Wills, Probate, Trusts and Inheritance Tax

The England and Wales law on Wills is broadly similar to that in Ireland. A Will must be in writing and must be signed in the presence of two witnesses. An Irish resident individual who owns UK situate assets may not necessarily require a separate English Will. However, if he/she wises to create trusts of English assets or if he/she wishes to minimise Inheritance Tax, a separate English Will may be necessary or desirable in relation to English or UK assets.

 

There are no rules in England and Wales which create an absolute right for a spouse, children or others to a fixed share of a deceased's assets. However, the estates of English and Welsh resident individuals can be challenged if they do not make proper provision for their family and dependents.

 

The England and Wales rules which apply in the case of intestacy (i.e. where no Will is made) are quite different to those in Ireland. These rules apply to long term English residents. The rights of spouses are less than in Ireland. Other relatives are given more tighter entitlement, than is the case in Ireland.

Where an individual dies with assets situated in England and Wales (e.g. a property, shares in an English registered company or other assets) an English grant of representation is required. The personal representative (the executor where there is a will, the administrator where there is no will) is obliged to administer the estate in accordance with law.

 

A trust provides a mechanism for suspending the ownership and managing assets for a period. A trust can be set up by Will or by during a lifetime deed. A trust can be a powerful method of managing family assets and tax planning over a long period of time.

 

The UK rules on administration of trusts have been considerably modernised in recent years. It is still desirable to provide administrative powers appropriate to the circumstances.

 

UK Inheritance Tax is controversial and can be onerous. It applies at a flat rate on all a deceased's assets over a value of £312,000 at a rate of 40%. Individuals whose long term home is outside the UK are subject to UK Inheritance Tax on their UK situate assets (such as property, the shares of UK registered companies).

 

Certain reliefs are available for Inheritance Tax for particular types of property, scenarios and individuals. Because of the ability of trusts to effect the timing of passing of assets there are specific Inheritance Tax provisions which affect trusts.

 

Particular international issues arise for individuals who are resident outside the UK who hold UK assets. Considerable opportunities exist for Irish domiciled individuals to avoid and reduce exposure to UK Inheritance Tax.