A Will with "Guidance". Problems?

getmore4less

Just tell potential beneficiaries now what you would like and let them decide at the time.

keep the will simple and a side note if you really want with something along the lines of a,b,c are causes close to me that would appreciate a donation.

The beneficiaries can decide if they need to do a DOV to reduce IHT on your estate or can happily give from their new wealth or just not bother.

another simple approach is to set aside some asset(s) that can easily be adjusted as you go along, have that set aside for the charities in the will.

eg. if £50k would cover it then you could have premium bonds as the account holding the charity share, easily adjusted and ring-fenced until a POA may decide to cash them first.

Sea_Shell

getmore4less wrote: »

another simple approach is to set aside some asset(s) that can easily be adjusted as you go along, have that set aside for the charities in the will.

eg. if £50k would cover it then you could have premium bonds as the account holding the charity share, easily adjusted and ring-fenced until a POA may decide to cash them first.

That a great idea. That way if the asset exists at the time of death (under the same specified account number etc.) then it can pass to them, but at the same time if you (or your PoA) need to spend it you can.

IF the asset didn't exist at the time of death though, they'd get nothing.

You'd need to ensure that your PoA knows that this is your intention for the account, and to spend your "pots" proportionally, as otherwise they could spend all your other money, leave this intact, and then the charity could get more that your family!!!

Actually, that last point is the most crucial I think in that scenario.

Lots to think about.

getmore4less

Sea_Shell wrote: »

That a great idea. That way if the asset exists at the time of death (under the same specified account number etc.) then it can pass to them, but at the same time if you (or your PoA) need to spend it you can.

IF the asset didn't exist at the time of death though, they'd get nothing.

You'd need to ensure that your PoA knows that this is your intention for the account, and to spend your "pots" proportionally, as otherwise they could spend all your other money, leave this intact, and then the charity could get more that your family!!!

Actually, that last point is the most crucial I think in that scenario.

Lots to think about.

this is the potential flaw(that's why I included it) because it opens the door to the Charity becoming a problem beneficiary.

It moves the problem of describing what you want from the will to the LPA.

Yorkshireman99

Sea_Shell wrote: »

That a great idea. That way if the asset exists at the time of death (under the same specified account number etc.) then it can pass to them, but at the same time if you (or your PoA) need to spend it you can.

IF the asset didn't exist at the time of death though, they'd get nothing.

You'd need to ensure that your PoA knows that this is your intention for the account, and to spend your "pots" proportionally, as otherwise they could spend all your other money, leave this intact, and then the charity could get more that your family!!!

Actually, that last point is the most crucial I think in that scenario.

Lots to think about.

There are very strict rules on what an attorney can, and more importantly can't do. The scheme proposed is a non starter.

securityguy

Yorkshireman99 wrote: »

There are very strict rules on what an attorney can, and more importantly can't do. The scheme proposed is a non starter.

I don't quite see why. What the attorney can't do is disadvantage the donor to benefit a potential beneficiary. However, if there are two bank accounts containing money, the attorney can draw from either (all other things being equal) and if the effect of that is to benefit one beneficiary over another, because a will - which the attorney may not even know the contents of - leaves one account to X and one account to Y, that's not the attorney's concern.

Consider, therefore, the case of a donor who has two bank accounts, one of which is left to beneficiary X and one of which is left to beneficiary Y. The attorney needs to access some money, and those accounts are all they are. What do you think the attorney should do? I would assert that they can use either account, and the impact that has on the potential beneficiaries is entirely irrelevant to their decision. But they are not forced to spend proportionately, to flip a coin, to prioritise one over the other, whatever. The attorney has to operate as though there were no will, and without concern for beneficiaries. But so long as there is no effect on the donor, the attorney doesn't have to deliberately act capriciously for the sole purpose of frustrating the will, either.

So I can't see why an attorney cannot be told "use the money in account X before account Y", or "sell asset X before asset Y", either formally in the PoA or informally via a side letter, nor do I see how such actions - provided they did not disadvantage the donor in any way - could be challenged.

Malthusian

Yorkshireman99 wrote: »

There are very strict rules on what an attorney can, and more importantly can't do. The scheme proposed is a non starter.

Why?

If you made a Will saying "I bequeath my Premium Bonds to the Cats Protection League" and then filled in the preferences section of the Power of Attorney saying "When my attorneys need to draw from my capital, I would prefer them to draw from my Premium Bonds and my non Premium Bond assets in due proportion as far as is practical", which part aren't the Attorneys allowed to do?

You wouldn't even need to fill out the preferences section, you could just tell the Attorneys what the idea is beforehand, as the Attorneys would be perfectly entitled to do that even if you didn't tell them that was your preference.

The Attorneys don't need to know the contents of the Will so the fact that the Premium Bonds are designated to one beneficiary and the non-PBs to another is not their problem. They could spend your Premium Bonds and disinherit the charity or spend your other assets and disinherit the family - there are perfectly good economic reasons to do either, independent of the inheritance issue. Equally there's no reason they can't spend both in due proportion.

We have seen this issue before on this forum - if a testator is dim enough to write in their Will "my house to my son and my cash to my daughter", and then they go into care and their Attorney sells the house to pay for the care, meaning the son gets nothing (unbeknownst to the Attorney), what rights does the son have to claim against the Attorney? None whatsoever.

(C/P with securityguy)

Malthusian

Incidentally, on a purely wotireckon basis, my solution to this problem would be

a) everything you can afford and want to give to charity now, do so
b) leave a specified sum worth just over 10% to charity in the Will to get the Inheritance Tax break, and update it regularly
(if I lose capacity to update my Will, but continue breathing for many years, meaning that it ends up as less than 10%, oh well)
c) leave the rest to my family and let them decide whether they can afford to give any funds they don't need to charity, either directly or via Deed of Variation.

If they're of the same mind as me (which I would hope they are) it will find its way to charity eventually, even if that's via the next generation or the one after that, but only after my own descendants' needs have been met. Like you said, charity begins at home.

Yorkshireman99

I am assuming that we are all talking about Lasting Powers of Attorney where the donor has lost mental capacity. The rules are very strict to protect, as far as possible, the donor's funds from being spent inapproriately. The wide discretion suggested goes against the whole purpose of LPOAs that is, as far as possible, to protect the donor's assets and only spend them in a way that derectly benefits the donor. If the OP really can't make up their mind and still wants some discretion then some kind of discretionary trust is probably more practical. The problem is, as always, is finding someone that can really be trusted to adninister it.

Mojisola

Chris75 wrote: »

The trouble with a set amount is that we do not know what the estate will be worth when we die. If we set a specific amount now and then we have had nursing home expenses etc it might leave very little for the family and if we are in a nursing home changing the will might be something we cannot easily achieve.

This is my concern. We have put set amounts in our wills but are keeping things under review because we don't want charities to benefit while our offspring are left with very little.

We may take the charities out of our wills altogether and leave a letter to our beneficiaries saying that, if they are in a position to do so, please make a donation to some named charities.

It's a shame that it's the charities own actions that make leaving them money so troublesome that many people choose not to.

Sea_Shell

I'm guessing if that a PoA was acting 100% in the interest of the donor, they should spend the money in the order of the best return that money was achieving (as I would with my own money).

That is spend the money earning 0% interest (e.g. Premium Bonds) first, then that only earning 1% and so on, leaving the best paying accounts or investments to last.

By not cashing in the lowest paying accounts first, they could be disadvantaging the donor!!