There was an accident in which Naomi died. The new wills weren’t signed.

The executors and guardians were bound by the terms of the 2007 document, which, by the time of Naomi’s death, were some distance from the deceased’s wishes. The guardians poisoned the minds of the children against Jo. The children were sent to boarding school. They were miserable beyond description; they would much rather have stayed with Jo, their de facto guardian.

The business was sold, but it attracted inheritance tax of nearly £400,000. Jo was made homeless despite her contribution to the household.

All for the sake of a couple of signatures.

A variant of the out-of-date will is a will that has not been updated after the death of executors, guardians or even beneficiaries. A correctly drafted will should have lots of redundancies. Nonetheless, the death of someone named in your will should be a prompt to review the provisions of the document.

Elderly Executors

People name folk they like as executors in their wills. Fair enough. The best person for the job, always. Nonetheless, I counsel against appointing elderly folk as executors. Remember, your will should be updated free of charge.

Old Age is a Privilege

Me, personally, I hope to grow old. But if you named me in your will when I’m past my 75th birthday, I’d say ‘look again, matey’. At that age, I want to potter about, bake cakes, read books and mess about on my bicycle. Then, I wouldn’t want to be dealing with anything more complicated than my electricity bill. Similarly, few would want to faff about with your will in their declining years. They may be the best person for the job, but personally, I’d want to give the job to the youth of the clan. If the folk you’ve named in your will are approaching their 70th or even 80th birthdays, it is a good reason to re-examine your will.

Lack of a legible name or a full address for the witnesses has been known to cause bother.

Do not attach anything to your will. What of unexplained marks or pinholes on the will? A pinhole might lead a reasonable person to think ‘… there was something attached to this will; what did it say, and where is it now?’ Such doubts could delay the administration of the will, and cause litigation.

Outdated Records

Viktor, died in service, or, more correctly, while on the payroll of his employers. Viktor had three children from his first marriage, which ended on the death of his wife. He had been estranged from his children for several years. By the time of his death, these children had all left full-time education and were making their way in the world. Viktor’s widow, Ugo, had four children from a previous marriage. All Ugo’s children were financially dependent on Viktor. He did not adopt them.

Viktor failed to update the recipients for his employer’s death benefits, so the company pension trustees followed his original nomination and paid the death benefits from his employers’ scheme to his three children. No provision was made for Ugo or her children: she complained to the Pension Ombudsman, but her complaint failed.

Mental Capacity

For a will to be valid and beyond dispute, the person making the will must have testamentary capacity. He must have sufficient mental competence. The phrase ‘sound mind, memory and understanding’ is often used. Mental illness does not by itself deprive one of the mental capacity to give instructions to a draftsman or to execute a will.

The expression ‘being of sound mind’ does not appear in wills. It is assumed that one is of sound mind. Having the necessary mental capacity would be a prerequisite for the validity of the will. Being of sound mind is a given.

A person who is mentally ill may have ‘periods of lucidity’ in which he may write a will. However, how does one prove it? The easiest way to avoid such a conflict is to write one’s will now, when one is, and can be shown to be, of sound mind.

Undue Influence

A testator must make his will of his own free will. A will that involved compulsion, coercion or duress is invalid.

Invalid Procedure

For a will to be valid it must be in a proper form in accordance with Section 9 of the Wills Act 1837. For instance, a will should be in writing, and must be signed and witnessed correctly by two witnesses, who may not be beneficiaries or spouses of beneficiaries.

‘[The formalities set out in the Wills Act do really matter.’
Lord Justice Jacobs
Parks V Clout 2003]

The Rule of One Pen

Only one pen should be used for signing and witnessing a will. That the same colour ink was used in the document might go some way to prove the authenticity of the will. Also, a single pen will force all the participants to focus on the task at hand; more pairs of eyes will ensure the will is signed correctly. I speak from decades of personal experience.

Lack of Knowledge and Approval

Some disputes turn on whether the testator ‘knew and approved’ the contents of the disputed will. In law, the testator must know the importance, meaning and effect of what he or she is doing.

Fraud

This is a concept so clear as to require little explanation. It is a staple of detective fiction. In the real world, the ingenuity of fraudsters appears boundless. There have been cases of impersonation where people call on an unwitting solicitor and pose as the testator.

Chapter 20[
**]Funeral Wishes

‘[I made my money the old fashioned
way. I was very nice to a wealthy
relative right before he died.’
Malcom Forbes]

‘I have a funeral to attend later in the week. John, who lived across the road from me, died, and the children had the “for sale” sign put up before the day was out. Fuming, I asked them to show some bloody respect by waiting till the funeral. I asked them to take it down.’ A friend of mine thus castigated her neighbour’s children.

Few people would want to appear as mercenary as John’s children. They’d wait a respectable period before looking for a will. Often till after the funeral. That’s the prime reason for not stating funeral wishes in one’s will. If the will is dealt with sometime after the funeral, there’s a chance the deceased’s funeral wishes wouldn’t be carried out. Testators should identify those most likely to arrange the funeral, and inform them of their wishes.

Similarly, some wills have clauses on organ donation

Almost every person has transplantable organs. Medical professionals will decide at the time of death if one’s organs and tissues are suitable for transplantation.

All who wish to donate their organs should:

•join the organ donor register;

•carry a donor card; and

•let them know your wishes.

The time between death and donation is 12 to 36 hours for most organs and tissues. Except if arranged by the most mercenary of expectant beneficiaries, few dying people have their wills at their death-beds.

Earlier, we encountered Zoe, who was arranging her mother’s funeral. Zoe went to the funeral director and she entered into a contract. It was up to Zoe to find the money to settle the bill; the funds might have been in the estate, Zoe might have had to have opened her wallet, or she might have passed a hat round the family or the village – nonetheless, the bill was hers to settle.

Planning

Janice’s sister, Beryl, didn’t want her son Clement to have to find the funds to pay for her funeral. She took out a prepaid funeral plan. Janice thus had paid for her funeral in her lifetime, and there should be no reason for Clement to put his hand in his pocket to pay for his mother’s funeral.

Beryl’s prepaid plan cost £2,895 – she has thus locked in her funeral at this price. She knows the cost of a burial plot is about £5,000 – an expense she considers unnecessary. She is certain that, whenever it is that she dies, her funeral will be conducted to the agreed standard and her loved ones will not have to put their hands in their pockets.

Funeral plans are for those concerned about the rising funeral costs and those who don’t want their loved ones scrabbling around in search of the funds for the funeral.

Many are concerned that the cost of care in old age will eat into their estates. I recommend such people take out a funeral plan.

Funeral wishes and organ donation preferences are the mark of an unskilled draughtsman. The will serves a specific purpose: expressing funeral wishes is not one of them.

There’s a wealth of information on funeral plans at

max-inheritance.co.uk/funeralplan

[Chapter 21
Putting It All Together]

‘[The most effective way
to do it, is to do it.’
Amelia Earhart
We’ll start with a blank sheet of paper.]

You’ve no intention of sleepwalking into intestacy. Your reading this book shows you are not content for the fruit of your life’s work to be shrouded in uncertainty, fights, expense or other mountains of unpleasantness. You want to be sure your family are taken care of, and that you’ve eliminated inheritance tax at the stroke of a pen.

Bearing in mind the uncertainties of life, you know the best time to plan for your family is now, as there is no profit in procrastination. You’ve read of the chief justice who made a hash of his own will – he was not an expert draftsman, and his family needlessly paid hundreds of thousands in inheritance tax.

And, you know, if you put your plans in place now, they will stay up to date, even if you live to 110. Remember, it’s the principle of ‘fire and forget’.

Use my 30 years’ experience to protect your family.

Talk is Free

To this end, please get in touch with me for a free, no-obligation consultation in the comfort of your home. The consultation will typically last 45 minutes. We’ll discuss what you wish to happen to your estate. I’ll show you how to do it.

I’ll come to you by Skype, by bike or by car.

Discover the secrets to bullet-proofing your estate

It took over two years to write this book, but I wanted something you could read in an afternoon. With clear explanation, and real-life illustrations of principles and concepts, you’ve got a decent grounding in the art of keeping your assets in your family. Advice, however, is personal. Just ask me.

Nothing is constant except change. The landscape of all things relating to inheritance is like a fickle lover: it changes. It might be probate, it might be LPA or even the inheritance tax rules.

Your time’s valuable; you don’t want to waste it. I don’t want to waste it, either. You’ll want to be up to date with changes in the landscape, be it technology or legislation. You’ll want the information as it applies to you.

Like sorting the wheat from the chaff, you want the info without the noise, ill-informed commentary or idle speculation.

Simply sign up to my mailing list, and I’ll send you relevant, up-to-the-minute information that will protect your estate for all time.

Bullet-proof your estate.

max-inheritance.co.uk/bulletproof

Free Resources

Go to max-inheritance.co.uk/book to access free resources for owners of this book, including:

•interviews with personal financial specialists on how to make the most of your money;

•downloadable calculators and assessment tools;

•and much more!

About the Author

Ade Oduyemi has spent his career as a financial adviser concentrating on inheritance planning.

Ade’s clients come from a variety of backgrounds, and have a broad range of incomes and occupations.

In addition to being published in financial periodicals, he has also recorded financial advice and inheritance planning videos and web cases for financial advice groups.

Glossary

Absolutely

Not for the benefit of any other person and free of any condition.

Administrator

The person who winds up the estate of a person who has not made a will, or who does not appoint anyone who is able and willing.

Attestation Clause

The clause in a will confirming the will was signed by the testator in the presence of two witnesses.

Bequest

A gift of personal property – distinct from real property – as directed in a will.

Class of Beneficiary

A group of beneficiaries such as ‘my children’, ‘my grandchildren’ or ‘my bandmates’.

Codicil

A written and witnessed document that supplements, revokes or alters certain provisions of a will.

Common-law Marriage

In inheritance law, there’s no such thing as common-law marriage, nor common-law wife nor common-law husband.

Contemplation of Marriage

Writing a will in such a way that it would not be revoked by a subsequent marriage.

Devise

A gift of real property (as opposed to personal property) as made in a will. The recipient of a devise is a devisee.

Disclaim

To refuse or renounce a right, claim or property.

En Ventre Sa Mere

A child yet unborn.

Estate

The aggregate of all the property to which a person is beneficially entitled.

Executor

A person appointed by a will to administer a testator’s estate.

Fiscal Drag

An increase in the amount of tax collected, even though there’s been no change in the applicable tax rate.

Guardian

A person given the powers and responsibilities of a parent in respect to a minor child.

Grant of Probate

A certificate proving that the executors of a will are entitled to deal with the estate.

Heir

The informal description of a person who inherits part or all of an estate.

Heir Hunters

A TV show. The Ministry of Justice publishes a daily list of unclaimed estates. Cameras follow probate genealogists round the land seeking people who might have a claim to these estates. Unclaimed estates revert to the Crown.

Inheritance Tax (IHT)

A tax on transfers of capital made on or after 18th March 1986. Most transfers that attract, or could potentially attract, inheritance tax typically occur on death.

In Terrorem Clause

‘Intimidating’ or ‘in fright or terror’. An in terrorem clause threatens the forfeiture of a beneficiary’s bequest or interest under a will, should that beneficiary contest the validity of the will.

Inter Vivos Trust

A trust established by a person in that person’s lifetime.

Intestate

Dying without a valid will. The condition of dying without a valid will is described as intestacy.

Issue

The descendants of a person: children, grandchildren, great-grandchildren and so on.

Joint Tenant

A form of ownership in which two or more people jointly own property, and, on the death of one of them, the deceased’s share passes to the surviving joint tenant(s).

Last Will and Testament

A document by which a person (the testator) appoints executors to administer his/her estate after his/her death, and directs the manner in which it is to be distributed to the beneficiaries he/she specifies. To be valid, the will must comply with the formal requirements of the Wills Act 1837, the testator must have testamentary capacity when the will is made and he/she must make it of his/her own free wishes without undue influence.

Legacy

A gift of personal property effected by a will.

Letters of Administration

Authority granted by the court to a specified person to act in the administration of a deceased person’s estate when the deceased dies without leaving a valid will.

Life Interest

The right to enjoy the benefit of property for life. On the death of the person who enjoyed the life interest, the property will be disposed of as directed in the testator’s will.

Life Tenant

The person who benefits from a life interest.

Joint Will

A single will that two or more people make to cover all their estates.

Official Solicitor

The Official Solicitor acts for people who, because of youth or lack of mental capacity, cannot properly manage their own affairs; are unable to represent themselves; and no other suitable person or agency is able or willing to act.

Mutual Will

Wills in which two or more people write individual wills to cover their estates. Each will contains a clause to the effect that it may not be changed without the consent of the other parties.

Parental Responsibility

The legal rights and responsibilities of being a parent. The most important elements of parental responsibility are to provide a home for the child, and to protect and maintain the child.

Pecuniary Legacy

A specific gift of money given to a specified beneficiary in a will.

Per Stirpes

‘By the root’, meaning according to descent. A method of distribution of estate property where if a beneficiary had died before the testator, the beneficiary’s share is divided equally among his children.

Power of Appointment

The right to nominate persons to receive the benefit of a trust after your death. Usually, the person given the power is the present life tenant of the trust.

Primogeniture

An Anglo-Saxon concept of law whereby the eldest son has the primary right to succeed to his ancestor’s estate.

Recital

The statement at the end of a will that explains why and how a will has been so written.

Residuary Estate

Or residue. The property comprising the deceased person’s estate after payment of his/her debts, funeral expenses, costs of administration of the estate, and specific bequests and devises.

Survivor

Any relative mentioned in the will who is still alive when the testator dies.

Tenant-in-common

An alternative to joint tenancy for two or more persons to own the same property. Each person has a separate share, which forms part of his or her estate on death and does not automatically pass to the surviving tenant(s) in common, but will pass either under the will or on intestacy.

Terminal Illness Benefit

Or Terminal Illness Cover. This pays out a lump sum or monthly benefit (depending on the plan chosen) if the life assured becomes terminally ill and is eligible to claim.

Testamentary Capacity

The ability to make a legally valid will.

Testamentary Trust

A trust established under a will or ‘testament’.

Testate

Dying with a valid will.

Testator

A man who signs a valid will. In these enlightened times, this is used to mean a person who signs a valid will.

Testatrix

A woman who signs a valid will.

Trust

An arrangement whereby property is transferred to trustees to be held for the benefit of another person, or institutions.

Trustee

A person named in a trust or under a will to administer a trust.

Viatical Settlement

The sale of a policy owner’s existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.

References

Any reader who encounters a broken link in trying to review any source document listed in these notes may email me at [email protected]. I shall do my best to get you a working link or a copy of the document.

Billing Wade, L., n.d., lisa’s page. [Online] Just Giving. Available from: https://www.justgiving.com/fundraising/lisa-billing1 [Accessed 10 April 2017].

British Broadcasting Corporation, 2012. Fiancée of killed soldier Pte Daniel Wade wins paternity. [online] British Broadcasting Corporation. Available at: http://www.bbc.co.uk/news/uk-england-merseyside-20507654 [Accessed 10 April 2017].

Hunter, M., 2016. Royle Family star Caroline Aherne left an estate worth £500,000 to her mother after dying of cancer without a will. [online] Daily Mail, 5 December 2016. Available from: [+ http://www.dailymail.co.uk/news/article-4001244/Royle-Family-star-Caroline-Aherne-left-estate-worth-500-000-mother-dying-cancer-without-will.html#ixzz4dq6pyyZZ+] [Accessed 10 April 2017].

Inheritance (Provision for Family and Dependants) Act 1975. London: HMSO.

Mendick, R., 2015. A battle of wills: mothers of dead soldiers taken to court. [online] The Telegraph, 10 October 2015. Available from: [+ http://www.telegraph.co.uk/news/uknews/law-and-order/11924371/A-battle-of-willsmothers-of-dead-soldiers-taken-to-courtlisa-billing-sharon-leverett.html+] [Accessed 10 April 2017].

Ministry of Defence, 2010. Trooper James Anthony Leverett killed in Afghanistan. [online] Gov.UK. Available from: [+ https://www.gov.uk/government/fatalities/trooper-james-anthony-leverett-killed-in-afghanistan+] [Accessed 10 April 2017].

Ministry of Defence, 2012. Sergeant Nigel Coupe, Corporal Jake Hartley, Private Anthony Frampton, Private Christopher Kershaw, Private Daniel Wade and Private Daniel Wilford killed in Afghanistan. [online] Gov.UK. Available from: [+ https://www.gov.uk/government/fatalities/sergeant-nigel-coupe-corporal-jake-hartley-private-anthony-frampton-private-christopher-kershaw-private-daniel-wade-and-private-daniel-wilford-killed-in-afghanistan+] [Accessed 10 April 2017].

The Gazette, 2015. Bankruptcy Orders BILLING, LISA. [Online] The Gazette. Available from: https://www.thegazette.co.uk/notice/2449415 [Accessed 10 April 2017].

The Holy Bible: New International Version, 1979. London: Hodder & Stoughton.

The Star, 2013. South Yorkshire soldier’s inheritance row is settled out of court. [Online] The Star, 12 April 2013. Available from: [+ http://www.thestar.co.uk/news/south-yorkshire-soldier-s-inheritance-row-is-settled-out-of-court-1-5578881+] [Accessed 10 April 2017].

Tolstoy, L., 2003. Anna Karenina. London, UK: Penguin Classics.

Shakespeare, W., 2000. Henry V. Ware, UK: Wordsworth Editions.

Shakespeare, W., 2008. Twelfth Night. Oxford, UK: Oxford University Press.

####

I thank you for reading my book. I trust you found it enjoyable and informative. Please take a moment to leave me a review on Amazon.

I thank you in anticipation

Best wishes

Ade

You may contact me at [email protected]


Maximum Inheritance:The easy way to write the will that’s perfect for you

Written by an estate planner of thirty years’ experience, this is a study of real cases both from personal experience and cases of everyday folk and celebrities. This is no mere 'how to’ guide rather it is an analysis of three decades of helping families like yours and mine preserve and maximise their inheritance. It is the study of 7,500 client files, 400 interviews and 500 court cases. Learn from celebrities like Peter Sellers, Caroline Ahern, Rik Mayal and Diana, Princess of Wales. This work shows how to eliminate inheritance tax at the stroke of a pen. Teaches how to avoid common and not so common mistakes in planning one’s estate, and punctures some false myths. Did you know for example that, although the concept of common-law marriage exists, it is nothing to do with co-habitation - therefore having lived with someone for 2 years or five years or indeed any length of time would not grant any inheritance rights or privileges that a married person would enjoy. However you came about your assets, irrespective of the value of your possessions, your wealth might be grand or modest – in the final analysis, do you care, when the last of your days has passed, who inherits your assets? Do you care that your estate doesn’t vanish like steam from a tea kettle? This book is for you if the answer to the question is ‘yes’.

  • ISBN: 9781370799763
  • Author: Ade Oduyemi
  • Published: 2017-04-13 19:50:15
  • Words: 28125
Maximum Inheritance:The easy way to write the will that’s perfect for you Maximum Inheritance:The easy way to write the will that’s perfect for you