Wills, intestacy and trusts Flashcards
(13 cards)
A valid will must? x5
- made by a person who is 18 years old or over
- made voluntarily and without pressure from any other person
- made by a person who has the mental capacity
- handwritten, typed or printed
- signed and witnessed (2x witness over 18 of sound mind)
Unlike a mirror will, a mutual will does what?
means the survivor cannot revoke their own will if they have taken benefits from their partner’s will
Under intestacy, what people are not included?
Step children, divorced spouses, in-laws
Under intestacy, if children are 18 what happens?
Their assets are held in a trust
Under intestacy, if both spouse and children survive, how is the estate divided?
the spouse gets the personal chattels plus the first £322,000
the remaining half is split between 1. the spouse and 2. the children in equal shares (once 18)
Under intestacy, where one person who would be entitled under the laws of intestacy dies before the intestate person what happens?
Their children take their place
Under intestacy who inherits the estate if there is no one else entitles?
The Crown or Treasury
Any assets or investment bonds in a trust, how are they accounted for in IHT?
Only the growth is subject to IHT
How does an Interest in Possession Trust differ from an Absolute Trust?
The beneficiaries receive the income/asset with a stated contingency e.g. reaching an age or life event like marriage, as a gift during the settlor’s lifetime
the remaindermen benefit on the death of the life tenant
As a gift, it’s subject to IHT and any transfer to it
would be a chargeable lifetime transfer
How does an Immediate Post-death Interest Trust differ from an Interest in Possession Trust?
It’s gifted on death vs in the settlor’s lifetime.
Therefore 20% chargeable lifetime transfer charge does not apply
A Discretionary trust allows the trustees to?
to appoint beneficiaries from a specified category or categories set out by the settlor
to decide whether to pay income or capital to any of the beneficiaries, or not to pay any benefits, as they see fit
Allows the trustees to select the most appropriate beneficiaries from the list, including those not yet born, and to determine how they should benefit
Flexible vs Split Trusts?
Both life assurance trusts
Flexible - a form of discretionary trust
Split - used with a combined life and critical illness
policy (the latter can be paid while insured is still alive)
Married Women’s Property Act Trust is created when?
a person takes out a life policy on their own life for the specific benefit of their spouse (man or woman) or children and therefore any benefits are outside the policyholder’s estate for IHT tax purposes
