The best New Year Resolution - Protect the Family.

At the end of last year, in the run up to Christmas, a gentleman came to see me about making a Will. As with all clients, I spent time getting to know him, his circumstances and what assets he had accumulated over the years, which inevitably led to my asking him about his motivation for coming to see me.

He smiled and said with a chuckle, ‘It’s a Christmas Present.’ I was rather surprised at this answer and jovially enquired as to whether his wife and children might be somewhat deflated when discovering this gift on Christmas morning, but I was told ‘It isn’t for them, it’s for me.’

He explained that with all his family coming to stay at his house for Christmas, the constant media coverage on the economy and the increase of people succumbing to illness this winter, he had decided to give himself peace of mind by ensuring his family were looked after and cared for if he wasn’t around to do so himself.

After a time a lot of people have enjoyed with family and loved ones, it is easy to see the importance of making a Will for those we care for. It is a legal document which covers a lot more than just the allocating of an individual’s assets and estate after he/she has passed away.

A Lifetime Trust, for example, makes sure that an estate left in a Will cares for a remaining spouse during their life and is then passed on for the benefit of the next generation.

Take, for example, the husband who leaves his marital home to his wife, intending for her to pass it on to their children. If she eventually needs to take residency in a nursing home, the wife will be forced to sell the property in order to fund her care. It is only when she is down to a limited amount of personal funds (currently £ 22,250 .00) that Social Services will assist with the payments, leaving a fraction of the original estate for the children.

If the husband used a Lifetime Trust, his wife would have had rights to remain in the house and live on the interest accrued from the estate for the rest of her life, but the capital would have been protected left directly to the children. In this arrangement, Social Services could not claim the capital value of the house or whatever assets were placed in the trust and the children’s inheritance would have been preserved.

Last October, the Lifetime Trusts became tax efficient when the Government announced that when a surviving spouse died, both the personal allowance of the survivor and any unused proportion of the allowance from the first partner would be exempt from Inheritance Tax.