Expert Wills & Trusts Solicitors Near You.
At MG Legal, we know that our clients like to know where their hard-earned money will end up, after they have died. That’s why we’ve seen a steady increase of the number of people making Wills over the last year. However, for some people, it’s not as simple as gifting money to a person after their death. In fact, they need to be able to let an individual have, or continue to have, benefit from an asset, whilst ultimately ensuring that it passes to a certain person.
This may seem like it’s getting a little complicated, however, once we’ve explained what the options could be in more detail, below, this should all start to make sense.
Immediate Post-Death Interest Trust Provisions
One way to ensure that assets are held for a certain person, whilst another person continues to be able to enjoy them, would be a trust in your Will. A common way of doing this is through an Immediate Post-Death Interest Trust (“IPDI”).
Frequently used by spouses, each spouse puts their respective share of their property into trust on their death. The property is generally passed to children or grandchildren, and the surviving spouse has the option to remain living in the property for their lifetime (or any other property that the spouses own and which constitutes their principal place of residence on the first death). In addition, the surviving spouse has a right to the income generated by the deceased spouse’s share of the capital.
Example – Mr and Mrs Smith
In practice, this could look as follows:-
Mr and Mrs Smith (“S”) own 123 Green Street as Tenants in Common in equal shares. It’s important that the property is owned in this way so that their respective shares of the property are capable of being left under their Wills. You can read more about how to own a property in our expert local Property Solicitors’ article, here.
S decide to discuss including IPDI provisions in their Wills. Our expert local solicitors for Wills explain the full provisions and the implications of these on Inheritance Tax to S, and they agree that they wish to proceed. Accordingly, their Wills are drafted, and the clients sign them. The clients go on to live a long, happy life and some years later, after several house moves, Mr S dies. Mrs S now needs to implement the trust, along with the other trustees, their children.
Essentially for Mrs S, nothing has really changed. She can continue to live in the property that is the subject of the trust for her lifetime. If she wants to sell up and move house, she can. Any replacement property would be purchased in the joint names of Mrs S (50% ownership) and Mrs S and the children (the trustees) (50% to be held on the terms of the Will of the first to die).
Mrs S decides to downsize, and is left with £50,000 net proceeds of sale when she buys her new house. Half of this belongs to Mrs S, as her 50% share, and the other £25,000 is held on Trust for Mrs S’s children, the beneficiaries under the IPDI provisions. This is held for Mrs S’s lifetime, and could usually be invested or held in savings. Any income made from this money, for example if it’s invested, would belong to Mrs S, and could be used to fund her lifestyle or, if the circumstances arose, to pay towards her care.
When Mrs S dies, her share of the property, or the net proceeds of sale, would be passed under the terms of her Will. Mr S’s share of the property would pass to his children, in line with the provisions of the IPDI clauses in his Will.
If Mrs S has to go into care during her lifetime, Mr S’s share of the property value would not be taken into account in any Local Authority Financial assessment.
As Mr and Mrs S made mirror Wills in this scenario, so the terms included in their Wills were reflective of one another, if Mrs S had died first, the effect of the clause would have been the same.
Benefits of an IPDI Trust
The benefits of including this type of trust provision in your Will, as well as the care benefits listed above, also mean that if Mrs S remarried, the share of the property held in trust would not be included in any divorce agreement, and would not pass to the new spouse. In addition, if Mrs S had a disagreement with her children and decided to change her Will to not include them, they would still be guaranteed the share of the property left to them by their father.
Things to consider
As you would when making a more-straightforward Will (i.e. one without any trust provisions), you would need to consider the Inheritance Tax implications of including IPDI provisions in your Wills. To discuss this further, contact MG Legal’s expert local solicitors for Wills to arrange a consultation. We will be able to discuss the benefit of the provisions, what these entail for the surviving spouse, and any Inheritance Tax implications.
Costs of including IPDI provisions in your Will
The costs of the provisions required can depend on what exact provisions will be included in your Wills. However, generally a married couple could expect to pay an additional £250.00 plus VAT on top of the costs of straight-forward mirror Wills. You can find out the cost of mirror Wills on our fixed-fee page, here.
In addition, when our clients instruct us to include IPDI provisions in their Wills, we need to be able to check how their property is owned. This usually costs £3.00 to obtain these documents from the Land Registry, unless the property is unregistered, in which case we will need sight of the original Deeds.
If the property is owned as Tenants in Common already, so each spouse owns a separate 50% share (or even, in some cases, different shares), there will be no additional work required.
However, if your property is currently owned as joint tenants (so on the death of one survivor, the property passes under the survivorship rule to the surviving owner), the tenancy will need to be severed to change it to the ownership set out above, Tenants in Common.
Our charges for changing the way a property is owned are usually in the region of £75.00 plus VAT, plus the £3.00 Land Registry fee to check ownership.
What happens if one person owns their property in their sole name?
Well, in this case, you are still able to include IPDI provisions in your Will, however, it will cover the whole property, as opposed to your share of the property. The costs are generally similar to the costs for a couple; however, you will not pay for two full priced Wills, only a single Will.
Instructing MG Legal to Draft Wills including IPDI Provisions
Our team are here to help, so if you wish to make a Will, we can discuss IPDI provisions with you during your initial appointment, without any additional costs. That way, you can decide whether you wish to proceed with a straight forward Will, or whether IPDI provisions would be the better option for you.
If you wish to simply discuss the effects of an IPDI Will before you proceed with making a Will, we can offer an initial consultation for a fixed fee of £75.00 plus VAT. We can provide you with a write up of the consultation for a small additional fee. This way, you can consider your options before discussing a Will in any detail.