Future planning – Do you know where your estate is going?

Tuesday 30 January 2018

By Charles Crossley, Director - Private Client Services, Equiom Isle of Man


Future planning – Do you know where your estate is going? 

This is the big question we should all ask ourselves, but how many of us give this important issue the consideration it really deserves or would we rather not think about it?  Some may consider it not to be their problem, but others might be disappointed to know how their assets would ultimately devolve under the laws of intestacy in the absence of a valid will.  Should we put off thinking about our wills just because it’s too difficult to contemplate the twists and turns of family relationships and the effect that wealth might have on them? You wouldn’t be alone; according to research, more than half of the UK adult population do not have a will. However, careful planning and a little bit of forethought can cater for most eventualities, and provide the peace of mind that your hard-earned wealth will be distributed according to your wishes. 

What can you do?

A will is fundamental to estate planning as, if suitably drafted, it sets out the parameters for the allocation of your assets. The process may also prompt other helpful measures such as the provision of powers of attorney or living wills, which ensure that your affairs are dealt with as you would wish, even in the event that you lose capacity. Charitable giving may also be something to consider at this point, and all these provisions can be discussed with your lawyer when preparing your will.

Whilst it would be wrong to say that, once drafted, a will can be forgotten about - we would always advise a regular review of your arrangements to ensure they remain appropriate - there is nevertheless a certain satisfaction that the matter has been dealt with and the burden lifted. 

When considering your will the choice of executor(s) requires careful thought. The executor is the person who ensures the provisions in your will are actioned, and will liaise with the beneficiaries after your death. We are asked regularly to act as executor for our clients and this is often because we already have knowledge of them, their assets, and in many cases have met many of the family members. We usually suggest a corporate executor is appointed as this can address any issues of succession. A professional executor can also handle matters impartially and take away the worry and responsibility placed on loved ones at what is likely to be a very difficult time for family and friends. 

Acting in this capacity, our principal focus at the outset is to secure the assets and then to work through the steps required to the point of distribution. These might include obtaining the death certificate, assisting with funeral arrangements as necessary, securing probate, carrying out the specific wishes of the testator in terms of specific legacies, arranging for property to be cleared and sold, and dealing with tax affairs both pre and post death.

Often, if assets are held in multiple jurisdictions, it may be advisable for separate wills to be made to cater for specific assets abroad, and we can assist in this process, in some cases leveraging on the expertise within our global network.

Estate planning would certainly not be complete without considering the effects of taxation on the estate, and through our colleagues in Equiom Solutions Limited advice can be furnished on all aspects of this. In many cases, lifetime planning is required to complement the estate planning being considered to ensure unexpected tax liabilities are mitigated. For example, whilst the Isle of Man is not subject to estate duties per se, the recent changes in UK tax legislation bring more assets into the scope of inheritance tax than was previously the case. No longer, for instance, does the interposition of an Isle of Man company provide the protection from UK inheritance tax for UK residential property which it used to, and further planning may be required to consider the effect of such changes. 

The use of Isle of Man trusts as a part of estate planning also continues to be a popular and efficient way to structure your affairs. A key advantage is to provide flexibility, so that rather than leaving rigid arrangements whereby, for example, a family member inherits a large sum of money at an undetermined and potentially inappropriate point in the future (perhaps at too young an age when the funds might be squandered), the use of a trust can manage the flow of funds to maximum effect without necessarily burdening the beneficiary with the weight of responsibility that immediate wealth might bring.  Not only can trusts help to navigate the tax environment and provide long-term security for the beneficiaries in an efficient manner, their foundation is to respect the wishes of the settlor over a longer period, most often with suitable discretion to navigate changes.  These might include a change to the circumstances of a beneficiary (for example through divorce), but also wider legislative changes, such as taxation.

Often, the settlor’s wishes will be recorded by letter during their lifetime, and may be subject to change by them at any time without affecting the drafting of either the will or the trust deed. The letter provides the trustee with indications of how and to whom the fund might be distributed. This might, for example, place limits on the amounts available to younger generations at any one time, may support the entrepreneurial spirit of the beneficiaries by providing seed capital for new business, or give guidance on how to divide the assets between family lines which can be complicated, particularly with multiple marriages.

There are several ways in which trusts can be interposed within estate planning. Most often, the settlor might create a trust with minimal assets before finalising their will, and the trust will remain dormant until funded by the will. During this period, the will might be amended several times according to circumstances, but so long as the trust deed continues to fit the purpose, it would not need to be changed at the same time.  Alternatively, the Will itself may contain trust provisions which essentially combine the will and trust provisions together.


So, in conclusion, don’t leave your estate to chance. If you have made a will already, dust it down from time to time and make sure that the arrangements you put in place are up to date and still fit for purpose. If you haven’t made a will or it is some time since your will was drafted, now is the time to seek appropriate advice.  It’s not a subject any of us likes to contemplate, but a bit of planning now can make a very big difference later!


If you would like to discuss your estate in more detail, please contact Charles Crossley