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The Law Society - Conveyancing

03

Mar

2014

Keeping your Will under Review – Nil Rate Band Legacy Clauses and the Transferrable Allowance

Most clients would agree that their personal and family circumstances change significantly over a 5-10 year period, yet few actively review the provisions of their Wills on a recommended 5 year cycle. Regular reviews of your Will choices are recommended to avoid these becoming overtaken both by changes in personal circumstances and also in legal developments.

A prime and prevalent example is the need to consider the impact of the transferrable Nil Rate Band Allowance available to spouses and civil partners introduced by the 2007 legislation, as evidenced by the recent case of Loring v Woodland Trust [2013] EWHC 4-400Ch.  In this case,  a Will made in 2001 which gifted the value of “my unused nil rate band” to family, with the residue of the estate going to a charity, hadn’t been changed to reflect the new law and problems of interpretation ensued.  The Court was asked to rule on whether the wording of the old nil rate band clause should be construed to give the charity the benefit of the additional £325,000 of gift, or to give this to the family.

Interestingly the Court decided to approach the issue as a matter of construction to establish the intention of the Will maker when making the Will, and the family benefitted from the additional sum.  However, such cases turn on their particular merits and very particular wording, and a review of the Will against the 2007 changes to the Nil Rate Band Allowance would have resulted in a more up-to-date Will.  A more ‘modern’ Will with a clear structure of gifting would have no doubt resulted, and the family involved would have avoided wasting significant time and cost in fighting the interpretation of the Will.

This is simply one example of a more technical, legal issue which is often overlooked when a client decides not to review or update their Will.  Equally, your Will should reflect your up-to-date personal, family and financial circumstances:

  • Should those chosen to act as Executors remain in role?
  • Are the same Guardians still appropriate for your children?
  • Would you be happy for one of a couple selected as Guardians to care for your children on their own if their partner were to predecease you or divorce them prior to their appointment? 
  • Do you now have grandchildren or other family members whom you would wish to benefit? 
  • Does your Will reflect a gift to your new spouse or partner, yet omit children from that relationship, meaning that they would not benefit from their parent’s estate if you were to inherit first and then pass this on through your own Will?
  • Have you considered the need for an ultimate beneficiary should you and your immediate family die together?

We strongly recommend that all clients review their Wills every four to five years, as well as at any major life event – remembering that marriage and civil partnership nullify a former Will, for example.  We are happy to advise on all associated issues and to provide an estimate for an update or revision to your Will.  Please contact Rory Thorp at our Barnet office, and Lucy Thomas or Judith Bleetman at our Cockfosters office.

 

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