Clients are now more than ever eager to ensure that their affairs are in order from an estate planning perspective. The following aspects should always be considered when putting in place estate planning documents (including wills, letter of wishes and nomination letters) that work comprehensively as well as tax efficiently:
• What is the domicile status of the testator?
This would be relevant to determine the law applicable to the succession as well as the possible inheritance tax implications on death.
• Where is the testator resident? What is his nationality?
This would be relevant to formalities requirements for a valid will as well as for establishing what law may apply to an individual’s succession (by way of a specific election).
• Where are the assets located?
Where there are foreign assets it is important to establish whether the will, will be recognised as formally and substantially valid to deal with these assets in the jurisdiction in question in line with the testator’s wishes. Consideration should be given to the application of foreign law regimes such as continental style forced heirship rules or sharia law and whether anything can be done to override these restrictions.
• Are there jointly held assets?
In the UK, most jointly held assets will automatically pass to the survivor. However, do not assume that foreign assets would pass to the joint owner by survivorship in the same way, as different rules may apply in the country in question.
• Is the testator married?
Is there a foreign matrimonial property regime I need to consider? This would be relevant to determine what assets pass under the will. Certain assets (or shares over certain assets) may in fact already belong beneficially to the surviving spouse despite being registered in the name of the deceased spouse.
• How do you want your spouse to benefit?
Most people will want assets to pass directly to their spouse. However, some (especially when it is a second marriage) prefer there to be some form of trust for their spouse rather than an outright gift).
• Are there minor children?
Guardianship provisions are essential to protect your minor children in the event of a premature and sudden death of both parents.
• What age would you like your children to benefit under the will?
Although the default age is 18, many people prefer to provide that their children will not take any assets outright until later, say age 25 for example.
• Who should be the executors/trustees of your will?
The executors are the individuals responsible for administering your estate and putting your will into effect, whilst the trustees (normally the same people as the executors) then administer any ongoing trusts. Often a surviving spouse will be an executor alongside one other family member or friend, or, sometimes a professional.
• Do you want to make any provision for charity?
A number of people will want to make provision for charity in their will and this can have tax advantages as well. This will range from either a specific legacy of cash or a share of the residuary estate.
• Legacies and personal belongings
Do you want to include any legacies or either cash or personal belonging to any family members or friends?
• Burial wishes
Often an individual will want to provide whether they should be buried or cremated and whether they have any funeral wishes in their will.
• Are there any pensions?
It is important to ensure that nomination forms for your pensions are completed as normally pensions do not pass under your will.
• Are there any insurance policies of which the testator is the policyholder?
UK insurance policies will normally pay the estate in the event of death unless they have been assigned to a trust in the policyholder’s lifetime. Foreign insurance policies would, by contrast, pay beneficiaries in accordance with the policyholder’s beneficiary nomination forms. So it is important to understand the type of policy and what planning can be put in place in this respect.
Mara Monte | Senior Associate | Private Client and Tax | London
Charlie Tee | Partner | Private Client and Tax | London