Q. My wife and I are in a comfortable enough financial situation. My wife is happily retired, although she does some part-time work to keep busy. I am hoping to retire in a year or two. We made some good investments, have some monies in shares, some in long-term savings accounts and bonds. We made wills a long time ago, confirming what accounts were to go to which children, what is to go to grandchildren. As I move towards retirement, our financial advisors are telling us to move funds around and potentially set up a trust to provide for some of our relatives. Do we need to go back to our solicitor if we make these kind of changes?
Dear Reader,
On occasion, wills will specify that the proceeds of a specific account or policy go to a specific person. If that account or policy no longer exists at the date of your death, the gift is deemed to have ‘lapsed’. The potential beneficiary would, in the absence of any other gift in the will, be left out.
This issue commonly occurs with regard to property. Say you made a will leaving your family home to your son but subsequently sold same. When your estate is being administered, your son obviously cannot be gifted property not owned by you prior to your death, and unless specifically provided for this lapsed gift could not be made up for.
For this reason, often solicitors will draft wills in a more general way to refer to “whatever family home I reside in at the date of my death” or “any savings accounts in my name”, thereby ensuring that such a gift would not lapse.
If your will is, or is going to be, out of date as outlined above, then you should immediately contact your solicitor in order to update matters. The rule of thumb is that a will should be reviewed every five years.
A trust can be useful where there is a minor or a beneficiary is under a disability that might render it difficult to manage their own affairs. In such a circumstance, a trust in your will might potentially avoid what is known as Discretionary Trust Tax. If the beneficiaries of the trust are not under such a disability, then the tax amounts to six per cent of the value of the trust when it is set up, and one per cent per annum thereafter.
Any major changes should be carefully considered by you, with input from your solicitor and accountant – and ensure that legal and tax and accountancy advice
