Family Investment Companies (FICs) have been used as part of succession planning since changes to trust taxation were brought in by the Finance Act 2006. Their use is likely to rise due to the Inheritance Tax net widening as a result of the latest budget, particularly from April 2027 when pension pots will be included in estates for Inheritance Tax purposes.
What is a Family Investment Company (FIC)?
An FIC is simply a company that has been established with the specific purpose of meeting the needs of a single family. It is generally created to hold investments for the family.
The investments within the company would typically include equities and/or property.
How can a FIC be used in Estate Planning?
Estate planning is not just about saving Inheritance Tax. Although this is a key objective, it is also about maintaining and protecting family wealth.
A company is a structure that enables ownership to be separated. Ownership is with the Shareholders but the day-to-day management and control of the business is with the Directors. Using a company enables a family to pass wealth down through generations without giving up control of how the wealth is managed.
Capital is also not easily extracted, which helps ensure it is preserved for future generations. The constitution of a FIC can also help protect against the impact of divorce by encouraging the use of marital agreements and by controlling the ownership of shares.
Inheritance Tax Saving – 3 Key Benefits:-
The reduction of the estate of the founders of the FIC. They will make a gift on the formation of the company, by either passing shares or cash for the subscription of shares to children/grandchildren. Sometimes cash is also gifted to a family trust, which will then subscribe for shares. These initial gifts save Inheritance Tax completely if the donor then survives 7 years;
To the extent shares are held by family members and not the founders, the profits generated by the FIC will be outside the founders’ estate, saving further Inheritance Tax;
A FIC is not within the relevant property regime so is not subject to 10 year anniversary charges of 6% like a discretionary trust would be, or subject to exit charges.
Discretionary Trust vs FICs
Discretionary Trust
FIC
Control
The trustees manage and control a discretionary trust and must do so for the benefit of their beneficiaries
Directors control a FIC on a day to day basis and have similar fiduciary duties to trustees, acting in the best interests of the company and its shareholders
Who Can Benefit
A key advantage of a discretionary trust is that anyone within the class of beneficiaries can benefit. A trust can also have a power to add new beneficiaries
Only shareholders can benefit from dividends and capital growth. A company can also employ anyone.
Funding
A trust can be funded up to an individual’s available nil rate band (£325,000) but may be otherwise taxed at a lifetime Inheritance Tax rate of 20%
Shares can be subscribed for in cash up to any value without tax charges. If a FIC is established, shares should be subscribed for at their market rate to avoid tax charges
Tax on Income
Trusts pay income tax at 45% or 39.5% on dividend income
FICs pay corporation tax at 25% or 0% on dividend income
Tax on Gains
Trusts pay capital gains tax at 24%. Annual exemption is £3,000
FICs have no annual exemption and pay corporation tax on capital gains at 25%
Distributions of Income
A beneficiary receives income with a tax credit at 45% which can be reclaimed if the beneficiary is a lower rate tax payer
Income is paid in the form of dividends from post-tax profits and taxed at the individual’s appropriate dividend rate. An annual exemption of £500 is available
Distributions of Capital
Capital distributed from a relevant property trust may trigger an exit charge but is not taxable on the beneficiary
Capital is not easily distributed to shareholders. Any profit element will give rise to either an income tax charge or a capital gains tax charge
Inheritance Tax
A trust will pay tax on every 10 year anniversary at a rate of 6% on the market value of all assets above the nil rate band
A FIC does not pay inheritance tax but a shareholder will pay inheritance tax on the value of shares within their estate – this value may be discounted to reflect a minority interest
Privacy
Whilst all trusts now have to be registered with HMRC, the register is not a public document
Companies have to be registered at Companies House and details of shareholders will be available. Company’s articles of association are public
Trusts have always been a traditional feature of estate planning, however as many of the tax advantages will survive the recent tax changes, FICs are becoming increasingly popular as an alternative to trusts.
In some ways trusts and FICs are similar. For example, they are both essentially set up for the management of assets for the benefit of the underlying beneficiaries and to preserve the family wealth.
Trusts still certainly have a place in estate planning, and have perhaps always been the default position when wanting to gift assets whilst also retaining an element of control. For the higher net valued individuals who wish to gift significant values and where perhaps flexibility and family involvement are priorities as well as investment growth, a FIC may be the better option. A combination of the two can also provide for an effective structure. For example, the addition of a discretionary family trust within the FIC structure could offer more protection of capital assets, particularly in the event of divorce.
Ultimately, as with any structure there are pitfalls, nuances and anti-avoidance rules to consider. Setting up a FIC is not a one size fits all exercise. It is a bespoke structure and multi-disciplinary advice should be sought to ensure it is appropriate to meet your family’s needs.
Here at Wellers we can help. Please contact us on 020 7481 2422 or email enquiries@wellerslawgroup.com
Planning for the future is rarely straightforward, especially when inheritance tax and family dynamics come into play. That’s why Wellers and Gravita co-hosted a practical webinar exploring the key issues from both tax and legal perspectives. The panel, hosted by Gravita Accounts Partner, Mark Rubinson, consisted of Gravita Private Client Tax Partner, Michaela Lamb and Wellers Senior Private Client Solicitor, Aarti Gangaramani.
What did the session cover ?
The session explored everything from gifting your home to the upcoming changes for non-doms. A key takeaway was that while DIY wills or AI-generated templates may seem convenient, they often fall short. Mistakes in structure, wording or witnessing can lead to intestacy, unnecessary tax, or assets ending up in the wrong hands.
Gifting property
Gifting property is another area where people can be caught out. Giving your home to your children but continuing to live in it can trigger inheritance tax rules that effectively ignore the gift. Even well-intentioned plans can fall apart without clear agreements, market-value rent, or properly structured ownership.
Family Investment Companies
The discussion also covered the use of trusts and family investment companies. These can be powerful tools, but they require regular reviews, administrative upkeep and careful planning to avoid unexpected tax charges. With changes to business and agricultural property relief coming in April 2026, there is still time to act, but the clock is ticking.
Other topics
Other topics included:
How the reintroduction of inheritance tax on pension pots may affect planning
What the changes to non-dom status mean for those with international assets
How to pass wealth down to grandchildren while protecting it from future divorce claims
Watch Now
Contact us
If you have questions, we would be happy to help. Please contact us at enquiries@wellerslawgroup.com or call 020 7481 2422
We invite you to join us and Gravita for our ‘Inheritance Tax Planning Update’ webinar on Wednesday 30th April at 9am, presented by Wellers Private Client Solicitor, Aarti Gangaramani and Gravita Private Client Tax Partner, Michaela Lamb
The webinar follows the Government’s Spring Statement which we hope will finally bring clarity as to which of the much talked-about changes to the Inheritance Tax regime, Rachel Reeves intends to implement. This webinar is your opportunity to get the most up-to-date information on how to protect your loved ones.
DATE: Wednesday 30th April 2025 TIME: 9am – 10am
We’ll discuss everything you want to know about Inheritance Tax, from a jargon-free accounting and legal perspective.
What happens if you die without a Will? Does setting up a trust really avoid Inheritance Tax?
During the session we’ll cover common myths and misconceptions from the everchanging landscape of inheritance planning, and what you can do to protect yourself.
Topics will include:
Business Property Relief and Agricultural Property Relief
The impact of the new tax residency rules
Importance of the preparation of Wills and how the intestacy rules can impact your estate
Administration of Trusts and how they work in practice
Assets in foreign jurisdictions, having parallel Wills in place and the re-sealing process
To secure your spot, please register using the button below. After registering, you will receive a confirmation email containing information about how to join the webinar.
By signing up to this webinar, you agree to share your data with Wellers and Gravita, for the purpose of contacting you about relevant content and services
The 2025 Stamp Duty Land Tax (SDLT) changes are an important topic in UK property law.
Stamp Duty Land Tax (or SDLT) is a tax payable to HMRC when an individual or corporate entity buys property or land in England and Wales (in Wales, it’s called the Land Transaction Tax).
SDLT uses thresholds for the calculation, so you pay an increasing percentage rate of SDLT according to the property’s value. How much you pay also depends on factors including whether you’re a first-time buyer, whether you will own any other property anywhere else in the world at the date of completion, and whether you’re a non-UK resident.
In her most recent Budget statement, the Chancellor of the Exchequer announced changes to SDLT, which will come into force on 1st April 2025. If you’re buying or considering buying a property at the moment, these changes could have a significant effect on the amount of SDLT payable.
First time buyer – SDLT up to 31st March 2025
If you’re a first-time buyer purchasing a property valued at less than £625,000, currently you would pay no SDLT up to £425,000 but 5% on the portion between £425,001 and £625,000. If the purchase price is over £625,000, then first-time buyer’s relief cannot be claimed
If you’re buying an additional property, other rates of SDLT will apply.
First time buyer – SDLT from 1st April 2025
The Chancellor announced significant changes to Stamp Duty Land Tax in her latest Budget. In most cases, it will result in purchasers paying more in SDLT.
Under the new rules coming into effect on 1st April 2025, a first-time buyer will not pay SDLT on a purchase price up to £300,000, with 5% SDLT due upon the portion from £300,001 to £500,000. If the purchase price is over £500,000 then first-time buyer’s relief cannot be claimed.
Why you need a good conveyancer ?
Stamp Duty Land Tax can appear quite complex, particularly if you’re a first time buyer or you’re not making a standard property purchase. When you buy a property, you rely on your solicitor to calculate the SDLT on your transaction and transfer it to HMRC in time, so you can avoid a fine.
Having a good conveyancing solicitor in your corner has never been more important.
When planning your estate, a life interest will trust can provide income for loved ones while preserving capital for future beneficiaries. Understanding the tax implications and how these trusts work is essential for effective estate planning.
What is a life interest trust?
A life interest trust (sometimes called an Interest in Possession Trust) gives a beneficiary the right to receive all income from trust assets for a specified period – often their lifetime. Unlike discretionary trusts, trustees must pay out all income and cannot accumulate it within the trust.
Key features of life interest trusts:
The income beneficiary (life tenant) has an absolute right to trust income
Capital is preserved for future beneficiaries (remaindermen)
Commonly used to provide for surviving spouses while protecting children’s inheritance
Can include property, investments, or other income-producing assets
The life tenant receives income after taxes and expenses. Despite the name, a “life” interest doesn’t always last a lifetime – it might end at a specific age, on remarriage, or another triggering event. When the life interest ends, capital passes to the remaindermen.
A right to occupy property rent-free also creates a life interest, even though no income is generated. Trustees often have powers to advance capital to beneficiaries if needed, providing flexibility.
How does a life interest trust work?
Life interest trusts operate on a simple principle: separating the right to income from the right to capital.
Example: Sarah leaves her estate in a life interest will trust for her husband John, with their children as remaindermen. John receives all rental income from properties and dividends from investments during his lifetime. When John dies, the children inherit the capital.
This structure achieves several goals:
John has financial security for life
The children’s inheritance is protected
Assets are shielded from potential remarriage claims
Tax planning opportunities are available
Life interest trusts and inheritance tax
Understanding the relationship between life interest will trusts and inheritance tax is crucial for estate planning. The treatment depends on who receives the life interest and when it ends.
Inheritance tax on creation
Spouse exemption: Life interests for spouses or civil partners are exempt from inheritance tax, just like outright gifts.
Non-UK domiciled spouses: Limited to £325,000 exemption if the deceased was UK domiciled.
Other beneficiaries: Life interests for anyone else are chargeable transfers, potentially subject to 40% inheritance tax.
Tax on the life tenant’s death
When the life tenant dies, the trust assets are treated as part of their estate for inheritance tax purposes – even though they only received income, not capital.
The calculation includes:
The life tenant’s personal assets
The value of trust assets (or their share if partial)
Less any debts
Standard inheritance tax exemptions apply
Important advantage: Unlike discretionary trusts, life interest will trusts avoid 10-year anniversary charges and exit charges.
Life interest trust pros and cons
Before choosing a life interest will trust, consider these advantages and disadvantages:
Pros:
Income security for the life tenant
Capital protection for remaindermen
No 10-year inheritance tax charges
Spouse exemption available
Can qualify for residence nil-rate band
Protects against sideways disinheritance
Cons:
Life tenant taxed on all income at their rates
Limited flexibility once established
Trust assets included in life tenant’s estate
Administrative costs and complexity
Potential family conflicts
Capital gains tax implications
Life interest trust disadvantages in detail
While life interest trusts offer benefits, understanding the disadvantages helps you make informed decisions:
Inflexibility: Once created, the life tenant’s right to income is absolute. Trustees cannot withhold income even if the life tenant becomes financially irresponsible.
Tax burden: The life tenant pays income tax on all trust income at their marginal rates, which could push them into higher tax brackets.
No accumulation: Unlike discretionary trusts, income cannot be accumulated for future needs or reinvested to grow capital.
Relationship tensions: Conflicts can arise between life tenants wanting income and remaindermen wanting capital growth.
Administrative burden: Ongoing costs include trust tax returns, professional fees, and potential disputes requiring legal intervention.
What happens when a life interest ends?
A life interest can end during the life tenant’s lifetime through:
Reaching a specified age
Remarriage (if stated in the trust)
The life tenant giving up their interest
Other triggering events in the trust deed
Tax implications of ending a life interest
Assets leaving the trust: Usually a potentially exempt transfer (PET) – no immediate tax but the life tenant must survive seven years.
Exceptions:
Transfer to spouse: Exempt
Transfer to the life tenant: No tax
Trustees typically pay any tax due, though the life tenant’s estate may become liable.
Creating a new life interest: Immediately chargeable at 20% on amounts over the nil-rate band.
Life interest trust tax implications
Life interest will trusts face specific tax treatment across income tax, capital gains tax, and inheritance tax. Understanding these implications helps with planning.
Income tax treatment
Trust tax rates:
Rental income: 20%
Interest: 20%
Dividends: 7.5%
These rates apply regardless of income levels. No personal allowances or dividend allowances apply.
Important: Trust management expenses cannot be deducted before calculating tax.
Life tenant taxation: The life tenant receives income with tax credits and includes it on their tax return. They can reclaim tax if their personal rate is lower than the trust paid.
Life interest trust capital gains tax
When trustees dispose of assets, capital gains tax may apply. Key points include:
Annual exemption: £6,150 (half the individual allowance)
Shared between multiple trusts from the same settlor
Special reliefs may be available (Business Asset Disposal Relief, Investors Relief)
Tax-free uplift on the life tenant’s death
Principal Private Residence Relief: Available if beneficiaries occupy trust property as their main home.
Life interest will trust cost
The costs of establishing and running a life interest will trust include:
Initial costs:
Legal fees for will drafting with trust provisions
Tax planning advice
Asset valuation if needed
Ongoing costs:
Annual trust tax returns
Accountancy fees
Investment management (if applicable)
Legal advice for significant decisions
Property maintenance (if property held)
While costs vary by complexity, life interest will trusts are generally less expensive to run than discretionary trusts due to simpler tax treatment and fewer compliance requirements.
Life interest trust explained – practical examples
Understanding how life interest trusts work in practice helps clarify their benefits:
Example 1 – Second marriages: David has children from his first marriage and marries Susan. His life interest will trust gives Susan the right to live in the family home for life, with the property passing to his children on her death. This balances Susan’s security with the children’s inheritance.
Example 2 – Vulnerable beneficiaries: Mary’s son has learning difficulties. Her life interest will trust provides him with income for life while protecting the capital from potential financial abuse. Professional trustees manage the investments.
Example 3 – Business assets: Tom owns a successful company. His life interest will trust allows his wife to receive dividend income while his children (who work in the business) ultimately inherit the shares.
Life interest will trust taxation – key considerations
When planning life interest will trust taxation, consider:
The life tenant’s existing income and tax position
Whether spouse exemption applies
Potential for capital gains on trust assets
The seven-year rule for lifetime transfers
Available reliefs and exemptions
Professional trustee requirements
Get expert advice on life interest will trusts
Life interest will trusts offer valuable estate planning opportunities but require careful consideration of tax implications and family dynamics. Our experienced private client team can help you understand whether a life interest will trust suits your circumstances.
We advise on:
Choosing between life interest and discretionary trusts
You currently run your business as a sole trader or partnership and want to know the advantages and disadvantages of incorporating that business.
One of the advantages is that a company has limited liability whereas as a sole trader or partnership you have unlimited liability.
As an individual, your trading profits may be taxed at 45%, whilst a company pays tax at 19% for 2019/20 and 2020/21.
A disadvantage is that you will no longer be able to set your trading losses in the future against other income, once you have incorporated.
You also need to consider what your stamp duty land tax bill will be on transfer of land and buildings to the company. If it is too great, you may instead wish to consider Gift Relief as an alternative.
This article explores the Capital Gains Tax implications when a sole trader transfers his business to a limited company by transferring the business assets to the company, through which he continues to trade.
The sole trader and the company are connected persons and therefore there is a deemed disposal by the individual to the company at market value.
Usually the only Chargeable Assets are land, buildings and goodwill. Plant and machinery, other than exceptionally, suffer losses, which are dealt with under the Capital Allowances regime.
If any buildings transferred have benefited from structures and buildings allowance (where they have been used for business purposes such as offices, retail premises, factories and warehouses), having met the conditions of the allowance, the consideration for the disposal is increased by the total amount of allowance already claimed when calculating the gain for Capital Gains Tax purposes.
The object of Incorporation Relief is the deferral, wholly or partly, of gains on chargeable assets.
The deferred gain is rolled over and set against the base cost of the sole trader’s shares in the company. The gain will be charged when the shareholder sells his shares in the company.
The calculation is as follows:
£
Deemed gain on transfer of land and buildings
x
Deemed gain on transfer of goodwill
x
Total gains
x
Less:
Incorporation Relief
x
Gains x (value of shares received) divided by total consideration
(x)
£
The base cost of the shares in the new company:
Market value of shares at incorporation
x
Less:
Incorporation Relief
(x)
Base cost of shares
x===
Usually the value of the shares received is the same as the total consideration received by the individual from the new company and the Incorporation Relief fraction will be one. In these circumstances, the whole of the gain is deferred and no gain is chargeable.
If the company pays for the business with loan stock i.e. something other than shares, a Chargeable Gain will arise.
The mechanics of this is usually achieved by the company opening a Directors’ Loan Account. The sole trader who then becomes a director can then withdraw money from the loan accounts once the company is profitable.
To qualify for Incorporation Relief the following conditions must be met:
The business must be a going concern.
All assets of the sole trader’s business must be transferred, with the exception of cash, to the company. If the sole trader wishes to retain land and buildings outside of the company e.g. to save Stamp Duty Land Tax, he will not be eligible for the relief.
The consideration received by the sole trader must be wholly or partly in shares.
The relief applies automatically when the above conditions are met.
In order not to waste the sole trader’s Capital Gains Tax annual exempt amount, it is possible to calculate the amount of Directors’ Loan required to generate a gain equal to it.
If the sole trader decides to utilise Entrepreneurs’ Relief, he can organise his consideration so that a Chargeable Gain above the annual exempt amount is triggered and he can take advantage of the relief at this stage. He may wish to do this if the shares in the company on sale would not qualify for Entrepreneurs’ Relief.
Entrepreneurs’ Relief is available on any Chargeable Gains on the transfer of land and buildings but not goodwill where the sole trader receives 5% or more of the shares in the company. The rationale behind this is that if the sole trader is retaining less than 5% of the shares then he is truly selling the business and reducing his involvement in it and therefore in those circumstances Entrepreneurs’ Relief would be available on the gains attributable to the transfer of goodwill.
Provided, the company is the shareholder’s personal trading company and the shareholder works for the company and meets the other criteria for Entrepreneur’s Relief, you can look through the incorporation and include the period during which the business was owned by the sole trader, when considering the two-year qualification period for Entrepreneurs’ Relief, prior to the sale of the shares. Entrepreneurs’ Relief will be available provided shares were issued wholly or partly in exchange for the transfer of the business as a going concern. Provided the business and the shares in the personal company have been owned for a combined period of 2 years and the individual shareholder works for the company. A subsequent sale of the shares would qualify for Entrepreneurs’ Relief.
Dis-applying Incorporation Relief
The sole trader can elect to dis-apply Incorporation Relief if they want to use full Entrepreneurs’ Relief or have Capital Losses to use. This may be the preferred route where the shareholder no longer works for the company at the date of the subsequent sale of the shares and so Entrepreneur’s relief would not be available at that stage.
Gift relief
To avoid paying Stamp Duty Land Tax on the transfer of the building to the company at market value, the sole trader can alternatively gift the assets to the company. The deferred gain is rolled over and reduces the base cost of the assets in the hands of the company. The deferred gain does not reduce the base cost of the shares.
If you do not transfer all of the business assets except cash to the company, Incorporation Relief is not available.
This is a complex area and the advice of your accountant or tax advisor should be obtained in advance of any transaction. We are very happy to advise you either separately or in conjunction with your accountant or legal advisor.
Wellers Wealth are very happy to work in conjunction with your independent financial advisor, accountant or legal advisor on such matters.
This article was written by Wellers Law Group LLP and the law is correct as at 24th November 2020. Please note that tax legislation changes frequently, so this article should not be relied upon without seeking further legal advice.
The budget 2020 announcements reduced the lifetime limit for gains qualifying for Entrepreneurs’ Relief from £10 million to £1 million for qualifying disposals made on or after 1 March 2020. So how should you make use of this important tax benefit?
The Government’s rationale for this reduction is the relief has done very little to generate additional entrepreneurial activity, primarily benefitting a small number of very affluent tax payers.
John Cullinane, the Tax Policy Director of the Chartered Institute of Taxation is calling for MPs to look closely at the Government’s plans for Entrepreneurs’ Relief and in particular why the review was not carried out in public. He goes on to say “there are people affected by the March 2020 budget change who have reinvested money in the expectation of the relief that they will no longer receive”.
Under the budget 2020 proposals, Entrepreneurs’ Relief is to be re-badged “Business Asset Disposal Relief”.
Entrepreneurs’ Relief is a Capital Gains Tax Relief available to taxpayers who sell or give away their businesses.
The relief operates by reducing the Capital Gains Tax payable on the gain (or deemed gain in the case of a gift) to 10%. This is regardless of whether the taxpayer is a basic, higher or additional rate taxpayer.
Up until the budget 2020 there was a lifetime limit of the gains qualifying for Entrepreneurs’ Relief of £10 million, but this has now been reduced £1 million.
The relief is available to sole traders or partners selling or gifting the whole or part of their business, company directors and employees who dispose of shares or securities in a personal trading company that they work for and directors and employees who acquired shares under the EMI Option Scheme.
To qualify there must have been material disposals of business assets.
A business asset is defined as:
The whole or part of a sole trader or partnership business.
A disposal of an asset used in a business at the time the business ceases to be carried on.
A disposal of shares (securities, loan stock etc.) in a company.
A material disposal means that the business must have been owned by the taxpayer for at least two years prior to the disposal.
A disposal of furnished holiday lettings qualifies for Entrepreneurs’ Relief, provided the other conditions are satisfied. A residential property business would not qualify.
In respect of assets used in the business at the time the business ceases, the asset must be sold within 3 years of the cessation of trade.
Shares in a personal company
The conditions are that the individual owns at least 5% of the ordinary share capital and at least 5% of the voting rights which is exercisable by the individual by virtue of that holding.
The second condition is that the taxpayer must work for the company or for another company in the same group. This would include full-time or part-time employees or directors. There is no minimum number of hours of work required.
In addition, the shareholder must either be entitled to at least 5% of the distributable profits and 5% of the assets available on the winding up and/or be entitled to at least 5% of the proceeds of disposal of the whole of the ordinary share capital of the company.
Associated disposals are also eligible for Entrepreneurs’ Relief:
The associated disposal rules do not apply to sole traders.
To qualify as an associated disposal a number of elements must be satisfied. You must have made a material disposal of the business or shares and securities in a company. As part of the withdrawal from the business you make a disposal of an asset which has been used in that business for at least 2 years and was acquired on or after 13 June 2016. The asset must have been owned by you for 3 years prior to disposal.
An example: a company director owns at least 5% of the shares of a company and also owns the premises from which the company trades. Provided he sells the building at the same time as he sells the shares, this could be an associated disposal provided the other criteria apply.
Entrepreneurs’ Relief can be claimed on part-disposals of businesses or business assets provided the disposal represents at least 5% of the shareholding (see above) or 5% of partnership assets. Provided the taxpayer has owned 5% or more for three of the eight years prior to the disposal, a material disposal may be of less than a 5% interest provided it is of the whole of the individual’s partnership assets/shareholding.
The associated disposal must take place within one year of the business cessation or within three years, so long as the assets have not been leased or used for any other purpose. If the individual taxpayer has charged the business rent for use of the assets, at its full market rent, no Entrepreneurs’ Relief is available. If less than the market rate rent has been charged for the business, some Entrepreneurs’ Relief will be available. If no rent is charged, then full relief is available.
Interaction with Rollover Relief
If you make a material disposal of business assets and you re-invest in a new business, you may look at first to see if there is any Rollover Relief available for the investment in the new business and apply Entrepreneurs’ Relief to any gains remaining after the Rollover Relief has been claimed.
Interaction within Incorporation Relief
If you transfer your business to a limited company you may wish to consider whether Entrepreneurs’ Relief would be available to you on any gains arising on the incorporation.
The main point to note is, that Entrepreneurs’ Relief will not be available in respect of any gain arising on the transfer of goodwill to the company. Under Section 169LA TCGA 1992 where goodwill is disposed of to a close company and the transfer is of 5% or more of the share capital of the company (or the shareholder exercises at least 5% of the voting rights or the shareholder is a beneficiary entitled to at least 5% of the profits available for distribution and at least 5% of the assets on a winding up or would be beneficially entitled to at least 5% of the proceeds on the disposal of the whole company) then goodwill is no longer a relevant business asset for the purposes of Entrepreneurs’ Relief.
In those circumstances, Entrepreneurs’ Relief would not be available for the value of the goodwill but Entrepreneurs’ Relief would be available where the transferor holds less than 5% of the shares of the company and does not meet any of the other tests listed above. The rationale behind this is that the individual is genuinely selling their business and reducing their involvement in it.
In summary, Entrepreneurs’ Relief is one of the most attractive benefits available to entrepreneurs. You can claim as many times as you like provided your claims are within the £1 million lifetime limit. It is available to individuals, not companies.
If you are selling a business, you have to be the sole trader or a business partner for the two year qualifying period.
If you are selling shares you have to have been an employee or officer in the company as well as owning the shares for the qualifying period. The company itself must be a trading company or the holding company of a trading group and must have traded within the qualifying period.
There is one case in which you are not required to be working in the business under an extension called Investors’ Relief.
The pitfalls of not dotting your ‘i’s’ and crossing your ‘t’s’
A £1 million tax relief can be lost on a technicality. It is therefore essential that you seek advice within at least two years prior to your retirement and earlier if possible. This is to ensure that you are eligible for the relief and if you are not eligible, to give us time to see what can be done to ensure you become eligible. Do not wait until after you have sold your business interests or your shares before checking.
The sorts of things that you will need to consider are whether you have any evidence that you have worked as an employee or officer for the company because if you can’t prove it you won’t be eligible. It would be sensible to have a written Employment Contract for example.
There is no set definition of trading given by HMRC. A company’s trading status is evaluated based on several factors. Trading can in certain circumstances extend to a one-off transaction resulting in unexpected profits.
Lots of businesses have a mixture of trading and non-trading activities. Companies with mixed business trading can still be eligible for Entrepreneurs’ Relief provided the non-trading activities are not substantial. HMRC considers substantial to be anything over 20%. So for example provided rental income received by the company equates to less than 20% of the company’s total trade and the staff are not spending more than 20% of their time in relation to non-trading activities, then you still may be able to qualify.
If your company is cash rich you could risk failing the trading status test unless such cash has been earmarked for a trading purpose.
Assets used in the business up to Cessation of Trade and subsequently sold
The business must be owned for at least two years prior to cessation and the asset must be sold within three years of the cessation. In these circumstances, the asset would qualify for Entrepreneurs’ Relief.
EMI shares
There are additional requirements to comply with if the shares are from an EMI. To be eligible for Entrepreneurs’ Relief you must have:
Purchased the shares after 5 April 2013.
Be offered the option to buy them at least two years before selling them.
The requirement to hold 5% or more of the voting share does not apply when it comes to disposing of EMI shares.
One way round the lower limit (the £1 million lifetime limit) would be to consider gifting shares to your spouse, since these are transferred at no gain no loss. Provided your spouse met the criteria, they would also have a full Entrepreneurs’ Relief lifetime limit. This doubles your tax relief.
If you are dissolving your company, Entrepreneurs’ Relief can still be claimed provided:
The distribution of company assets is taxed as a capital distribution, not as income.
Distribution takes place within three years of the date of cessation of trade.
In the two years prior to the company ceasing to trade, the usual qualifying conditions were met.
You will need to discuss this with your accountant but you may find paying the 10% Capital Gains Tax suits you better than seeking out your profits over several years with a traditional small salary of £12,000 or so per year plus dividends on which only 7.5% tax is payable.
There is anti-avoidance legislation that was introduced in April 2016 which prevents individuals from closing companies simply as a way of taking advantage of the tax efficiency of the capital distribution route rather than an income distribution.
Distributions from the voluntary liquidations of a company may be treated as income distributions in the following circumstances:
If the company is a closed company (a company with five shareholders or less).
If the shareholder receiving the distribution is involved with a similar trade or activity within two years.
If the intention of winding up the business appears to be to obtain a tax advantage.
In these instances, the distributions could be subject to income tax and ineligible for Entrepreneurs’ Relief.
The legislation surrounding Entrepreneurs’ Relief is complex and professional advice should be sought well in advance of retirement, incorporation or gifting of business assets.
Wellers are very happy to work in conjunction with your independent financial advisor, accountant or legal advisor on such matters.
This article was written by Wellers Law Group LLP and the law is correct as at 24th November 2020. Please note that tax legislation changes frequently, so this article should not be relied upon without seeking further legal advice.
When planning your estate, understanding the different types of trusts available can help you make informed decisions about your family’s financial future. Discretionary will trusts offer flexibility and control, but it’s important to understand how they work and their tax implications.
What is a discretionary will trust?
A discretionary will trust is the most flexible form of trust available. It enables trustees to use and distribute the income and capital entirely at their discretion – they have complete control over who receives what and when.
This flexibility makes discretionary trusts particularly valuable when:
You’re uncertain about future family circumstances
You want to protect assets for vulnerable beneficiaries
Family members have different financial needs
You need to respond to changing tax laws
There’s a risk of divorce or bankruptcy affecting beneficiaries
How does a discretionary trust work?
In any trust arrangement, there’s a separation between legal ownership and who actually benefits from the assets. The trustees hold legal title to the assets but cannot benefit personally. Instead, they must manage the trust property for the beneficiaries’ benefit, following the instructions in the trust deed.
For discretionary will trusts specifically:
The trust is created when the person making the will dies
Trustees have full discretion over distributions
No beneficiary has an automatic right to income or capital
Trustees can respond to changing family circumstances
The trust offers protection from beneficiaries’ creditors or divorce proceedings
Professional trustees can be appointed alongside family members
Discretionary will trust inheritance tax
Understanding the inheritance tax implications of discretionary trusts is crucial for effective estate planning.
Initial inheritance tax position
If you leave your entire estate to a discretionary trust, this creates a chargeable transfer for inheritance tax purposes – even if your spouse is a beneficiary. The whole estate is subject to inheritance tax at 40% above the nil-rate band.
However, there’s an important two-year window that offers significant planning opportunities. Any distributions from a discretionary will trust within two years of death are treated as if made by the deceased in their will. This means:
No exit charges apply during this period
Distributions to exempt beneficiaries (spouse/charity) can trigger inheritance tax refunds
You can effectively rewrite the will through trust distributions
Family circumstances can be reassessed after death
Ongoing inheritance tax charges
After the two-year period, discretionary trusts face two types of inheritance tax charge:
Ten-year anniversary charges: Up to 6% on the trust value above the nil-rate band (currently £325,000)
Exit charges: Proportionate charges when capital leaves the trust (income distributions remain exempt)
The actual rates depend on the settlor’s inheritance tax history and any other trusts they created. These charges, while significant, are often outweighed by the protection and flexibility the trust provides.
Discretionary will trust taxation
Discretionary trusts face specific tax treatment that differs from individual taxation:
Income tax rates:
First £1,000 of income: 20% (non-savings) or 7.5% (dividends)
Income above £1,000: 45% (non-savings/interest) or 38.1% (dividends)
No personal allowances available
Trust expenses can reduce taxable income
Capital gains tax:
Annual exemption: £6,150 (half the individual allowance)
Tax rate: 20% or 28% for residential property
Holdover relief may be available on certain distributions
Is a will trust a discretionary trust?
Not all will trusts are discretionary trusts. Your will might create different types of trust, each with distinct features:
Discretionary trusts offer maximum flexibility but may not suit every situation. We can help you choose the right trust structure for your family’s needs.
Advantages of a discretionary will trust
Discretionary will trusts offer significant advantages that make them valuable estate planning tools for many families:
Maximum flexibility: Trustees can adapt to changing family circumstances, financial needs, and tax laws without needing to alter the will
Asset protection: Trust assets are protected from beneficiaries’ creditors, divorce settlements, and bankruptcy
Vulnerable beneficiary safeguarding: Ideal for beneficiaries who may struggle with money management due to age, disability, or addiction
Tax planning opportunities: The two-year window allows post-death tax planning and potential inheritance tax savings
Generation-skipping: Assets can be preserved for grandchildren while supporting children if needed
Privacy: Trust distributions remain private, unlike outright inheritances through probate
These benefits are particularly valuable for:
Blended families with complex dynamics
Families with beneficiaries at different life stages
Estates where business assets need protecting
Situations where mental capacity is a concern
International families with cross-border considerations
The flexibility to respond to unforeseen circumstances often outweighs the additional complexity and costs involved.
Disadvantages of a discretionary will trust
While flexible, discretionary will trusts have some drawbacks to consider:
Complexity: Require ongoing administration and tax compliance
Costs: Professional fees for trustees, tax returns and advice
Tax rates: The trust pays up to 45% tax on income, compared to 20-45% for individuals
No entitlement: Beneficiaries cannot demand distributions
Limited reliefs: Some capital gains tax reliefs unavailable
These disadvantages must be weighed against the protection and flexibility offered, particularly for complex family situations.
Tax treatment for beneficiaries
When beneficiaries receive income from a discretionary trust, it comes with a 45% tax credit regardless of the trust’s actual tax position. This creates opportunities:
Basic rate taxpayers can reclaim overpaid tax
Non-taxpayers receive substantial refunds
The trust maintains a “tax pool” to track available credits
Careful timing of distributions can maximise tax efficiency
For capital distributions, beneficiaries generally receive assets at market value with no immediate tax consequences for them.
Key considerations for discretionary will trusts
Before choosing a discretionary trust, consider:
Family circumstances: Are there vulnerable beneficiaries needing protection? Will family dynamics change?
Estate size: Will ten-year charges significantly impact the trust value? Is the estate large enough to justify ongoing costs?
Trustee selection: Who will make these important decisions? Should you appoint professional trustees?
Letter of wishes: How will you guide trustees without legally binding them?
Professional advice: Complex rules require expert guidance throughout the trust’s life
How Wellers can help
Our experienced private client team understands the complexities of discretionary will trusts and can guide you through every step of the process.
We offer:
Initial consultations to assess whether a discretionary trust suits your needs
Expert drafting of wills incorporating trust provisions
Ongoing trustee services and administration support
Tax planning advice to minimise inheritance tax exposure
Clear, fixed-fee pricing for transparency
Our STEP-qualified solicitors have extensive experience in:
Complex estate planning for high-net-worth individuals
Multi-generational wealth preservation
Family business succession planning
International trust structures
Charity legacy planning
Next steps
Discretionary will trusts offer valuable flexibility for estate planning, but their complexity requires careful consideration and expert advice. Our experienced trust solicitors can help you understand whether a discretionary trust suits your circumstances and guide you through the setup process.
For confidential advice about discretionary will trusts or to discuss your estate planning needs:
There are a number of different types of trusts. Given the regularity with which I am asked what type of trust is best for a given situation I have provided a brief definition of some of the key types, setting out their advantages and disadvantages and briefly referring to their tax treatment.
Bare Trust
This is the simplest form of trust. It consists of one or more trustees and one or more beneficiaries. Some have described it as a half-way house between a full trust and outright ownership.
The beneficiary has an immediate and absolute right to both the capital and income of the trust at 18 years of age provided they have sufficient mental capacity.
The assets of the trust are held in the name of the trustee or trustees but the trustee has no discretion over the assets held in trust. The trustee of the bare trust is a mere nominee in whose name the property is held. Except in the case of bare trusts for minors, the trustee has no active duties to perform. The trustee must simply follow the instructions of the beneficiary provided they are lawful, in relation to the assets held in trust. A bare trust can be express or implied by conduct.
There can be more than one beneficiary provided each beneficiary is absolutely entitled to their share of the trust’s assets. The trustee has no discretion to change the shares or to use the income from one beneficiary’s share to benefit another beneficiary.
It is straightforward to administer which keeps running costs down and there is no limit on the number or amount of assets held by the trust and it can hold any kind of asset.
Advantages
Bare trusts are useful vehicles to pay for school fees since the amount can be estimated in advance and only that amount put into the trust. Often this is a vehicle used by grandparents to pay for grandchildren’s school fees, since once gifted into the trust the sum falls outside of the grandparent’s estate after seven years and they are not taxed on the income of the trust, which parents would be if they had settled the money into a bare trust.
Disadvantages
The lack of control for the trustees. They do not have a discretion. The beneficiary is entitled to take control of the trust fund as soon as they reach 18 years of age and to demand that the assets are put in their names, provided they have mental capacity. The age that the beneficiary becomes entitled to the trust assets is always 18 years of age and this cannot be altered. The assets in the trust are not ring fenced against creditors of the beneficiary and on the death of the beneficiary will form part of their estate for Inheritance Tax purposes.
The bare trust is a rigid structure. Once established the beneficiaries and their share of the trust assets cannot be changed. No future beneficiaries can be added as the trust has been set up absolutely for the named beneficiaries and this cannot be reversed. A gift to the bare trust is irrevocable and therefore cannot be undone once executed.
It is not a recommended vehicle for large sums of money since the beneficiary will have full access at 18 years of age.
Taxation of bare trust
Income Tax
Except where a parent has settled money into bare trust for a minor, the income received by a bare trust is taxed at the beneficiaries’ marginal rate of tax. It is treated as if the beneficiary had received it directly themselves.
If parents have set the trust up, then any trust income over £100 is taxed at the parents’ marginal tax rate as if they had received the income. This would not be the case for grandparents, as explained above.
Capital Gains Tax
A gift into a bare trust would be a deemed disposal for Capital Gains Tax purposes and to the extent that the then market value exceeded the original acquisition cost and any enhancement expenditure, Capital Gains Tax would be charged on the notional gain on the beneficiary.
Just as above, gains realised by the trustees are treated as if they were realised by the beneficiary and it is the beneficiary’s annual exempt amount that would be available to offset any gains.
Inheritance Tax
The assets of the bare trust are in the beneficiaries’ estate and will be subject to Inheritance Tax on their death. Just as with any other gift, if you make a gift into a bare trust you need to survive 7 years for the value of that gift to fall outside of your estate for Inheritance Tax purposes. This is the case where the beneficiary is not also the settlor of the trust funds into trust (i.e. the person gifting the money into the trust). The rules are different for settlor interested trusts
Discretionary trust
The definition of a discretionary trust is one where none of the beneficiaries has a present right to present enjoyment of the income generated by the trust property. The trustees have a discretion as to how to apply the trust capital and the income of the trust as it becomes available. The trust will contain a definition of the class of beneficiaries on whose behalf the trustees hold the trust property but it is up to the trustees to decide how much is paid, how often payments are made and to whom.
As no individual beneficiary can claim the income or capital as of right, such a beneficiary has a mere hope (to be distinguished from a right) that the trustees will at some time exercise their discretion in his or her favour.
The right of the beneficiary under a discretionary trust, subject to the terms of the trust, is to be considered by the trustees in the exercise of their discretion whether to appoint income or capital and, indeed how much.
Advantages
Discretionary trusts are useful if the settlor is unsure about which of the beneficiaries will need help in the future and in what proportions. They are also useful as asset protection vehicles because none of the beneficiaries have an enforceable right to the assets of the trust, nor do their creditors.
Discretionary trusts are useful in estate planning to benefit members of the family in the event of an unexpected death. Property within the trust is exempt from creditors. A creditor cannot take trust property in bankruptcy or liquidation (unless the debt was originally a trust debt). An exception to this will be where a settlor gifts assets into trust to prevent known creditors accessing funds. In these circumstances if it is established that the act of settlement was done to defraud creditors, the trust can be set aside via litigation.
This type of trust, if properly managed, can be a very tax efficient structure. There is freedom to implement tax planning after the trust has been set up in response to the changing circumstances of the beneficiaries.
Discretionary trusts allow the settlor of the trust funds to outline how they wish the trust fund to be used, during their lives and thereafter. The settlor’s wishes are not legally binding, but are useful guidance to the trustees. If professional trustees are used, the settlor may have the peace of mind that their wishes will be complied with, since there would be no conflict of interest, as there may be between a trustee who is also a beneficiary.
In terms of flexibility, the trustees can respond to changing family circumstances easily due to the control they have over the use and distribution of assets held by the trust because of the discretion they are given under the terms of the trust.
Disadvantages
This trust is more costly to administer. The services of accountants and lawyers may be required to submit trust tax returns and for trust documentation to be drafted. For example, for every distribution to beneficiaries there must be Deeds of Appointment drafted.
Only profits, not losses are distributed to beneficiaries.
Taxation
The funds fall fully outside of the settlor’s estate after seven years. The funds within the trust fund fall within the relevant property regime. In broad terms, ‘relevant property’ is property that is not comprised in the estate of the settlor or a beneficiary. In order to ensure that such assets are not therefore outside the scope of Inheritance Tax, relevant property is subject to exit and principal charges. These principal charges fall due on the tenth anniversary of the creation of the trust. The assets within the trust are revalued and a tax charge of 6% of the excess in value above the then nil rate band is charged to Inheritance Tax and paid at that point. In simple terms, this is repeated every ten year anniversary and/or on exit of the asset from the trust fund.
Trustees are responsible for paying tax on income received by discretionary trusts. The first £1,000 is taxed at the standard rate.
If the settlor has more than one trust, this £1,000 is divided by the number of trusts they have. However, if the settlor has set up five or more trusts, the standard rate band for each trust is £200.
The tax rates are below:
Trust income up to £1,000
Type of income
Tax rate
Dividend type income
7.5%
All other income
20%
Trust income over £1,000
Type of income
Tax rate
Dividend type income
38.1%
All other income
45%
Trustees do not qualify for the dividend allowance. This means trustees pay tax on all dividends depending on the tax band they fall within.
Interest in possession trusts/life interest trusts
The interest in possession trust is often referred to as a life interest trust or a fixed interest trust. In its simplest form, the beneficiary (or life tenant) is entitled to the net income from the fund in which he has an interest (after the trustees have deducted expenses properly incurred by them in the exercise of their management powers) for the rest of his life or for a fixed period.
On the death of the life tenant, the right to trust income will pass to another if the trust document provides for this or will end with the distribution to the capital beneficiaries or become part of a discretionary trust.
Interest in possession trusts created during the lifetime of the settlor before March 2006 were potentially exempt transfers. Inheritance Tax was only chargeable if the settlor died within seven years of setting up the trust.
The Finance Act 2006 made significant changes to the Inheritance Tax treatment of interest in possession trusts. These changes took effect from 22 March 2006. Since 22 March 2006, if an individual creates an interest in possession trust during his or her lifetime the transfer comes within the relevant property regime, and:
The transfer is immediately chargeable to Inheritance Tax; the assets within the trust are ‘relevant property’ and are therefore subject to exit and principal charges. This was not the case for interest in possession trusts set up before March 2006.
To understand the Inheritance Tax treatment of interest in possession trusts, we need to be able to differentiate between ‘relevant property’ and ‘qualifying interests in possession’.
Where trust assets are held on ‘qualifying interest in possession’, such assets are comprised in the estate of a beneficiary. Therefore, where a beneficiary is a life tenant of a ‘qualifying’ interest in possession trust, the trust assets form part of his death estate. As ‘qualifying interest in possession trusts’ are already within the scope of Inheritance Tax, property within a qualifying interest in possession trust is not subject to exit and principal charges.
Finance Act 2006 changed the rules such that not all life tenants of interest in possession trusts are now treated as having a ‘qualifying interest in possession’.
The term ‘qualifying interest in possession’ is used to describe:
IHTA 1984, Section 59 (1);
Assets in a trust for a disabled person;
Assets in an interest in possession trust created on death; and
Assets in a lifetime interest in possession trust created before 22 March 2006.
IHTA 1984, Section 3A (1):
Assets settled on ‘qualifying interest in possession’ trusts are treated as being part of the estate of the beneficiary with the interest in possession (the life tenant).
IHTA 1984, Section 49 :
Because such assets are taxed in the beneficiaries’ death estate, ‘qualifying interest in possession trusts’ are not subject to exit and principal charges.
If an individual dies with a qualifying interest in possession in a trust, the trust assets will form part of his death estate. The executors must declare the value of a qualifying interest in possession on the death estate return (form IHT400). If the beneficiary only has an interest in part of the trust fund, the same proportion of the assets in the trust is deemed to form part of his estate.
Assets held in the deceased’s own right – personal assets etc – make up his ‘free-estate’. We value the free-estate, deduct any liabilities and then add the value of a qualifying interest in possession to the assets in the free-estate. This total amount will be charged to Inheritance Tax.
Taxation
The trustees are responsible for paying income tax at the rates below.
Type of income
Tax rate
Dividend type income
7.5%
All other income
20%
The trustees are responsible for paying income tax at the rates above.
Sometimes the trustees mandate income to the beneficiary. This means it goes to them directly instead of being passed through the trustees. If this happens, the beneficiary needs to include this on their self-assessment tax return and pay tax on it.
Settlor interested trusts
This is where the settlor is also a beneficiary of the trust that they have set up. In these circumstances the settlor is responsible for income tax on these trusts, even if some of the income is not paid out to them. However, the income tax is paid by the trustees as they receive the income.
The trustees pay income tax on the trust income by filling out a trust and estate tax return.
They give the settlor a statement of all the income and the rates of tax charged on it.
The settlor tells HMRC about the tax the trustees have paid on their behalf on a self-assessment tax return. The rate of income tax depends on what type of trust the settlor interested trust is.
On the death of the settlor the full value of the trust fund forms part of the settlor’s estate.
If you have any questions please call us on 020 7481 2422 or email us at enquiries@wellerslawgroup.com if you would like to know more.
This article was written by Wellers Law Group and the law is correct as at 24th November 2020. Please note that tax legislation changes frequently, so this article should not be relied upon without seeking further legal advice.
Why You Should Seek Professional Legal Advice for Your Will
Your will is one of the most significant documents you will ever create. It sets out your wishes for your estate after you are gone. To ensure it is properly written and legally valid, it is crucial to use a professional solicitor. DIY wills are more prone to errors, which can render them invalid, potentially causing significant complications. A solicitor will ensure that your will is executed correctly, giving you peace of mind.
Professional assistance is essential in drafting your will no matter your circumstances but particularly if you own property in the U.K. or abroad, own a business, have dependents outside your immediate family or you’re aiming to reduce your inheritance tax bill or have complex wishes.
Who Should Make a Will?
Everyone over the age of 18 should make a will, particularly if you have a partner, children, property, shared financial assets, or any other significant assets. Making a will gives you control over your legacy. You can choose an executor you trust to carry out your wishes.
Without a will, your assets will be distributed according to the Rules of Intestacy. This means you cannot choose your executor; one will be appointed for you, who may not act in your best interests.
Keeping Your Will Up to Date
It is important to regularly review your will with a solicitor to ensure it reflects your current circumstances. Significant life events, such as marriage, remarriage, having children, a family member’s death, or changes in inheritance tax laws, necessitate updating your will. This ensures it remains effective and honours your intentions.
Understanding Inheritance Tax
Inheritance Tax (IHT) is payable on estates exceeding the Nil Rate Band allowance—the amount you can leave tax-free. While everyone is subject to the Nil Rate Band, in 2017, the Government introduced an additional Nil Rate Band, subject to conditions:
1. You must have a property to leave to your descendants (children or grandchildren).
2. Your estate must be valued at under £2 million.
By consulting with a solicitor, you can ensure that your will is valid, up-to-date, and optimised to manage inheritance tax effectively.
Find out more about why you need a professionally drafted Will, with Dawn Pearce
Why You Need to Create a Lasting Power of Attorney with a Legal Professional
Creating a Lasting Power of Attorney with a solicitor ensures that the document is correctly drafted and legally sound. Solicitors provide professional advice tailored to your specific situation, helping you understand the implications of your choices. They also ensure that the document meets all legal requirements, reducing the risk of errors that could render it invalid.
Additionally, a solicitor can help you navigate the complexities of LPAs, including advice on selecting appropriate attorneys and understanding their responsibilities. By creating an LPA with a solicitor, you can have peace of mind that your affairs will be managed according to your wishes, without unnecessary delays or complications.
What is an LPA?
A Lasting Power of Attorney (LPA) is a legally binding document that enables you to appoint someone to act on your behalf when you are no longer able to do so yourself.
There are various reasons you might need someone to act on your behalf. In the short term, this could be due to a hospital stay where you need someone to manage your bills. Over a longer period, it might be necessary if you are diagnosed with a condition like dementia and need someone to take over your property and financial affairs.
Types of Lasting Power of Attorney
There are two types of LPAs:
Property and Financial Affairs: This allows you to appoint someone to manage your finances, property, claim, receive or use your benefits, and handle your bank accounts.
Health and Welfare: This allows you to appoint someone to make decisions on your behalf regarding where you live and your medical care when you can no longer make these decisions yourself.
If you have an Enduring Power of Attorney (EPA) document, you will need to create an LPA to ensure your wishes are upheld. EPAs stopped being issued in 2007 and were replaced by LPAs.
If you lose capacity and only have an EPA, the document must be sent off for registration with the Office of the Public Guardian, which can result in a lengthy delay before any action can be taken, during which your assets are frozen. With an LPA, registration occurs at the time of creation, ensuring it is ready for use whenever needed.
Get In Touch With Our Team Today
Ensuring that your Lasting Power of Attorney and Will are properly drafted and legally sound is crucial for safeguarding your future and the future of your loved ones.
Our experienced solicitors are here to provide expert guidance and support, ensuring your legal documents are tailored to your unique needs.
Don’t leave such important matters to chance. Contact the Wellers Law Group team today to discuss how we can assist you in creating a Lasting Power of Attorney and drafting your Will.
Find out more about LPAs with Dawn Pearce
If you would like to receive our newsletter please let us know here
