Whilst a Will is something everybody should make, making a Will requires some crystal ball gazing and decisions based on various unknown matters i.e. decisions on what’s to be done at an unknown future time (time of death) with unknown assets (what you may have now may be very different to what you have on death) for the benefit of beneficiaries whose circumstances at the relevant time are unknown.
Wills should be regularly reviewed and can be amended at any time by codicil or a new Will made to reflect changing circumstances but a discretionary Will can go a long way to avoiding the need to make amendments or a new Will and the crystal ball gazing mentioned above.
With that in mind, the above headline in a Sunday newspaper caught my eye. It related to a question from a reader who’s son was about to be declared bankrupt and who was concerned at the possibility of the son’s inheritance being taken by his creditors. The answer was to make a discretionary Will of which the son would be a beneficiary but would not be entitled to anything as of right i.e. it would be for the trustees to decide at their discretion how and when the son might benefit and it would be strange if trustees exercised their discretion in his favour if that meant the benefit being taken by the son’s creditors. Instead, the trustees might consider benefits for the son’s wife and/or children.
As well as minimising the risk of inheritances being taken by a beneficiary’s creditors etc and the intended benefit being lost, a discretionary Will also has the advantage of not needing to be amended to reflect changing family etc circumstances. Instead, the testator can simply amend from to time the letter of wishes provided to the trustees to help them when it comes to them exercising their discretion.
So, unless you are confident about your powers of predicting the future, consideration should be given to whether a discretionary Will is appropriate to your circumstances as part of your overall tax and financial planning.
