Planning what will happen to your estate isn’t always simple – here’s some expert advice on what to do if your situation is complicated.

The main goal of estate planning will see that as much of your wealth as possible is passed onto the people you want to benefit from it after you die. One of the first steps is to write a Will – but for many people, it isn’t as simple as leaving everything to your partner or children. Here, Sarah Murphy, Chair of the Law Society’s Private Client Committee, answers some of the most common questions that lawyers encounter when things aren’t straightforward.

What if I can’t decide who gets what?

Being unsure who to pass your wealth onto needn’t necessarily stop you making a Will. If you’re feeling uncertain, you can build a discretionary trust into your Will – then what happens to your assets after you die will be decided by its trustees, who are appointed by you. If you have trustees you can rely on, and leave a letter of wishes, they can use this as guidance on how to distribute the funds. Your letter of wishes can be amended as many times as you like in your lifetime without you having to keep going back to your lawyer.

However, it’s important to understand the purpose of a letter of wishes – and that it is just that and not legally binding. The trustees can act according to their discretion, as well as taking your intentions into account – for example, by looking at the relationship you had with the beneficiaries, their current circumstances, the current tax position and so on.

What if the people I want to inherit my estate are children or too young to manage the money responsibly?

In this scenario, it’s common to set up a trust for the children or young people. The trustees would be guided by you as to how to distribute the funds on their behalf – for example, by paying for their maintenance and education. Then you can state that they will receive the full estate at a certain age – for example, 21 or 25 – depending on what you think is right for the individual. In the meantime, you can rely on the trustees to make sensible decisions on your behalf.

What if my beneficiaries are vulnerable in some way?

If the beneficiary is disabled or has a long-term condition and will need someone to look after them after you die, you can set up a discretionary trust or a vulnerable person’s trust for them. The latter can be very tax efficient, and you can make sure the money is invested in the right way so that the beneficiary is looked after for the rest of their life. You can also consider setting up a trust like this during your lifetime, rather than waiting until after your death.

Can you leave someone out of a Will?

Perhaps you’ve fallen out with a family member or one of your descendants has married someone you disapprove of. Everyone has complete freedom to do as they wish in their Will and can specifically write out anyone they like – but that doesn’t preclude people from making claims against estates for various reasons.

For example, they could argue that you actually intended to include them but you were badly advised or didn’t have full mental capacity at the time of making the Will. These cases are time-consuming and expensive for your estate to defend, so it’s important to take advice before excluding someone who might expect to inherit from you.

Often, these cases don’t succeed unless that person had a long-standing financial dependency on you, in which case it’s likely to end up in front of a judge.

The other aspect to bear in mind is that you have no control over what people do with their money once you’ve given it to them. For example, if I give you £100, you’re free to spend it as you wish. In the same way, you can’t leave money to people with a legally binding contingency on who they pass it onto or how they spend it.

What if the people I want to inherit from me die before I do?

I’ve always been surprised at the number of people – and not just spouses – who don’t die in the order you assume they will; for example, when a parent survives their children. But as we routinely live into our 90s or beyond, it’s not uncommon. You therefore need to ensure you make a provision in your Will for someone else to inherit if they die before you – for example, their own children – or else the gift will fail. It’s always worth thinking about this carefully and discussing various scenarios with your lawyer so you have a plan B.

What if I don’t have any descendants to leave my estate to?

You have complete testamentary freedom and can leave your wealth to whoever you want. In cases like this, charities are a popular option, and anything you leave to charity has the bonus of passing to it free of tax.

There’s also a tax benefit if you leave at least 10% of your estate to charity. It’s a complicated formula, but in principle, the rate of Inheritance Tax chargeable on your estate will drop from 40% to 36%.

Can you leave money to a pet?

You can’t actually pass your wealth onto an animal, but you can leave money to someone with the intention that they use it to look after your pet.

I acted for a lady a few years ago whose dog was the most important thing in her life. We structured her Will in such a way that someone had to commit to looking after her pet before they found out that it also came with £10,000 from her estate.

Alternatively, you can set up a trust where the trustees can decide how much money to give to the person who takes on the pet.

Get in touch

Estate planning, trusts and tax need careful consideration, and it’s important to ensure your will takes into account all of your financial planning. Get in touch with your financial adviser to discuss your specific requirements.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.

Will writing involves referral to a service that is separate and distinct to those offered by St. James’s Place. Wills and Trusts are not regulated by the Financial Conduct Authority.

SJP approved 06/03/2023

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