Carers' Guide to Wills and Trusts
When we're caught up in the emotions and practical 'day to day' elements of caring, we can experience a 'legal blindspot'.
What do we need to be putting in place today, to avoid difficulties in the future?
Here's our guide to why Wills and Trusts are so important to both us as carers and to our 'cared for'. From peace of mind and security to meeting care needs, beyond our own lives.
Blue Badge Facts
"We heroically try to meet all of the [daily caring] demands, even though we’re frightened, tired, lacking support and trying hard to make things feel normal for the person we love.
This creates a bit of a blindspot, because there’s so much to do today and tomorrow - but what about in a years time or two years time? " Mike, following his husband's diagnosis with dementia
Making sense of legal jargon
Before you start reading this, you may find it helpful to familiarise yourself with the legal meaning of a handful of worlds. This includes terms like executor, beneficiaries, estate and assets.
Everything you need to know about Wills and Trusts
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What is a Will?
Your will is a legal document setting out how and who your assets (money, property, land, other possessions) should pass on to, following your death.
Your will should appoint an executor, who is the person entitled to administer your estate. Your will can also appoint guardians for your young children.
If your intended beneficiaries are vulnerable or disabled, it is important to consider creating a trust in the will, to ensure assets can be appropriately managed.
You can choose whether to leave your assets to beneficiaries outright, or to a trust.
You may be able to reduce the amount of inheritance tax payable if you take advice in advance of your death and a will is prepared.
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“By the time I had the time to sit down and think about the inadequacies in his existing will, it was too late. As by this time my wonderful husband had lost his ability to sign his name or give sufficient, credible responses to questions to define his mental capacity, as being acceptable for the purposes of rewriting His Will.”
What is a Trust and how does it work?
A trust is the formal transfer of your assets, e.g. property or money, to trustees to hold for the benefit of others (the beneficiaries).
A trust is therefore useful where the intended beneficiaries are young, vulnerable, disabled, or they are in receipt of means-tested benefits.
Find out more about how a trust is useful in these circumstances.
Trusts can be created during your lifetime or in your will, as something created by your assets following your death.
The beneficiaries can be named or referred to as a ‘class’ or ‘group’, e.g. ‘my children and grandchildren’.
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Dying without a will
If you die without a will, there are intestacy rules which will dictate how your estate (money, property, land, other possessions) should be allocated.
This can create problems for unmarried partners or other dependants. For example there is no automatic right to inherit for a surviving partner who wasn't married or in a civil partnership with the deceased.
If you don't currently have a will, you can check your own intestacy situation here.
Why a Trust can be important for a vulnerable person
Leaving gifts outright to a vulnerable person (either in a will or through intestacy rules), can cause a number of problems.
Any means tested benefits and support packages funded by the local authorities may be cut, leading to the inheritance being used to pay for these services until it runs out.
A new application for benefits or support packages will then have to be made with no guarantee they will receive what they were previously entitled to.
Who is a Trust useful for?
There are various reasons for creating a trust, but they are particularly useful where the intended beneficiaries are young, vulnerable, disabled or in receipt of means-tested benefits.
The trustees are able to manage the trust assets on behalf or and for the benefit of the beneficiaries.
Trustees can make payments to, or purchases for, the beneficiaries - all in line with your wishes.
The taxation of trusts can be complicated and it is therefore recommended that professional advice is sought before creating a trust.
Having a trust in place, can mean that any benefits your beneficiaries receive, remain in place.
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How much do Wills and Trusts cost?
There can be a huge range in the costs of preparing a will, depending on your circumstances and wishes.
The cost of a straightforward will may be in the region of £500+VAT, whilst a will creating a trust may be £1,000+VAT or more.
As this is a high expense we are keen to understand if there are any grants, legal aid or funding to set this up. If you know of anything please let us know at info@mobiliseonline.co.uk
How do I start creating a will or trust for a vulnerable person?
When you’re putting a will and/or trust in place for a vulnerable person, it is often a more complex process. It’s recommended that you contact a solicitor who has experience in discretionary trusts.
If the person you care for has a learning disability, Mencap run free ‘Planning for the Future’ seminars.
Carers' Questions about Wills and Trusts
Elspeth Neilson, carer and solicitor at Osborn Law, answers some of our community’s questions.
Questions:
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I care for my husband, if I were to die first, how can we protect our assets from having to pay for all of his care? We'd like to leave some money to the children.
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Why not just buy an off the shelf will?
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How much is reasonable to pay for setting up wills?
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I'm the only surviving relative of my ‘cared for’, what can I do to ensure they will have the best possible care and advocacy when I die?
“I care for my husband, if I were to die first, how can we protect our assets from having to pay for all of his care? We'd like to leave some money to the children.”
A life interest trust (also known as an interest in possession trust) in a will is a good way to preserve your share of capital for your children, whilst enabling your husband to continue living in the family home or receiving income on investments for the rest of his life.
The capital passing into the trust cannot be used towards care fees, but any income earned on the trust assets should be paid to your husband and could then be used towards care fees.
A life interest trust for the benefit of your husband would also attract the spouse-exemption for inheritance tax purposes. If you would like your husband to be able to access the capital, then a disabled discretionary trust or vulnerable beneficiary trust may be appropriate.
Creating a discretionary trust in your will would also be an option, however the tax position should be carefully considered beforehand.
“Why not just buy an off the shelf will?”
Off the shelf wills are usually only appropriate when your circumstances are very straightforward. In the case of carers, you may wish to create a disabled discretionary trust or a vulnerable beneficiary trust in your will, in which case it would be prudent to have your will professionally drafted so that it complies with drafting and legislative requirements.
“How much is reasonable to pay for setting up wills?”
There can be a huge range in the costs of preparing a will, depending on your circumstances and wishes. The cost of a straightforward will may be in the region of £500+VAT whilst a will creating a trust may be £1,000+VAT or more.
“I'm the only surviving relative of my ‘cared for’, what can I do to ensure they will have the best possible care and advocacy when I die?”
This is a real concern for many carers and not one that is always easily addressed. If your ‘cared for’ has mental capacity then they should make lasting powers of attorney that include a replacement attorney who can assist them after your death. The replacement attorney could be a professional such as a solicitor, if there are no family members or friends who are able to act.
If your ‘cared for’ is not able to make lasting powers of attorney, then the Court of Protection can appoint you and another person/ professional as deputies.
Notify your GP and social worker of your situation so that appropriate support can be put in place for your ‘cared for’ after your death.
If you have a question that you would like to put to Elspeth, please let us know by emailing at info@mobiliseonline.co.uk.
Legal jargon buster
Executor
Your executors should be trustworthy and capable of administering your estate and following your wishes.
Assets
These are the items of value that you own. For example, your home, bank accounts, shares, and jewellery. This can include digital assets such as social media accounts. Jointly held assets may pass automatically to the co-owner.
Guardian
People or persons appointed to have legal responsibility for your children (under 18), in the event of your death. Provision should be made for a minor child’s inheritance to be held on trust.
Beneficiaries
These are the people (or person) who you leave your assets to. You may wish to leave everything to one person. However, thought must then be given to what happens to your estate should the main beneficiary die before you.
A trust may be the best option if your intended beneficiaries are young, vulnerable, disabled or in receipt of means-tested benefits.
Vulnerable person
Someone lacking mental or legal capacity to manage their inherited funds, or in receipt of means tested benefits, which may be impacted through inheritance.
Trustee(s)
Trusted people, appointed to manage the inherited estate on behalf of a vulnerable person/people, and in accordance with your wishes.
Estate
Sum total of your net worth.
Inheritance tax
The tax paid on your estate. There is typically no inheritance tax to pay if:
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the value of your estate is below the £325,000 threshold
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you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club
Monies put into a trust, are not included in your estate, when calculating inheritance tax.
