Wills & Estate Planning Cavendish Publishing Limited London • Sydney • Portland, Oregon This book is supported by a Companion Website, created to keep titles in the Pocket Lawyer series up to date and to provide enhanced resources for readers Key features include: ♦ forms and letters, in a ready-to-use Word format Access all the material you need at the click of a button ♦ updates on key developments Your book won’t become out of date ♦ links to useful websites No more fruitless internet searches www.cavendishpublishing.com/pocketlawyer Wills & Estate Planning Mark Fairweather & Rosy Border Cavendish Publishing Limited London • Sydney • Portland, Oregon Second edition first published in Great Britain 2004 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX, United Kingdom Telephone: +44 (0)20 7278 8000 Facsimile: +44 (0)20 7278 8080 Email: info@cavendishpublishing.com Website: www.cavendishpublishing.com Published in the United States by Cavendish Publishing c/o International Specialized Book Services, 5824 NE Hassalo Street, Portland, Oregon 97213–3644, USA Published in Australia by Cavendish Publishing (Australia) Pty Ltd 45 Beach Street, Coogee, NSW 2034, Australia Email: info@cavendishpublishing.com.au Website: www.cavendishpublishing.com.au © Fairweather, Mark and Border, Rosy 2004 The first edition of this title was originally published by The Stationery Office All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, without the prior permission in writing of Cavendish Publishing Limited, or as expressly permitted by law, or under the terms agreed with the appropriate reprographics rights organisation Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Cavendish Publishing Limited, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Fairweather, Mark Wills & Estate Planning–2nd ed—(Pocket lawyer) Wills—Great Britain I Title II Border, Rosy 346.4’1’054 Library of Congress Cataloguing in Publication Data Data available ISBN 1-85941-859-7 10 Printed and bound in Great Britain Contents Welcome ix Buzzwords xiii Frequently asked questions xxi Will you, won’t you? What have you got to give? Choosing who will inherit—and what they will get 17 Spouses and partners 21 Gifts to children and grandchildren in your will 25 Special beneficiaries 31 Appointing executors and guardians 39 Inheritance Tax 1—all about Inheritance Tax 47 Inheritance Tax 2—common Inheritance Tax avoidance strategies 63 10 Common Inheritance Tax bloopers 75 11 Life insurance 85 12 Trusts 89 13 Funeral arrangements CONTENTS 105 v 14 Medical use of your body after death 115 15 Have you got it all together? 129 16 Odds and ends 139 17 Signing, witnessing and safe keeping 151 18 Sample wills 155 Useful contacts 189 Index 197 vi WILLS & ESTATE PLANNING Disclaimer This book puts you in control This is an excellent thing, but it also makes you responsible for using it properly Few washing machine manufacturers will honour their guarantee if you don’t follow their ‘instructions for use’ In the same way, we are unable to accept liability for any loss arising from mistakes or misunderstandings on your part So take time to read this book carefully Although this book points you in the right direction, reading one small book will not make you an expert, and there are times when you may need to take advice from professionals This book is not a definitive statement of the law, although we believe it to be accurate as at April 2004 The authors and publisher cannot accept liability for any advice or material that becomes obsolete due to subsequent changes in the law after publication, although every effort will be made to show any changes in the law that take place after the publication date on the companion website About the authors Mark Fairweather is a practising solicitor and is one of the founding partners of the legal firm Fairweather Stephenson & Co He and Rosy Border have written 14 titles together, including five in Cavendish Publishing’s Pocket Lawyer series He has two children and lives in Suffolk Rosy Border, co-author of this title and series editor of the Pocket Lawyer series, has a first class honours degree in French and has worked in publishing, lecturing, journalism and the law A prolific author and adapter, she stopped counting after 150 titles Rosy and her husband, John Rabson, live in rural Suffolk and have a grown up family Rosy enjoys DIY, entertaining and retail therapy in French markets vii A cknowledgments A glance at ‘Useful contacts’ will show the many sources we dipped into while writing this book Thank you, everybody We would especially like to thank John Rabson, Chartered Engineer, for his IT support and refreshments Track changes! Tax rates and tax allowances change regularly Most changes are announced by the Chancellor of the Exchequer in the Spring Budget, and then apply for the coming tax year, starting on April The tax rates and allowances in this book apply to the tax year 2004/05 You can track subsequent changes on the Inland Revenue website www.inlandrevenue.gov.uk Any book on wills and estate planning is also vulnerable to changes in tax law and policy The pace of change is speeding up The Chancellor can now announce changes twice-yearly: the trailer is the Pre-Budget Report in December and the big feature is the Spring Budget The HM Treasury’s website, www.hm-treasury.gov.uk, provides the full script as well as useful press releases on the individual measures Future policy changes may therefore affect some of the tax-saving strategies in this book viii WILLS & ESTATE PLANNING Welcome Welcome to Pocket Lawyer Let’s face it, the law is a maze and you are likely to get lost unless you have a map This book is your map through the part of the maze that deals with making your will We put you in control This book empowers you This is a good thing, but being in control means responsibility as well as power, so please use this book properly Read it with care and don’t be afraid to make notes—we have left wide margins for you to just that Take your time—do not skip anything: m m everything is there for a purpose; if anything were unimportant, we would have left it out Think of yourself as a driver using a road map The map tells you the route, but it is up to you to drive carefully along it As with any legal matter, your own common sense will often tell you when you need expert help In any case, we will alert you to m m common traps for the unwary; situations when you are in danger of getting out of your depth and need professional advice Sometimes we pause to explain something: the origin of a word, perhaps, or why a particular piece of legislation was passed You not need to know these things to make use of this book, but we hope you find them interesting WELCOME ix chronological application 61 discretionary trusts 67–69, 182–85 Inheritance Tax avoidance 65, 67, 68–69, 182–85 will making use of 179–85 organ donation xxvi–xxvii, 115, 117–20, 146 deathbed donations 125 donor cards 119, 130, 189 registration of intention 119–20 Organ Donationline 189 overseas assets xxvii, xxviii, 14 parental responsibility xviii, xxii guardians 43, 45 partners meaning of partner xxv same-sex xxii, xxiv–xxv, 15–16, 21, 55, 129–30 simultaneous deaths xxix pecuniary legacy xviii pensions xx, 15–16 nominated beneficiaries 129–30 per stirpes xviii perpetuities, rule against 28 personal representative xviii 204 PETs See potentially exempt transfers pets (animals) xxiv, xxvi post-death variation 70–71, 186 potentially exempt transfers xviii, 48, 49, 56–60, 65 Inheritance Tax payment 60–61, 77–78 power of attorney, enduring xiv, 126, 127–28 predecease, meaning xviii private residence relief 81–82 private sector tenancy 12–13 probate xviii protective trust 35 Public Guardianship Office xix, 127–28 real estate xix rented property 12–13 residential property council tenancy 13 family home 10–12, 69, 72–73, 81–82, 93–95, 192 housing association tenancy 13 interest in possession 69, 82, 93–95 private sector tenancy 12–13 rented 12–13 residuary xix residue xix revoke xix rule against accumulation 28 WILLS & ESTATE PLANNING rule against perpetuities 28 same-sex partners xxii, xxiv–xxv, 21, 55 pensions 15–16, 129–30 scattering ashes 107 Section 21 Statement 19–20, 141 settlement 89–90 settlor 90 signature blind testator 145 method of signing 152 testator unable to sign 153 witnesses 151–52 simultaneous deaths xxix small gifts, outside will xxv societies as beneficiaries 37–38 Society of Financial Advisers (SOFA) 193 specific legacies xxv–xxvi, 141–43 spouse Inheritance Tax exemption 66 joint property 8, 10, 129, 139–40 meaning xix order of death state benefits 31–32 statutory, meaning xviii substitute executor xxiii, 42, 143 substitutional gifts 143 survive, meaning xix survivor xix survivorship 10, 139–40 notice disapplying rule 139–41 taxation INDEX age-contingent gifts 27 Inland Revenue 192 See also individual taxes, eg, Capital Gains Tax; Inheritance Tax testamentary capacity xix, xxix mental disabilities 34 testamentary expenses xix testator xix age blind 145 capacity xix, xxix, 34 timeshare xxviii Tissue Donation After Death Register 121–22, 190 Treasury xiv trustees xix children’s inheritance xxii choice of 32–34 discretionary trusts 32–34 duties 90–91 powers 91–92 standard of skill and care 90 trusts 89–102 accounts 91 accumulation and maintenance trusts 99–102 age contingent gifts 27, 89, 92 avoidance of personal gain 91 for bankrupts 102 bare trusts 92–93 conservation of assets 91 decision-making 91 discretionary See discretionary trusts distribution according to terms of trust 91 205 interest in possession trust 93–95 investments 90 for irresponsible person 102 meaning xix for person with mental disability 102 protective trust 35 unmarried partners xxv intestacy xxi no Inheritance Tax exemption 55 wedding gifts 58–59 wills 30-day clause 145 accidental destruction 154 additions xxiv alteration xxiv in anticipation of marriage 144 blind testator 145 206 deed of variation 70–71, 186 destruction 130, 154 electronic versions xxvi joint wills xxix language xxvi letter as xxi living will xvii, 125, 126–27 meaning xx mirror will xvii, xxx mutual will xvii, 18, 24, 148–49 reviewing 153 safe keeping 154,190 samples 155–85 signing See signature specific legacies 141–43 testator unable to read 153 testator unable to sign 153 witnesses xx, xxx, 151–52 witnesses xx, xxx, 151–52 woodlands 54 WILLS & ESTATE PLANNING Notes NOTES 207 Notes 208 NOTES Notes NOTES 209 Notes 210 NOTES Notes NOTES 211 Notes 212 NOTES Notes NOTES 213 Notes 214 NOTES Notes NOTES 215 Notes 216 NOTES Notes NOTES 217 The Pocket Lawyer series Corporate Insolvency Andrew McTear, Chris Williams, Frank Brumby & Rosy Border Debt Recovery Mark Fairweather & Rosy Border Divorce and Separation Rosy Border & Jane Moir Letting Your Property Rosy Border & Mark Fairweather Living Wills and Enduring Powers of Attorney Mark Fairweather & Rosy Border Personal Insolvency Andrew McTear, Chris Williams, Frank Brumby & Rosy Border Setting Up a Limited Company Mark Fairweather & Rosy Border Taking in a Lodger Rosy Border The Employer’s Handbook Bob Watt & Rosy Border Wills and Estate Planning Mark Fairweather & Rosy Border Your Consumer Rights Angela Clark & Rosy Border Rights at Work Bob Watt & Rosy Border To order any of the titles in the Pocket Lawyer series, contact Cavendish Publishing Limited The Glass House Wharton Street LondonWCIX 9PX email: info@cavendishpublishing.com web: www.cavendishpublishing.com Tel: 020 7278 8000 Fax: 020 7278 8080