Legal Services

Writing Wills and understanding Trusts

Separation, divorce and family problems

Making a Will gives you an element of control over what happens to your estate

Writing Wills and understanding Trusts

There are a lot of misconceptions about making a Will. People often assume that they are not old or rich enough to make one or that everything will go to their spouse anyway.

However, often the reality is very different and putting in place a properly drafted Will can give you peace of mind that your assets would pass as you would wish on death.

A Will can also safeguard inheritance for young or vulnerable beneficiaries by including a Trust.

It may also be appropriate to consider setting up a Trust during your lifetime to try and mitigate any Inheritance Tax liability on death or to benefit younger generations of the family (such as grandchildren).

We can discuss your individual situation and concerns and advise on preparing bespoke Wills and Trusts for you.

Wills

Each person’s circumstances are unique as you could be…

  • a single person who would prefer friends and charities to receive your assets on death as opposed to family members,
  • a young unmarried couple who have just bought their first property together,
  • spouses with young children, or
  • a couple who have met in later life but have adult children from previous relationships.

A Will must be drafted to reflect the wishes of a client which may involve striking a careful balance between benefitting different family members. This is not always an easy task.

The drafting process should also involve maximising the use of Inheritance Tax exemptions in so far as is possible.

What happens if you do not make a Will?

If you do not have a Will in place, the law in Scotland deals with how your estate would be distributed on death. This is known as dying “intestate”.

The law dates back to 1964 and makes no provision for cohabiting partners. Instead, they are forced to make a claim to the Courts for a discretionary award within six months of death.

The law also works on a hierarchy of division among family members and, depending on the value of the estate, the spouse may not inherit everything.

If you leave no children and a sizeable estate, part of it could end up passing to your parents or siblings.

Therefore, making a Will gives you some control of what would happen to your assets when you pass away.

Wills for different circumstances

Wills for business owners

It is even more important to have a Will if your affairs are not straightforward.

If you have your own business (or an interest in one as a sole trader, partner or shareholder of a limited company) you can provide in your Will what should happen to your business interest on death.

If you have an interest in a company, it is important to seek proper legal advice to ensure that the provisions in your Will do not conflict with the provisions of the company’s Articles of Association which deal with the death of a shareholder.

Who can inherit in your Will under Scottish law?

It should also be mentioned that, in Scotland, there are constraints on the freedom that you have on who can inherit on your death.

Notwithstanding the terms of your Will, your spouse and children will always have a claim on the “moveable” part of your estate (i.e. what you own on death excluding any land and buildings unless they are owned by a company or a partnership in which you have an interest) if they have been omitted from the Will or are unhappy with the provision that has been made for them.

This is known as their “legal rights” and is an important factor to consider in succession planning in Scotland.

Spouses or children cannot claim their legal rights and the legacy that has been left to them in the Will: they must make a choice to claim one or the other.

If you have any concerns about a legal rights claim being made on your death then you should take proper legal advice so that you understand the position and the options available to you.

Appointing guardians for young children

If you have young children you can appoint Guardians to look after them if something happens to you and they are under the age of 16.

A Will can also be used to hold a young person’s inheritance in Trust until they attain an age at which you would be more comfortable with them receiving the capital.

Without Trust provisions, children would inherit outright at the age of 16 so it is common to delay this until 21, 25 or 30.

Trusts can also be used in a Will to safeguard inheritance for a beneficiary who is perhaps suffering from a health issue (mental or physical) or a dependency on alcohol or drugs.

Making a Will if you have remarried

Finally, if you have married again but have children from a prior relationship you can use your Will as a way of carefully benefitting both your spouse and your offspring on your death.

A common approach is to ensure that your widow(er) can stay in your home for the remainder of his or her life but with the property ultimately passing to your children.

This family set-up can be complex so it is important to ensure that a properly drafted Will is put in place to regulate what will happen when you (or your spouse) passes away.

Contact Us

Wills can deal with a number of matters and the case studies and FAQs below cover some of the more common questions and scenarios that we have experienced in our work.

However, there is no “one size fits all” approach so we would strongly recommend that you contact us directly to discuss your own circumstances and concerns so that we can offer you the best advice on how to proceed.

Contact us

Trusts

Different types of Trusts

There are different types of Trust that can be set up for clients depending on their circumstances and what they wish to achieve. A person who sets up the Trust is known as the “Settlor” and he or she will appoint “Trustees” to hold certain assets for the benefit of others (known as the “Beneficiaries”).

The entitlement of the Beneficiaries to the assets in the Trust will vary depending on the type of Trust. Trusts can be set up in lifetime (known as “inter vivos” Trusts) or in a Will so that they take effect on death (known as “mortis causa” Trusts). Importantly, any assets held by a person as a Trustee are completely separate to anything that he or she may own personally. The main types of Trust are as follows:

Discretionary Trusts

With a Discretionary Trust, Beneficiaries do not have an absolute right to any part of the Trust assets. They simply have a “potential” right to benefit and it is up to the Trustees exercising their discretion (hence the name) as to which beneficiaries benefit and in what shares.

A separate Letter of Wishes prepared by the Settlor can give guidance to the Trustees, but this is not binding upon them.

A Discretionary Trust is useful where a beneficiary is perhaps vulnerable (through age, health issues or addiction) and it allows the Trustees to advance funds only when they feel it is appropriate to do so.

Because a Beneficiary does not have a right to any part of the Trust assets his or her interest in the Trust will not have an impact on any means-tested State Benefits which he or she may receive.

In relation to Inheritance Tax planning Discretionary Trusts can be a very useful tool. Up to £325,000 (being the current Inheritance Tax threshold known as the “Nil Rate Band”) can be placed in a Discretionary Trust without incurring any initial tax, as long as there were not any transfers into another Discretionary Trust within seven years of the transfer.

If the value of the Trust is below £325,000 on the ten-year anniversary of the Trust being set up or if the Trust is wound up before the end of this period, no Inheritance Tax will be payable.

Once the seven-year period has elapsed, the funds placed into the Trust would be disregarded and the Settlor will have their Nil Rate Band “reinstated” and he or she would be able to utilise this allowance in their estate, make further gifts or set up another Discretionary Trust.

Liferent Trusts

With a Liferent Trust, a Beneficiary is given the right to use and enjoy an asset for the remainder of his or her life.

Typically, this can be the rent-free use of a property or the right to receive income (whether that be rental income, interest from cash deposits or dividends from investments).

This Beneficiary will not own the asset but he or she does have a defined right to benefit from it.

When he or she dies (or if the Liferent Trust comes to an end in another way depending on the terms of the deed which set up the Trust) the asset will pass outright to other named Beneficiaries.

Often a Liferent Trust is used in a second marriage situation: the surviving spouse can stay in the property but ultimately it will pass outright to the deceased’s children from a previous relationship when that comes to an end.

Once a Trust is up and running, the treatment for the purposes Inheritance Tax, Income Tax and Capital Gains Tax varies depending on the type of Trust.

It is important to take proper advice regarding the appropriateness of the type of Trust considered and also the taxation implications before proceeding.

Case Studies for Wills & Trusts

View our case studies to find out more about how we help clients with Wills & Trusts.

Couple with first property

First joint property

Simon and Lyndsay have just purchased their first property together. They are not married and do not have any children but that might change in the future. Simon is concerned about what would happen to Lyndsay if he died. Read more >
Graham and Anne

Second marriage joint assets

Graham and Anne are married and own their property jointly. Both had children from their first marriages. They want to pass their wealth onto their own children but neither wishes the other to be forced to leave the house if one of them dies. Read more >
Couple with Young Children

Will for couple with small children

Patrick and Natalie have three young children. They would like all of their assets to be split equally among their three children. However, Natalie is really concerned about what would happen to the children if she and Patrick both died. Read more >

Frequently Asked Questions

    • If you own any assets (especially property) then having a Will can let you plan for what will happen to your estate on your death.

      If you are in a cohabiting relationship, have young children or have remarried then it is especially important that you set down your wishes formally.

    • Executors are appointed in a Will to ascertain the assets that a person held when he passed away, complete any necessary Confirmation formalities (being the Scottish version of Probate) and then ultimately distribute the estate as per the terms of the Will.

      It is an important and responsible role, so the individuals appointed should not be phased by this.

      However, often Executors will engage the help of a solicitor to help them deal with matters.

      Family members, friends or professional advisers can be appointed as Executors and an Executor can also be a beneficiary of the estate.

    • If you die without a Will, your spouse would be entitled to part of your estate (property interest, personal belongings and cash) but, if the values exceed the current thresholds, then part of your estate could pass to your children or to parents and siblings if you have no children.

      If you are unmarried then your partner will not inherit anything automatically and a court application would need to be made by the surviving partner to claim against the estate within six months of the date of death.

    • A Will can contain an appointment of a guardian to look after your children if something happens to you and one or more of your children are under the age of 16.

      It is important to consider the practicalities of such an appointment and sensible to provide for a substitute guardian in case the original appointee is unwilling or unable to act at the relevant time.

      The guardian’s legal appointment ends when a child reaches his 16th birthday and between the ages of 16 to 18 the guardian can only provide guidance to the child.

    • If you die without a Will (known as “dying intestate”) then legislation dating back to 1964 will dictate how your estate will be distributed on your death.

      As noted above, spouses will inherit a set share of your estate but then children and even remote family members could inherit depending on the circumstances and the size of the estate involved.

    • The cost of putting a Will in place depends on the complexity of your instructions but, as a general rule, the cost of administering an estate where there is no Will is higher than when there is one in place.

      Therefore, it makes financial sense in the long-run to have a formal Will in place.

    • This is a common concern, but an appropriate Will can be drafted if proper advice is sought.

      It is important to discuss all of the relevant issues with an expert who will ensure that the competing interests of members in a “blended family” are considered.

      There is no “one size fits all approach” here: everything will turn on the individual circumstances of the family involved.

    • It is important to ensure that you review your Will at periodic intervals (for example, every 3-5 years) or sooner if a major life event such as marriage, divorce or the birth of children takes place.

    • In Scotland children inherit outright at the age of 16 which is widely considered to be very young.

      Therefore, it is common in a Will to provide that a young beneficiary’s inheritance should be held in trust for him until he attains a specified age (to be chosen by the person putting in place the Will) such as 21, 25 or 30.

      This option of postponing the age of inheritance is not available where someone has passed away without leaving a Will.

    • In Scotland, you cannot completely disinherit your spouse or children. Even if they are excluded from the terms of your Will they can still make a claim on the “moveable” part of your estate (which excludes any interest in any land and buildings).

      This claim is known as “legal rights” and can be made regardless of the age of the claimant spouse or child or any period of estrangement between the deceased and the claimant.

      The size of the claim is dependent on whether or not you are survived by (a) a spouse and children or (b) a spouse or children. Specialist advice should be sought to ascertain exactly how legal rights will have an impact on your estate.

Who to contact

Sara Smith

Partner

Sara advises Private Clients on a variety of subjects including Wills, inheritance tax planning, Powers of Attorney, estate administration and the setting up of Trusts. Sara is also a qualified Solicitor in England and Wales.

Contact: sarasmith@urquharts.co.uk

Sharon Gordon

Associate

Sharon joined Urquharts as a trainee in 2011 and qualified as a solicitor in 2013.  As part of our Private Client team she advises on all aspects of Private Client law including Wills, Powers of Attorney and Executries, with a special interest in advising elderly clients and their families.

Contact: sharongordon@urquharts.co.uk

Trust in our expertise...

Urquharts Solicitors