Wills, tax, trusts & probate

Should I appoint a trust corporation as an executor or trustee of my Will?
8 March, 2018

When we help clients to prepare their Wills, one of the most important things we discuss is the choice of executors and trustees.  Most people want friends or family members to carry out their wishes and to deal with their estate after their death.  They, after all, have intimate knowledge of the family and its arrangements but before making the decision, it is worth giving it a little more thought.

Being an executor and trustee is a serious responsibility, with personal responsibility.  It can be difficult to do everything that has to be done whilst keeping relationships on an even keel, at a time when emotions are likely to be running high and, later, when making decisions about managing any ongoing trust arrangements.  This is where a professional executor can work alongside family members, helping them to stay objective and taking any ‘flak’ if difficult decisions have to be made.  

Perhaps there are sensitivities about how the estate is being shared out between a second wife and the children of a previous marriage. 

There might be a nil rate band trust (NRBT) in the Will, setting aside a slice of the estate while the rest goes to the surviving spouse.  Children are often appointed as executors and trustees of their parents’ Wills but if they are beneficiaries under the NRBT, you might not want them to have a say over how the trust is used while the surviving spouse is still alive.  

Sometimes, a named professional person is appointed as co-executor or trustee alongside a family member, to help with administration of the estate or trust.  This is perfectly possible but can cause problems e.g. if the professional moves to another firm or cannot act because of illness or worse. 

We dealt with one such case, involving a substantial trust fund held across a wide range of assets.  The firm dealing with the administration did not have a trust corporation and so individual partners were appointed.   One of the partners decided to move to another law firm.  The family wanted the trust work to remain with the original firm, so another partner in that firm had to be appointed as trustee, and all the assets re-registered in the names of the new trustees.  This was a time consuming and expensive exercise.

In another case, the named partner was suddenly taken very ill and was unable to work for many months, so another trustee had to be appointed at short notice and, again, all the trust assets re-registered in the names of the new trustees.

This is where a trust corporation has the edge.  Instead of appointing an individual, your Will can appoint the trust corporation as an executor and trustee.  In our own trust corporation, Cripps Trust Corporation Limited (CTC), the directors are partners in Cripps’ Private Client team and CTC continues even though the  directors might retire and change. On a practical level, one of the directors of CTC is more likely to be available for making decisions or to sign documents than a single individual. The combined experience of the directors is invaluable if unusual or complex issues arise during the administration of the estate or, later, when dealing with the trust.

One additional advantage of trust corporations like CTC came to light recently, when the Court of Protection (CoP) said that solicitors’ trust corporations will need less compliance to be approved to act for individuals whose affairs are dealt with in the CoP.  This is because the directors will already be subject to the stringent regulations which apply to solicitors for the protection of the public.

If you would like to discuss trust corporations or learn more about appointing Cripps Trust Corporation Limited as a trustee or executor, please contact Hannah Baker on 01892 506 057 or at hannah.baker@cripps.co.uk .


Chancellor asks for review of the inheritance tax system
22 February, 2018

The Chancellor, Philip Hammond, has asked the Office of Tax Simplification (‘OTS’) to review the inheritance tax system, aiming to make the system ‘fit for purpose’ and to provide a ‘smooth’ experience for anyone interacting with it. The complexity of the current inheritance tax regime, with its web of exemptions and reliefs, makes it difficult to navigate without professional assistance. The phased introduction of the Residence Nil Rate Band (‘RNRB’) has only added to the complexity.  For more information on the RNRB, read our blog here

So what might this mean for the future of inheritance tax?

At this stage there is little certainty. The OTS tax director, Paul Morton, has confirmed that the review will look at the system from the users’ perspectives as well from a legislative viewpoint. The OTS will also consider how other countries approach the issue, to learn about the widest range of options available.  Stephen Herring, head of taxation at the Institute of Directors, highlighted that a review of inheritance tax would be best undertaken in conjunction with a review of capital gains tax as the two taxes often interact and overlap.

Initial reactions to the proposals were mixed with some concern that the real target is the removal of some of the existing inheritance tax reliefs. The Times reported that the review provides an opportunity to ‘crackdown’ on reliefs, making it harder for wealth to be passed down to the next generation. Others are more optimistic, including The Telegraph, who think that the review may result in a tax break or similar solution that will enable parents and grandparents to pass on large sums to future generations without incurring a hefty inheritance tax bill.

These conflicting predictions demonstrate the ambiguity at this stage. The Chancellor’s intentions are unclear.

The OTS published a document clarifying the scope of the review this month which can be found here. They plan to publish their report in the autumn of 2018.

We will keep an eye on how matters progress and keep you updated via this blog.

If you would like more information in relation to inheritance tax planning, Stephen Horscroft can be contacted on 01892 506 341 or at stephen.horscroft@cripps.co.uk.

Wills – review, revise, revisit
15 February, 2018

There’s no time for the ‘January Blues’ in the Advisory team at Cripps, as we have just concluded our busiest month of the financial year so far.

Whether it was the annual family ski trip that led to panic about updating Wills, the conversation over Christmas lunch that got people thinking about estate planning or New Year’s resolutions which encouraged people to get their affairs in order, there are good reasons to review Wills regularly such as…..  

Increase or diversification in assets

Where your estate has changed in value over the years, or you have acquired a more diverse range of assets, it may be worthwhile to consider your tax planning options.

You may for example have assets that meet the criteria for an inheritance tax relief such as agricultural property relief or business property relief. Or you may have assets that have significantly appreciated in value. In all such instances, you should take advice from a solicitor who can take you through your tax planning options.

Changes to your personal circumstances

Your Will reflects your wishes at the date it was written and your circumstances and wishes may have since changed. For example, you may already have provided financial assistance to some of the beneficiaries named in your Will by way of lifetime gift and may want to even things up or your chosen executors may no longer be suitable.

Your views may have also changed or you may have retired, experienced the breakdown of a relationship, married or become a parent since last writing your Will. All of these changes should prompt you to reconsider your Will.

Questions you may wish to ask yourself:

  • Does my existing Will provide for children born after the date of my Will?
  • Do I have children under 18 and if so have I appointed a guardian?
  • Do my executors have the time or skills required to administer my estate?
  • Have I married since writing my Will? If so, your Will will be revoked unless made in contemplation of that marriage.
  • Is my pension nomination up to date?

Changes to legislation

There have been a number of changes in legislation in recent years which may prompt you to revisit your Will. For example, if your Will contains a Nil Rate Band Discretionary Trust, the introduction of the transferable nil rate band and the Residence Nil Rate Band (RNRB) may mean that such trusts are no longer necessary and that your Wills are not as tax efficient as they could be.  For more information on the RNRB, read our blog here.

If you would like more information on any of the issues mentioned in this blog, or would like to discuss your existing Will or to make any changes please contact Anna Ridley on 01892 506151 or anna.ridley@cripps.co.uk.

Lasting Powers of Attorney and Enduring Powers of Attorney – Could you be due a refund of registration fees?
12 February, 2018

The Office of the Public Guardian’s ‘fee refund scheme’ has launched.

Individuals who registered a power of attorney in England or Wales between 1st April 2013 and 31st March 2017 are entitled to a refund as the registration fee was set too high for that period. The charge for registering a power of attorney dropped in March 2017 to £82 per document.

Powers of attorney are documents which allow someone (the ‘donor’) to nominate others (‘attorneys’) who can make decisions on their behalf.  Lasting Powers of Attorney (‘LPAs’) replaced their predecessor, Enduring Powers of Attorney (‘EPA’) in 2007.  It is possible to set up LPAs that cover property and financial affairs and/or health and welfare. Refunds apply to the registration of both LPAs and EPAs during the relevant period.

It is up to the donor, their attorney or the personal representatives (if the donor has died), to claim the refund. Only one claim needs to be made per donor, even if they registered more than one LPA or EPA.  The process should take around 10 minutes and can be done either online or by telephone (see below).  It may take up to 12 weeks for the claim to be processed and, if the claim is approved, the refund will be paid directly to the donor’s bank account.  If the claim is rejected you can appeal the decision via the Refunds Helpline by emailing poarefunds@justice.gsi.gov.uk or calling 0300 456 0300.

How much the donor will be refunded depends on the date the fee was paid (0.5% interest is added to the refund):

Fee paid between

Refund per power of attorney

April 2013 – September 2013


October 2013 – March 2014


April 2014 – March 2015


April 2015 – March 2016


April 2016 – March 2017


To claim online, visit https://claim-power-of-attorney-refund.service.gov.uk/start.  To claim by telephone dial 0300 456 0300 and choose option 6.  The claim must be made by telephone if either (a) the donor has died; (b) the donor has no UK bank account; or (c) you are a court appointed deputy.

If you would like more information about the refund scheme, are interested in setting up LPAs or would like to register an existing EPA then please contact Nicola Hillyer on 01892 506 014 or at nicola.hillyer@cripps.co.uk

Too good to be true?
1 February, 2018

Some unregulated commercial Will writers market ‘lifetime protection trusts’ as a solution to reduce care home fees and save inheritance tax (‘IHT’). The benefits are often overstated and you should exercise caution when considering these trust arrangements as they may not be suitable in your circumstances.  Francesca Sassoli answers some common questions in relation to these trusts.

What is a lifetime protection trust?

Trust arrangements are promoted under a number of different names including ‘wealth preservation trusts’.  The trust is set up to receive your family home during your lifetime leaving you with limited control of your main asset.

Giving your home away during your lifetime is rarely a good idea and will make it harder for you to access the capital when you need it. 

Will it save me IHT?

Not necessarily. The value of your property will only fall outside your estate for IHT purposes if you give up any benefit from the property and survive 7 years from the date you gave it to the trust.  Living in the property without paying a full market rent would count as a benefit.

These trust arrangements have been marketed to individuals whose estates are not subject to IHT.  The introduction of the new Residence Nil Rate Band in April 2017 increased the tax free allowances available to individuals.  By 2020, married couples who meet all the conditions of the new allowance will be able to pass £1 million of their combined assets, including their home, to their children or grandchildren tax free. 

Will it save me care home fees?

Probably not.  Depending on your circumstances, it is likely that the arrangement will be caught by the ‘deliberate deprivation’ rules.  The rules allow local authorities to clawback assets that a person has sold or given away with the intention of reducing their wealth before being assessed for entitlement to help with care fees.   There is no time limit for applying the rule.  The local authority simply has to demonstrate that it is more likely than not that the individual knew, at the time of setting up the trust, that they may need care in the future.

Is it simple to run?

Not always. Trustees should keep accounts and record their decisions. They must comply with HMRC reporting requirements.  Depending on the value of your property, the trust may be subject to an initial IHT charge when it is set up and an exit charge when property leaves the trust.  A review must be carried out on every 10 year anniversary of the trust’s creation and an IHT charge may arise then too. 

Does this mean all trusts are a bad idea?

Not at all.  There are various different types of trust that can be very useful if implemented correctly and in the right circumstances.  Trusts can be used to protect assets and beneficiaries, reduce IHT and provide flexibility for planning in the future. 

How can I save IHT and protect my assets from care home fees?

By seeking independent advice from a regulated professional.  A well drafted Will that is appropriate to your circumstances can mitigate the impact of IHT and care home fees. 

If you would like more information, Francesca can be contacted on 01892 506 354 or francesca.sassoli@cripps.co.uk.