Protecting & Passing on Wealth

We have one of the largest and most experienced teams of will, estate and tax planning lawyers in Kent and the South East, which has been trusted by generations of families. We work with you to protect your assets and pass on your wealth to the next generation in the way that best suits your circumstances.

Our estate and tax planning lawyers have extensive experience of supporting high and ultra-high net worth individuals and families with complex asset structures and international elements. We can help you to plan for the future and minimise your tax liabilities, for example through the use of trusts and other appropriate structures.

Working with us, you will benefit from the support and collective experience of the whole firm. We offer a strong network of lawyers to provide a comprehensive service, including probate, trust management, tax compliance, family law, The Court of Protection and buying or selling a home.

It is only natural to wish to pass on your wealth to benefit your loved ones or create a lasting legacy by giving to charity. The truth is that you are never too young to think about what will happen to your family – especially your children – and your assets when you pass away. In fact, your will is arguably one of the most important documents you will ever sign.

Our team of will, estate and tax planning lawyers in the South East has been trusted to deliver peace of mind to generations of families. We pride ourselves on building long lasting relationships with our clients, developing a deep understanding of their individual needs, and tailoring our services accordingly.

What should you include in your will?

If you do not yet have a will in place, the key elements to consider include:

• Wishes for your funeral
• Appointing executors
• Appointing guardians to look after your minor children
• Making gifts of cash or personal possessions, as well as gifting to charity
• Providing for a spouse or partner – if you live with someone, but are not married or in a civil partnership, your partner will have no automatic rights to your property if you die. There is no such thing as a ‘common law’ husband or wife. Spouse and civil partners also benefit from spouse exemption for Inheritance Tax purposes but unmarried partners do not
• Providing for children, especially in terms of whether to pass assets to them outright or whether to hold assets in trust for them
• Determining all of your assets and liabilities, i.e. property, bank accounts, stocks and shares, pensions and life insurance, digital assets, mortgages and other debts
• International assets and how they will pass on your death, bearing in mind that taxation and succession rules in other countries can be very different from the rules in this country
• Business interests, shareholdings and agricultural assets, including the tax reliefs that can apply to these assets and how to maximise or safeguard those reliefs.

When should you update your will?

For those who already have a will in place, it is sensible to review it on a regular basis, and especially in light of any of the following:

• Marriage or civil partnership – getting married or entering into a civil partnership will revoke any will you have in place already, unless the will makes specific provision for the marriage
• Divorce
• Changes to executors
• Changes to beneficiaries – this is especially true if you make a will and subsequently have children
• Acquiring or selling property or assets – ideally advice should be sought before the sale or purchase goes ahead
• Inheriting assets.

What happens if you die without a will?

Many people do not realise that if they die without having made a will, strict intestacy rules apply, which may mean your assets do not pass on as you would like them to. These rules may also cause tax problems for those you leave behind.

What is the difference between making a will and wider estate planning?

An estate plan is a broader plan of action for your assets that may apply during your life as well as after your death.

For many people with relatively straightforward assets and circumstances, a simple will should suffice. However, if you have more complex circumstances such as international assets or business assets, or if you wish to take advice on tax planning or setting up trusts, then an estate plan is recommended.

What should be included in an estate plan?

Estate planning might include:

• The preparation of your will(s) including a review of your Inheritance Tax position, any associated trusts, rights of occupation, and letters of wishes
• Advice on joint property ownership or the right to reside in property
• Inheritance Tax mitigation advice, including allowances and exemptions and, where relevant, lifetime gift planning and the use of trusts or companies for asset protection and tax planning
• Business protection and succession planning, and Inheritance Tax advice on agricultural and business assets
• Advice on death-in-service benefits and life policies
• Advice on potential claims against your estate or your capacity to make a will
• Advice on domicile issues affecting the drafting of your will(s) and general advice on issues relating to foreign property
• Advice on charitable donations
• Advice on creating Lasting Powers of Attorney
• Advice on planning for potential care home fees.

How can I make sure my will isn’t challenged?

In England & Wales, we have something called “testamentary freedom”, which means it’s up to each individual how they decide to leave their assets when they die.  This is in contrast to some other countries or legal systems, which have forced heirship provisions that can apply to all or part of an estate.  But the press is full of stories about wills being challenged, or claims being made against estates.  That type of claim is definitely on the increase, and there are a number of grounds on which a will can be challenged.  So what can you do to make a challenge less likely?

The first thing is to be aware of the grounds on which a will can be challenged – some of those are practical, others more complicated.  A will can be challenged if it hasn’t been signed and witnessed properly.  That is why we send careful instructions on how to sign your will if you can’t come into the office.  It might be challenged if somebody feels that undue influence was exercised over the person making the will:  that could be by a family member, friend or a carer.  Another possible reason for challenge is the mental capacity of the person making the will:  they need to understand what they are doing, the extent and nature of their assets, the persons for whom they should consider making provision, and be able to make decisions and hold that information in their mind.  The ability to do so can be affected by illness, medication, recent bereavement or other factors.  If there is a risk of a challenge on those grounds, your solicitor might suggest an independent report on your capacity to make a will, to reduce the risk of a successful challenge.

Another basis for challenge is where somebody feels that the person making the will should have provided for them, but either hasn’t, or has made provision that the potential claimant feels is too low.  This could lead to a claim under the Inheritance (Provision for Family and Dependants) Act 1975.  Finally, once you have made a will you should review it regularly to ensure that it still represents your wishes accurately, and provides for the correct beneficiaries.

It isn’t possible to prevent a challenge to your will, but there are definitely steps you can take to reduce the risk of a successful challenge.  Our expert lawyers have experience in helping to prevent challenges, but also in managing a challenge  if it does arise.

Digital assets

The digital world is becoming increasingly dominant in modern life. It can cause distress as well as financial loss to families and loved ones if digital assets such as photos, music, videos, blogs, art, manuscripts, bank accounts and crypto currencies either cannot be accessed or are lost forever.

What is a digital asset?

Many people store photos, videos, music, e-books, blogs, movies, emails, conversations, social media, games, bank accounts, medical records, cryptocurrencies such as Bitcoin and even maintain their identity online. Collectively these are referred to as ‘digital assets’. These may be of a financial, sentimental, intellectual and social value to you, your family and friends.

Why are digital assets important?

It is important to plan for what happens to your digital assets when you die or if you lose mental capacity as they may have:-

• A financial value such as online bank accounts, online gaming accounts, crypto currencies, photograph sharing accounts, popular domain names and websites
• A sentimental value to your family and friends such as photos or emails that might be stored on a smart phone, on an online photo sharing website, in cloud storage or on social network account. You wouldn’t want your executors to have to deal with the sentimental assets after your death, but the good news is that you can take steps to deal with many of them during your lifetime
• An intellectual value such as domain names, website content, blogs, copyrights and trademarks, art and manuscripts. These are difficult to value. Specialist advice is needed
• A social value such as social media and gaming accounts.

How should I organise my digital legacy?

It would be advisable to make an inventory of all digital assets, where to find them with usernames. Make sure these are updated when they change and ensure that this list will pass to your personal representatives or attorney upon your death or incapacity. Take legal advice to ensure that what you decide is effective.  Make sure that you keep this list safe so it can’t be accessed or misused during your lifetime.  We have prepared a digital asset log that you can download and use as a guide to help with this process

Can I leave digital assets in my will?

If your will does not specifically refer to digital assets, they will pass in line with the residue of your estate.  “Residue” means everything you own when you die, after any legacies and bequests set out in your will have been made.  That can work where your estate passes to one person (such as a spouse), or where there are financial assets (such as a Bitcoin account) which can be encashed to split between your beneficiaries.  It doesn’t work so well looking at personal things such as photos stored online, or your Facebook account.

It is possible to leave gifts of particular digital assets in your will, or of your digital assets as a class of assets.  Your solicitor can discuss the options with you when preparing your will.

In addition, you should be aware that ownership of a device does not necessarily mean ownership of all the rights associated with the information stored on it. For example, a gift of an iPhone with an active iTunes account, does not include the iTunes account. The music on iTunes is only a personal licence to use the music according to Apple’s terms of business. This license is not transferrable and terminates on death.

Once seen as a tax exclusively on the super wealthy, the Inheritance Tax (IHT) net is creeping ever wider, partly due to rising property prices.

Currently, IHT is paid at 40% on the value of an estate over the Nil Rate Band (NRB), which since 2009 has been set at £325,000 for an individual and £650,000 for a couple. This amount can be reduced by certain gifts and transfers during lifetime. There is also a Residence Nil-Rate Band (RNRB), which means if you are leaving your main home to children or grandchildren and your estate is worth under £2 million, you (and your spouse) can benefit from an additional £175,000 allowance each.

These thresholds have been frozen until 2030, which means even more estates will potentially be impacted by IHT.

Our Inheritance Tax experts have extensive experience of working with individuals and families to help them significantly reduce their exposure to IHT. The key is to plan ahead.

How can I reduce Inheritance Tax (IHT)?

There are a number of key ways to reduce your IHT liability. These include:

• Making use of exemptions
• Gifting assets
• Charitable giving
• Setting up a trust or family investment company
• Ensuring your will is tax efficient
• Other measures such as nominating a trust to receive your death-in-service benefits from your employer, placing your life policy into trust or making use of deeds of variation in relation to inheritances.

What are the rules on gifting assets to reduce Inheritance Tax (IHT)?

An outright gift is one of the simplest ways to reduce an estate, for example, by giving an adult child or grandchild a deposit for a house, or helping to pay for school fees or university tuition fees. Such gifts are Potentially Exempt Transfers (known as PETs) and are taken into account for IHT purposes if you die within seven years of the gift. This is known as the ‘seven year rule’.

Some gifts are completely left out of the IHT calculations, and are not subject to the seven year rule. You can give away £3,000 a year and can roll forward one year’s allowance if it was not used the previous year. You can also give up to £250 to an unlimited number of people each year. It is also possible to make regular gifts out of surplus income, which are immediately exempt from IHT, though it is important to keep meticulous records of these.

Any money passing to a registered UK charity, whether through a lifetime gift or as an inheritance, is exempt from IHT. Broadly speaking, if your will leaves 10% of your estate to charity then a lower IHT rate of 36% (rather than the usual 40%) applies to the balance of your estate. There are complex rules around this so it is important to take specialist advice.

Charities can also benefit under a post death variation. Even if no gift to charity is made in the deceased’s will, the beneficiaries of the estate may posthumously be able to redirect some of their inheritance to charity in this way. The beneficiaries have a two year window starting with the date of death in which to carry out a variation. Any such variation to charity will benefit from charity exemption for IHT purposes.

Do you pay Inheritance Tax (IHT) on business or agricultural assets?

There are a range of significant reliefs from IHT for business assets, including Business Relief (BR) and Agricultural Relief (AR). The latter is specifically for agricultural businesses and land.

These reliefs can help save a substantial amount of IHT, and potentially avoid the need for the farm or business to be sold.

The rules around BR and AR are complex, so advice should be sought early.

Trusts and family investment companies can potentially be beneficial for Inheritance Tax planning, asset protection and wealth accumulation.

We have extensive experience in setting up and managing a wide range of trusts including:

• Discretionary trusts
• Life interest trusts
• Bare trusts
• Charitable trusts
• Insurance trusts
• Personal injury trusts
• Will trusts.

A Family Investment Company (FIC) is a bespoke private company, which can be used as a tax-efficient alternative to family trusts. A FIC is a flexible structure, allowing families to define how specific family members benefit through varying rights attaching to shares, or the number of shares in issue. The directors and shareholders of the FIC are normally family members. As with trusts, the structure of the FIC can enable parents/grandparents to retain control over assets, whilst accumulating wealth in a tax-efficient environment and facilitating future succession planning. It is preferable to set up FICs with cash (usually by loan), as the transfer of property or shares could create capital gains tax and stamp duty liabilities.

We also have an expert Trust & Tax Management team, who can assist with everything related to managing trusts.

How can Family Investment Companies (FICs) help reduce Inheritance Tax?

A FIC can help families manage their exposure to Inheritance Tax (IHT) in several ways. The key features and benefits of a FIC are as follows:

• When the FIC is formed, shares can be given to family members without incurring any immediate tax charges and, after seven years, the full value of what has been given away will pass out of the estate of the founders, so avoiding any IHT
• If the founders lend initial capital to the FIC, any growth in the value of investments held by the FIC will be outside the founders’ estates
• The founders can create distinct classes of shares, so enabling them to decide which of those share classes (including those retained by the founders) receive the dividend income declared by the company (and the capital if the company is ever wound up)
• If shareholders have a minority interest in the FIC, the value of their shareholding will be discounted on death for IHT purposes, taking into account the size of their holding and their inability to sell the shares or demand income from the company
• Unlike trusts, the FIC will not pay periodic charges to IHT which apply to trusts at up to 6% every ten years, or exit charges if and when capital is distributed although there are other tax charges that may apply
• A FIC may provide useful protection in the event of a shareholder’s divorce. The FIC can be structured so that shares can only be held by direct family members (excluding spouses).

What is the difference between a trust and a family investment company (FIC)?

Trusts and FICs are alternative structures for holding family wealth and both can be used for IHT and estate planning purposes. Usually, FICs are set up with cash rather than specific investments to avoid tax charges arising at the point the assets are transferred into the FIC, whereas trusts can potentially receive a much wider range of assets when they are set up. Both trusts and FICs are subject to their own tax regimes and careful thought needs to be given in terms of which would be the appropriate structure in any given set of circumstances.

How can trusts help to reduce Inheritance Tax (IHT)?

Placing assets in a trust can mean they are no longer considered part of your estate when it comes to IHT. If you create a trust by a variation within two years of an inheritance received after someone’s death, you can potentially still control the assets and receive an income from them without the assets forming part of your estate on your death. Trusts are also a good option if you want to give away money or assets to family members, but would still like to retain some control.

Using deeds of variation to redirect an inheritance is an under-used but very effective way to reduce future IHT if your estate is likely to be subject to IHT.

Nominating a trust to receive death-in-service benefits from an employer or placing life insurance policies into trust can avoid inflating a spouse, civil partner or partner’s estate for IHT purposes, but the funds remain fully available to them should they be needed.

What are the different types of trust?

There are a number of different types of trusts that can be created either during your lifetime or on your death, and the key types are as follows:

• Discretionary trusts are where the trustees hold the trust assets at their discretion, so that the beneficiaries named in the trust do not have any specific rights to either the capital or income. These sorts of trusts are often used for estate protection purposes as a result
• Life interest trusts are where one or more beneficiaries have a right to receive the income generated by the trust, but do not have any rights to the trust assets themselves
• Bare trusts are where the underlying beneficiaries are absolutely entitled to the assets held within the trust, and the trustees act as the legal owners of the assets, usually until the beneficiaries reach the age of 18, but they continue beyond then in some circumstances
• Charitable trusts are run exclusively for charitable purposes
• Pilot trusts are usually set up on a discretionary basis but with no assets in them at the outset so that they can later receive payments from life policies, death in-service benefits and other similar benefits, usually on death
• Personal injury trusts are designed to hold the damages that arise from personal injury claims, and the trustees will then manage and invest those funds on behalf of the beneficiary to whom the damages were awarded
• Vulnerable person’s trusts are created to hold assets for individuals who are treated as being “vulnerable” within the legal definition, and are designed to manage those assets for the vulnerable beneficiary
• A ‘will trust’ is a generic term relating to any trust that is created in a will when someone dies, and the type of trust or trusts involved can be one or more of the varieties referred to above.

All these trusts have tax and other considerations on creation and during the lifetime of the trust. Before creating any kind of trust, it is essential to take advice on the type of trust involved and the tax and other implications of the trust being created.

What are the benefits of setting up a trust?

Setting up a trust can have a variety of different benefits. Many trusts are created through wills and come into effect when the person who has made the will dies. These sorts of trusts are typically designed either to mitigate Inheritance Tax (IHT) (usually because the person owned business or agricultural assets to which certain inheritance tax reliefs apply) or to protect the deceased person’s estate for the benefit of their children or other nominated beneficiaries. A trust will keep the assets out of the estate of those beneficiaries, which can be useful as a way of guarding against a beneficiary divorcing, going bankrupt, experiencing other financial difficulties, exceeding asset limits for care funding purposes or for longer term IHT planning.

Lifetime trusts can also be set up to mitigate IHT, especially where life policy proceeds or death in-service benefits are added to those trusts. Alternatively, it is possible to create a trust and then to transfer assets into it to take advantage of the lifetime gifting rules. This usually means that the donor of the gift needs to survive seven years in order for the gift to fall out of account for IHT purposes. Creating a lifetime trust can give rise to a tax liability under some circumstances so it is a good idea to take advice first.

Can a trust protect assets in the event of divorce?

Many parents are concerned about the possibility of their children divorcing and whether this would allow their child’s former spouse to make a claim against assets inherited from the parents’ estates. If the parents create wills leaving their estate in trust on their deaths, this can help to protect their estates. The trust means that the inheritance does not belong to the child outright and is therefore much better protected in the event of a divorce. At some later point, the trust can be wound up and the assets distributed to the child when it is safe to do so.

We all hope to go on running our lives for as long as possible, but need to plan ahead for a time when we may need help in making decisions.

Our experienced and friendly lawyers have extensive experience in helping people to put Lasting Powers of Attorney in place.

What is a Lasting Power of Attorney?

A Lasting Power of Attorney (LPA) is a legal document in which you appoint one or more people (the attorneys) to act on your behalf, in circumstances where you no longer have capacity to make decisions yourself. You can decide who you appoint, what powers they have and specify any wishes you want followed.

Having an LPA in place can avoid the expense and the potential difficulties of a Court of Protection Deputyship application if you later need someone to act on your behalf.

What are the different types of Lasting Powers of Attorney?

There are two types of LPA:

• Property and financial affairs
• Health and welfare.

Under a property and financial affairs LPA, your attorneys can make decisions on your behalf such as buying and selling property, opening and closing bank accounts, dealing with your investments, managing your day to day finances, and claiming benefits and pensions. This type of LPA can be used at any time after registration, even if you still have capacity. In those circumstances, it should be used by your attorneys with your consent.

A health and welfare LPA can only be used if you have lost capacity to make health and welfare related decisions. It enables your attorneys to make decisions about where you should live, the type of care you receive and day-to-matters such as your daily routine, diet, visitors and the social activities which you participate in. If social services are involved in decisions about where you may live and your care in the future, then it can be particularly helpful to have an attorney who is authorised to make decisions of this type for you. Your attorney can also give consent to or refuse medical treatment on your behalf if you give them this specific authority. This could include making a decision as to whether or not you receive life-sustaining treatment in certain circumstances, giving you peace of mind that someone you trust and who is aware of your wishes is acting on your behalf. If you choose not to give your health and welfare attorney this particular authority then decisions about life-sustaining treatment would be made by the doctors and other professionals overseeing your care at the time, and any decision made would need to be assessed to be in your best interests and subject to any Advance Decision you may have made.

You can create either or both types of LPA. Ensuring an LPA is in place will mean that decisions can be made quickly and by someone you trust if you ever lose capacity.

How do you go about putting a Lasting Power of Attorney in place?

An LPA is an extremely important document and requires careful preparation and sound legal advice. Download our complete Lasting Powers of Attorney pack containing comprehensive information and the relevant forms.

Who can be appointed as an attorney?

You can appoint a friend, a relative or a solicitor as your attorney and they must be over 18. As with deputyships, our trust corporation, the Thomson Snell & Passmore Trust Corporation, can act as a professional attorney for property and financial affairs LPAs.

How many attorneys can I appoint?

You need to appoint at least one attorney and if you choose more than one, you will need to decide whether you want your attorneys always to act together (a joint appointment) or whether they can also act separately (a joint and several appointment). A joint and several appointment is the most flexible option. You can also choose to appoint a replacement attorney if your first choice is unable to act for any reason.

What are an attorneys’ duties?

Your attorney has formal legal duties and must follow the principles set out in the Mental Capacity Act 2005 and the Code of Practice. Your attorney must act in your best interests and take account of your wishes, feeling and beliefs.

You can apply conditions and restrictions on the use of the LPA and can also include guidance as to how you would expect your attorney to act.

Making a post death deed of variation

If you benefit from a deceased person’s estate under a will or intestacy, or as the surviving owner of a joint asset, you may wish to redirect the inheritance to others. There are considerable tax advantages if this type of gift is made by a qualifying deed of variation.

Can a will be changed after death?

Any beneficiary who inherits under someone’s will or the intestacy rules (if the deceased person dies without a will) can vary their inheritance. The document which deals with this is known as a deed of variation and must be signed within two years of the date of death in order to be valid. A variation can deal with some or all of the beneficiary’s inheritance (so they can vary all of it or perhaps vary some of the inheritance and keep the rest), and the inheritance which is varied can pass to other individuals outright, or into trust. If assets are varied into a trust, this can often be part of an exercise in wider estate planning as the trust assets are then outside of the estate of any individual person. This can be particularly useful for the beneficiary who carries out the variation, as they can still benefit from the trust in a way that keeps the trust assets out of their estate for inheritance tax purposes when that beneficiary dies.

What is a deed of variation?

A deed of variation is an under-used but very inheritance tax effective measure. It is used when a beneficiary inherits from an estate, but wishes to remove that inheritance from their own estate to avoid a future inheritance tax liability on their own death. If a deed of variation is used to create a trust, the beneficiary will potentially still be able to benefit from the inheritance going forward.

What are the advantages of a deed of variation?

A deed of variation which satisfies the relevant conditions will not trigger a tax liability for the original beneficiary. Instead, for all inheritance tax purposes (and in important capital gains tax respects) the gift effected by the deed will be treated as if made by the deceased if it contains the appropriate tax statement.

This enables tax exemptions to be claimed retrospectively, and can prevent assets from forming part of the beneficiary’s chargeable estate.

Deeds of variation also provide unique opportunities for trust creation without the usual limitations imposed by ‘reservation of benefit’ rules or ‘pre-owned assets’ income tax. So they should definitely be considered by those who have received an inheritance from which they may wish to benefit, but who also want to reduce their estate’s tax exposure.

Can deeds of variation be used on property?

Deeds of variation can be used for any assets which are inherited by a beneficiary. Very often, the assets in an estate are sold as part of the administration process but if the beneficiary wants to keep a specific asset such as a property, and transfer it into trust through a variation, then the beneficiary is free to structure the variation in this way.

Families today come in all shapes and sizes, redefining the traditional social structure of a husband, wife and 2.4 children.

We support all types of family and recognise that those who fall outside the ‘nuclear’ family set-up may have specific estate planning needs. Our expert lawyers can help a wide range families including:

• Solo parents
• Surrogacy arrangements
• Adoptive and foster parents
• Blended families
• Bereaved families
• Those who have chosen not to or have been unable to have children
• LGBTQIA+ families

We can advise on issues such as:

• Making a will and estate planning
• Minimising your exposure to inheritance tax
• Creating a trust or family investment company
• Creating lasting powers of attorney
• Making a post death deed of variation

What do solo parents need to think about when it comes to estate planning?

Solo parents (as with all parents) need to consider various matters when it comes to their estate planning.

It is important as a parent to consider your will.  Under the terms of your will, it is possible to appoint a guardian who would be responsible for looking after your child in the event you were to die before the child reaches the age of 18.  The guardian is often (but not always) a family member and would have day-to-day care for your child in the event that there was no one else who had parental responsibility.

For children who are born to parents who are not married or not in a civil partnership at birth, it is the parents’ names registered on the birth certificate which confers parental responsibility on them.  If, for instance, a child is born and the father is not registered on the birth certificate, the father does not have parental responsibility for the child (but could apply to the court to be granted this and the birth certificate amended).  If you are a solo parent and there is another parent named on the birth certificate, the surviving parent would have parental responsibility and should therefore take care of the child in the event of your death. It is important in that instance that you agree with the surviving parent who should be appointed to look after the child on their subsequent death, where possible.  Appointments of guardians need not necessarily be in your will but they do need to be in writing in order to be effective.

Another issue to consider is how to structure your estate for the benefit of your child on your death, such as whether you would like the child to receive your estate upon reaching a certain age (such as 18, 21 or 25) or whether it is appropriate to put in place some form of formal trust structure where your chosen trustees (usually your executors) have discretion as to when your child can benefit and how.  This also provides more flexibility for providing for your child during their minority and can allow (should you wish it to do so) payments to be made to the guardian to cover rehoming them to find a larger home in order to be able to care for your child.  Advice should be sought about this to ensure that any contribution to a property returns back to the trust created by your will once the child reaches the age of majority (or older), again at the trustees’ discretion.

The other thing to think about is incapacity as a solo parent such that you become unable to look after your finances or your child through illness or otherwise.  It is important that you consider putting in place a Lasting Power of Attorney (LPA) so that your finances can continue to be managed for your child’s benefit under the terms of the LPA (such as payment of school fees, school expenses, holidays etc).

In terms of parental responsibility, it is not possible to confer parental responsibility under an LPA for your child should you lose capacity, but there are steps that you can take to set out your wishes about care of the child which would be taken into account.

How should those involved in surrogacy arrangements approach estate planning?

Children who are born to surrogates are legally under current law treated as the child of the woman who gives birth to the child (and any husband or civil partner that she may have).  This means the intended parents have to go through the process of an adoption/parental order in order to be recognised as the parents of the child born through a surrogate.  For those going through a surrogacy arrangement, it is advisable to consider what would happen to the child if the surrogate died before the parental/adoption order is finalised. This could include the appointment of a specific guardian for the surrogate child as well as structuring the surrogate’s estate to mitigate the chances of the child bringing a claim against the surrogate’s estate for reasonable financial provision. For these purposes, a surrogate child is not treated as a child of the surrogate when determining who receives their estate.

Are there specific things adoptive and foster families need to think about when it comes to estate planning?

Once children are adopted, the adopted child is treated as a child of the adoptive parent and has the same rights as a child who is genetically related to the parent.  It also means that the adoptive parent has parental responsibility for the child and has to ensure that the child’s rights are looked after and the parent adheres to the responsibilities they have to the adopted child.

For adopting parents, the child would not be treated as theirs in until the adoption order is granted and therefore adopting parents may want to consider putting in place a temporary will, particularly if they are fostering the child pending the adoption order being finalised.  As they do not have parental responsibility prior to the issuing of the adoption order, adoptive parents cannot put in place guardianship provisions before the adoption order has been granted.

A child in foster care will not automatically become a “child of the family” no matter how long term the foster placement is.  As such, if foster parents wish to benefit a foster child in their will they need to do so expressly rather than relying on a definition of “children”.  This also means that a foster child will not be in the class of people who could automatically bring a claim against the estate of a foster parent for reasonable financial provision.

What should special guardians consider when it comes to estate planning?

Special guardians are appointed by the Court when it isn’t appropriate for a child to live with their birth parents but adoption is not right for them either.  Special guardians have the same rights as parents in terms of being responsible for making decisions for the child, such as medical treatment, schools etc.  On the granting of the order, parental responsibility is granted to the special guardians, but that parental responsibility is shared with the birth parents.  As such, following the order, some decisions about the child continue to rest with those with parental responsibility.

As special guardians have parental responsibility for children, they should consider the structure of their wills to ensure adequate provision is made for the care of that child on death.  They should also consider powers of attorney to ensure their attorneys can make financial provision for the child due to incapacity.

How can blended families best approach estate planning?

There are various points that those with blended families need to consider.

For the adults, they will of course want to ensure that their surviving spouse/civil partner/partner is catered for in the event of their death.  However, many people will want their assets to ultimately revert to their children, so long as their partner is taken care of during their lifetime.  There are various ways to provide for this, which include trust structures and, sometimes, relying on the partner giving effect to your wishes.

For unmarried couples, there are various tax consequences to consider as, unlike spouses/civil partners, there is no spouse exemption on whatever you leave to a non-married partner.  Care also needs to be taken to ensure that the partner is adequately provided for to avoid them having the possibility of bringing a successful claim against your estate after your death for reasonable financial provision.

What are the estate planning considerations for those families who have lost a child?

Sadly, there are people whose children die before them and they are then faced with difficult decisions about where they would leave their estate. There are a few ways that you may like to think about leaving the estate (or the share of your estate) that you would otherwise have left to the child that has died, such as:

• To your grandchild(ren) of the child that has died. This may include some form of trust structure to ensure that what you leave them is used wisely and managed in a way that it does not do more harm than good
• If your child died without leaving children, you may want to think about:
  • Leaving their share of your estate to your other children (if applicable)
  • Leaving their share of your estate to charity
  • Creating a charity in your lifetime (or a charitable trust in your Will) in memory of your child, so the money can be used for a purpose that is personal to you and your estate passing to the charity you have created on your death.

You may also need to review other estate planning documents that you have in place such as existing trusts, powers of attorney etc as a result of your child’s death.

Are there key estate planning considerations for those without children?

For those without children, there can often be competing things to think about.  Firstly, if you are married or cohabiting with someone, you may want to think about providing for them in the event of your death, but with your estate reverting to other beneficiaries thereafter if, for instance, you would not want your whole estate to go to your partner’s chosen beneficiaries.

There are also tax consequences to consider, given the current inheritance tax (IHT) legislation does not allow those who do not have children or linear descendants to be eligible for the additional tax free allowance known as the Residential Nil Rate Band (RNRB). The definition of “descendants” for this purpose is wider than the standard definition and, as well as including your lineal descendants (which automatically includes adopted descendants), it also includes spouses of your lineal descendants, step-children (if you are married to their parent), and children in respect of whom you are appointed legal guardian or special guardian when they are under the age of 18.  For those who do have children / descendants within this wider definition, their estates can potentially benefit from the RNRB although there are some additional conditions that also need to be satisfied.  This means that those who do not have children ultimately end up paying more IHT than those with such children, given they lose the additional allowance that is available.

In addition to thinking about your estate planning and your will, you also need to think about LPAs and who would assist you with managing your finances and caring for you in the event of incapacity in the future.  This may be family members or, for instance, you may choose to appoint a professional to be appointed to act for you in relation to your finances rather than giving this responsibility to a family member or friend.

How should LGBTQ+ families approach estate planning?

The LGBTQ+ community has fought hard over the years to be treated the same as heterosexual couples.  It is important for LGBTQ+ people to ensure their estate passes in accordance with their wishes on death.

There are similar issues to think about for the LGBTQ+ community as for those who are solo parents, namely thinking about their wills and LPAs.  For those where children are involved, the points about guardianship and incorporating potential trust structures are also relevant too.

If you  have family members who are transitioning (or have already transitioned), you may want to consider redrafting your wills to ensure they clearly reflect the new gender identity of the person that has transitioned.  Under the Gender Recognition Act 2004, an individual’s gender will not be legally recognised until they have obtained a gender recognition certificate.  This means it is advisable for those who have made wills after the Act came into effect (4 April 2005) to review their wills to ensure they give effect to the right instructions.  For instance, if you leave your estate to “your sons equally” and your son has obtained a gender recognition certificate, it will be necessary to check the date the will was made because if the will was made before 4 April 2005, the gender from birth is what is recognised for succession purposes i.e. son, not daughter.