Testamentary trusts can be used to provide flexibility to a will so that it is, as far as possible, able to adapt to meet changing circumstances of the intended beneficiaries of the estate. They can also be used in situations where it is thought that the beneficiary might go bankrupt, be in a relationship which is deteriorating, or is possibly of unsound mind. Because of the flexibility that trusts afford, they are often said to “rule from the grave”.
Examples of testamentary trusts that are often employed in wills are as follows:
- Education – to enable a child/ grandchild to finish education and when this is done the remaining trust capital would form part of the residual estate.
- Absolute capital protected – for situations where a spouse or children are not to receive control of capital but are free to do as they please with the income. The remainder beneficiaries receive either all the capital as “absolute” or surviving beneficiaries.
- Protective – Special disability – for situations where there is a beneficiary with a severe disability in need of financial support for care and accommodation but not to be given control. Capital can be reserved for remainder beneficiaries after the vulnerable beneficiary dies.
Changing a will
Wills should be reviewed regularly and changed if there have been changes in the will makers personal situation that could result in unintended consequences. For example, if a marital relationship breaks down, it would be sensible for each party to that relationship to make new wills which would properly reflect their new circumstances.
If a nominated beneficiary of a will becomes bankrupt, it would be sensible to make a new will either excluding that beneficiary or creating a trust in favour of that beneficiary so that the creditors of that person do not benefit by a windfall injection of funds.
When changing a will, it is most important to ensure that this is done properly. Sometimes changes are made by way of a separate document, called a “codicil”, which should be signed with the same level of formality as the will itself – ie: in the presence of two witnesses and with the same pen. It is our philosophy at Nevett Ford Lawyers that unless exceptional circumstances apply, instead of adding a codicil, it is usually safer to revoke the current will and make a new one which properly reflects all of the desired changes.
