The loss of a spouse / partner triggers many emotions. One that is overlooked quite a lot of the time is fear. A new sense of vulnerability which drives a search for security and protection. A sense that the future is going to be alright, even if it will never be the same.
Typically, not long after a bereavement, the surviving partner will recognise a need to update, or write a Will. Then that partner can at least have the sense that their loved ones are protected. Or can they?
It’s quite alarming scrolling through Facebook these days. You may have noticed that a lot of the sponsored ads coming up on your feed are for Contentious Probate services. Some don’t even bother to disguise what they’re up to in such legalistic terms, preferring to get straight to the point with ‘Lost a family member? Didn’t get what you deserve? You can contest the Will!’
Most people think that if they get a Will done that lists assets and to whom those assets go, all will be well. So why are these companies spending small fortunes pursuing people who aren’t happy with the contents of a Will?
It’s to do with who might have a legal claim on your estate. There are the obvious people and the not so obvious people. So, for example, a divorce being finalised is no grounds to prevent an ex-spouse claiming against your estate, even years later. Anyone can contest a Will, but if you want to succeed, you must prove that you could have expected provision and convince a judge that the omission of you, or lack of full provision was likely due to a factor other than what the deceased wished, so maybe the undue influence of a beneficiary or simple oversight.
Check your Will. If there are people out there personally connected to you through blood or marriage that you don’t want to inherit, are these people excluded? Is it clear that it is deliberate and not an oversight? If you want to leave unequal proportions to your children, is there a Letter of Wishes accompanying the Will stating the reasons? If your Will does not, the simple fact is that it may not be robust enough to resist contestation.
These Contentious Probate firms are not going away any time soon. Let’s face it, it’s the new P.P.I. My message to literally anyone I can get to listen is very, very simple; a cheap / free Will service could be the most expensive form of estate planning you could do! Even a lot of solicitor prepared Wills that I see aren’t really that good. Further, a really good, robust and contestation resistant Will needn’t cost the earth! My clients pay me £150 inc VAT for a single Will.
Contestation isn’t the only threat though. While a Will may be contestation secure, there are other ways in which it may leave your estate vulnerable.
Inheritance Tax. I had a client who had been married and wanted to leave her daughter her house in South East London. The Inheritance Tax threshold was £1,000,000 in her case. It is worth £1,200,000. If she died today, even with a good quality Will, her daughter would face a tax bill of £80,000!
Care Home Fees. The local authority can put a charge on your property for up to 100% of the value of the property to recoup care fees. Between now and October 2023, this could wipe out an estate, Will or no Will. After October 2023 there will be a cap of £86,000 if there are assets over £100,000, but that will not include accommodation and food. Realistically, by the time you reach your cap, you’ll probably have incurred £150,000 of chargeable debt. Some Wills can contain a Trust that will mitigate up to 50% of the property value, most won’t.
Probate Fees. Even if you have a Will, you need a Grant of Probate. Even with a cut price Probate Service, an average estate will be worse of by many thousands of pounds. Again, a Will offers no protection.
So, what does? How can you be absolutely sure that your loved ones receive what you want them to receive? There is a little-known mechanism: An Asset Protection Trust.
People think of Trusts and think that they’re for wealthy people. Yes, a lot of wealthy families use them. It’s why they stay wealthy! In fact, the present Duke of Westminster inherited a £9bn property empire and paid no Inheritance Tax for precisely this reason. Because of this, a lot of people might assume that a Trust would be out of their league, hugely expensive and not applicable to more modest assets. Not so!
Your property, investments and bonds can all be put into a Trust. You can be the sole beneficiary of that Trust in your lifetime. Your loved ones can replace you as the sole beneficiaries after your death and pay not a penny in tax, loose nothing to care costs and even entirely negate the need for Probate Fees. All for less than £2300.00.
Effective estate planning is about asking the right person the right questions. If you ask for a Will, a Will is what you will be offered. If you ask for a solution that best protects your family, it will probably be the last thing you are offered.
Dan Henley
Director
Oliver Lee Estate Planning
