Wills - what they can't do |
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Mary Skellam looks at what wills can't do
Firstly, and maybe most obviously, a Will only takes effect from the date a person dies. Until that date, a Will can have no power. A Will gives power to the executors from the moment a person dies.
However, because of Powers of Attorney and “Living Wills” there is a lot of confusion out there. For clarification, “Living Wills” are formally called Advance Decisions or Advance Directives. They are directions to medical professionals about when a person may or may not want to be resuscitated or what treatment they want to receive. Hence the term “Living Will”; they take effect whilst a person is still living. A Power of Attorney is a document allowing somebody else to take over decisions or signatures or transactions on your behalf, and ends on death.
The second thing that a Will cannot do is deal with somebody else’s property. A person may only give away what they own on the day they die. A clause giving away 10 Downing Street would not automatically be invalid; however, the gift would fail. The rest of the Will would take effect as planned.
So, if a person decides to leave their house to someone in their Will, and then decides they would rather make the transfer during their lifetime. Fine. Even if they forget to update the Will. The Will is not invalid just because it gives away something that is no longer owned. If they try and give away somebody else’s assets, it would not work.
Care should be taken where property and assets are owned jointly. There are two ways of owning things jointly: joint tenants and tenants in common. If a person owns something with someone as joint tenants, then on their death it would automatically pass to the survivor. It cannot be given away by Will.
Similarly, if a person benefits from assets in a trust, they might be taken into account for tax purposes but they do not belong to that person. They cannot be given away by Will.
Thirdly, Wills cannot deal with overseas land. If a person owns a house in Spain then they should consider making a Spanish Will. Other countries have different rules and people should not be mistaken that they can look after everything by one Will here. Wills in this country cannot direct what will happen to land owned abroad.
Wills cannot force people to take certain actions. A person may name an Executor, a Guardian or even direct that John move house. Nothing is binding. An Executor can renounce (as long as they haven’t “intermeddled”) and a Guardian can decide not to take on the responsibility. John can decide he rather likes where he lives at the moment.
One can make a conditional gift though: if John moves house, he inherits £1 million. He may then decide he doesn’t prefer his home after all.
Importantly, if a person leaves a gift to their pet in their Will, it is not going to work. Animals cannot own property. There are special ways to ensure a pet is properly looked after when their owner dies, but leaving a legacy of £100s is not the way.
Another misconception is that making a Will reduces the tax liability. This is not correct. Ensuring that correct advice is taken, specific to each individual’s circumstances and having a professional draw up a Will may reduce a tax bill. The Will in itself cannot; the plans undertaken and decisions made in the drafting may assist.
Connected to that is that some people think if they have a Will then they do not need a Grant of Probate. Wrong! Whether or not a Grant is needed depends on the value of the estate or assets within the estate that pass by the Will, as well as the individual requirements of the financial institutions involved. If a Bank asks for a Grant, then a Grant must be obtained (or the money is trapped). The Will cannot control that.
One final important point is that Wills are individual. A person cannot make a Will for another person. Quite regularly clients telephone me for an appointment to make Wills “for me and my wife” but it turns out wife is not coming to the appointment. There is no such thing as a ‘joint Will’. Each person must have their own. They may decide to have ‘mutual Wills’ which are dependent on each other and binding, (with their own problems) but they are not joint.
June 2012
Disclaimer:
Firstly, and maybe most obviously, a Will only takes effect from the date a person dies. Until that date, a Will can have no power. A Will gives power to the executors from the moment a person dies.
However, because of Powers of Attorney and “Living Wills” there is a lot of confusion out there. For clarification, “Living Wills” are formally called Advance Decisions or Advance Directives. They are directions to medical professionals about when a person may or may not want to be resuscitated or what treatment they want to receive. Hence the term “Living Will”; they take effect whilst a person is still living. A Power of Attorney is a document allowing somebody else to take over decisions or signatures or transactions on your behalf, and ends on death.
The second thing that a Will cannot do is deal with somebody else’s property. A person may only give away what they own on the day they die. A clause giving away 10 Downing Street would not automatically be invalid; however, the gift would fail. The rest of the Will would take effect as planned.
So, if a person decides to leave their house to someone in their Will, and then decides they would rather make the transfer during their lifetime. Fine. Even if they forget to update the Will. The Will is not invalid just because it gives away something that is no longer owned. If they try and give away somebody else’s assets, it would not work.
Care should be taken where property and assets are owned jointly. There are two ways of owning things jointly: joint tenants and tenants in common. If a person owns something with someone as joint tenants, then on their death it would automatically pass to the survivor. It cannot be given away by Will.
Similarly, if a person benefits from assets in a trust, they might be taken into account for tax purposes but they do not belong to that person. They cannot be given away by Will.
Thirdly, Wills cannot deal with overseas land. If a person owns a house in Spain then they should consider making a Spanish Will. Other countries have different rules and people should not be mistaken that they can look after everything by one Will here. Wills in this country cannot direct what will happen to land owned abroad.
Wills cannot force people to take certain actions. A person may name an Executor, a Guardian or even direct that John move house. Nothing is binding. An Executor can renounce (as long as they haven’t “intermeddled”) and a Guardian can decide not to take on the responsibility. John can decide he rather likes where he lives at the moment.
One can make a conditional gift though: if John moves house, he inherits £1 million. He may then decide he doesn’t prefer his home after all.
Importantly, if a person leaves a gift to their pet in their Will, it is not going to work. Animals cannot own property. There are special ways to ensure a pet is properly looked after when their owner dies, but leaving a legacy of £100s is not the way.
Another misconception is that making a Will reduces the tax liability. This is not correct. Ensuring that correct advice is taken, specific to each individual’s circumstances and having a professional draw up a Will may reduce a tax bill. The Will in itself cannot; the plans undertaken and decisions made in the drafting may assist.
Connected to that is that some people think if they have a Will then they do not need a Grant of Probate. Wrong! Whether or not a Grant is needed depends on the value of the estate or assets within the estate that pass by the Will, as well as the individual requirements of the financial institutions involved. If a Bank asks for a Grant, then a Grant must be obtained (or the money is trapped). The Will cannot control that.
One final important point is that Wills are individual. A person cannot make a Will for another person. Quite regularly clients telephone me for an appointment to make Wills “for me and my wife” but it turns out wife is not coming to the appointment. There is no such thing as a ‘joint Will’. Each person must have their own. They may decide to have ‘mutual Wills’ which are dependent on each other and binding, (with their own problems) but they are not joint.
June 2012
Disclaimer: