Discretionary wills: Keeping your options open
Sponsored feature by Owen Byrne, senior associate, BDB Pitmans
At a recent seminar, a perplexed advisor raised the question of a client’s wish to leave his estate to those who attended his funeral (but without them knowing they would inherit by attending).
After a witty response from someone asking for advance notice of the funeral, the right answer came out: the testator should make a discretionary will, leaving his executors a letter of wishes asking them to decide how to monitor who had attended the funeral and distribute accordingly.
By a discretionary will, you give your executors discretion as to how your estate is distributed. You would leave them a letter of wishes setting out principles, which can be very detailed, but it is non-binding on them.
Discretionary wills are becoming more commonplace in practice. Some clients will not consider them. They want absolute certainty as to who gets what. Some are uncomfortable with the thought of trusts. Others welcome the flexibility a discretionary will provides. The structure can last much longer than a more specific will.
When the testator’s intentions or circumstances change, the letter of wishes can be updated without having to go through the formalities of signing a will in front of two witnesses each time. A discretionary will essentially empowers your executors to distribute according to circumstances at the time of your death. Many things, including family circumstances (eg a child going through a divorce), assets and tax law can change between a testator writing a will and death.
Another common reason is to protect family wealth in a trust for future generations. Perhaps you do not want your children to have access to their inheritance all at once? Perhaps you would like to give your adult children flexibility to pass some of their share to your grandchildren in a tax efficient manner?
It is important to keep your will under review as your intentions, assets, family circumstances and tax law change.
At BDB Pitmans we have an Individuals team to help with such life changes – private client, matrimonial and residential property.
BDB Pitmans can be found at 51 Hills Road, Cambridge. Visit bdbpitmans.com.
