Thursday, 20 November 2014

Can trusts be trusted in the event of divorce?


Preserving family wealth is uppermost in many families’ minds.  Therefore, knowing how structures created to hold family wealth will perform in the event of a family member divorcing is crucial.

Unfortunately, the treatment of trusts on a beneficiary divorcing is to some extent uncertain.  The legislation is clear enough: anyone with an irrevocable, fixed interest in a trust (e.g. life tenant/capital remainderman) can have their interest transferred to their spouse or child in the event of a divorce or separation.  The terms of ‘nuptial settlements’, be they discretionary or fixed interest, can also be varied to permit a spouse and/or children to benefit.  Therefore, trusts that want to remain outside the divorce courts will take care not to be regarded as nuptial settlements. 

Thursday, 6 November 2014

Asset protection: careful what you promise...


Threats to wealth come in many guises.   Mr Southwell was described by the judge in Southwell v Blackburn at the Court of Appeal as ‘shrewd, cautious and guarded’.  He knew that if he married Ms Blackburn, who had two children from a previous marriage, she would have a financial claim against his assets in the event of divorce.  He also knew that, when he bought a property for her and her teenager children to live in with him, putting her on the title with him would be risky too, so he made sure that didn’t happen either.  He bought the property with the help of a repayment mortgage and he made all the repayments.  Exemplary thus far. 

Thursday, 23 October 2014

Come to our seminar on protecting family wealth: 13 November 2014, London

We’re often asked about the current state of play with UK pre-nups and, as a wealth lawyer, I’m always interested to know how bullet-proof trusts are, should a beneficiary divorce, and whether there are any alternatives to trusts that might offer better protection. 


So I've teamed up with my colleague Teresa Cullen, our family partner, and we'll be exploring exactly these issues in our seminar here at Fladgate, 16 Great Queen Street, London WC2B, on 13 November 2014. 


Further details below.  If you'd like to join us, please RSVP to register your interest. 

Bare Trusts: are they the ‘next big thing’?


The third consultation on Inheritance Tax (IHT) charges for trusts assumes that every individual will have only one settlement nil rate band (SNRB) to put against the periodic charges to IHT of all trusts created in lifetime, or on death, by that individual.  (For more on the new SNRB, see my blog post of 19 June 2014.)

As the SNRB does not renew itself every seven years, the well advised will soon begin to realise that the SNRB is a precious commodity that needs to be preserved and carefully allocated.

The SNRB only needs to be allocated among ‘settlements’ though.  As it seems that Bare Trusts are not settlements for IHT purposes, if the SNRB does come into effect, there will be no need to allocate any SNRB to Bare Trusts.  So, are Bare Trusts about to become all the rage, if you have young children or grandchildren to plan for?  You can save your SNRB to allocate against your other trusts/will trusts instead! 

Now is the time, then, to reacquaint ourselves with what Bare Trusts have to offer. 

Thursday, 9 October 2014

Best will for… Part 3: most married couples


I like the simple things in life. When it comes to wills, most of my married couple (and civil partnership) clients want to keep things simple too. ‘Everything to my spouse and then to my children equally, please’ is a common refrain. There is nothing wrong with that.

The only problem with keeping things that simple, though, is that you can be wrong-footed if your family’s circumstances have changed by the time you die, or afterwards. The child’s marriage doesn’t work out. The child’s ex-partner wants a stake in your child’s home. Your spouse loses capacity to manage finances after your death. Lawyers have a tendency to look on the black side and chances are none of these things will happen. However, the fact is that a simple will, leaving everything to heirs outright, gives no protection against any of these things, so you are taking a risk.

Thursday, 25 September 2014

Family businesses and pre-emption rights: a trap for the unwary

Business owners are a notoriously busy lot.  Trying to get them to put wills in place can require persistence on the part of the adviser.  However, care is needed when making wills for business owners as getting the will in place, on its own, may not be enough.



Trouble can ensue when the share transfer provisions in the articles of the company, or any shareholders’ agreements, prevent the deceased’s shares being transferred to the heirs named in the will, or the trustees of any trusts in the will.  Restrictions placed on transfers are commonly called pre-emption rights. 

Thursday, 11 September 2014

Choosing trustees? Not so fast!


What is the key decision which repays very careful thought when setting up a trust or a will containing a trust?  Is it who can benefit from the trust (the beneficiaries)?  Of course, that is very important.  Or whether it is a fixed interest or a discretionary trust?  Absolutely, money in the right hands at the right time, naturally.  But I would argue that there is one matter that trumps even both of these.  No prizes for guessing (the clue is in the title!) – the No.1 spot has to go to choice of trustees.  Poor decision-making on this front can lead to big regrets all round as it is far from easy to force trustees to retire once they have accepted the position.  Read on if you require further persuasion.