From the Wealth Protection Team

A reader wrote to us and asked: ‘Does a will outright a trust?’

By way of background information, she explained that her mother had established a trust during her lifetime and property had been transferred (ie. settled) into the trust. Our reader wants to know if her mother’s will (made after the trust was set up) would over-ride the terms of the trust?

This is a common query. It’s important to remember that a will and a trust are two completely separate succession planning devices relating to completely separate and distinct property interests.

A will covers the personal estate of the will-maker, whereas a trust is a device established by a settlor to place property outside their personal estate for the benefit of certain named beneficiaries.

Once property has been settled into a trust, it no longer forms part of the settlor’s personal estate and, as such, is no longer property governed by the settlor’s will. It is trust property, plain and simple, and is governed by the terms of the trust alone.

Can a will ever influence a trust?

There are a couple of limited exceptions where a will may impact or influence a trust:

• Depending on the terms of the trust, anyone who holds delegable powers under the trust (such as the power to appoint & remove trustees and/or beneficiaries) may be entitled to make a direction under their will regarding those powers. For example, a will-maker may appoint a person to hold their power of appointment of trustees after their death. By doing that, they have transferred control of the trust to that nominated person.
• It is also very common for a will-maker to include a statement in their will that any debt owing to them by the trust is forgiven. The effect of this is to effectively transfer wealth from the personal estate to the trust – because, if that debt had not been forgiven, the trust would be required to repay the debt to the estate.

So, the answer to this question is:

‘No, generally a will does not trump a trust. In fact, neither trumps the other – they each cover entirely different property interests.’

Do you have any questions about the structure of your Trust or how to put effective succession planning in place? Get in touch today: info@wakefieldslaw.com or give us a call on 04 970 3600

The post Ask a Lawyer: Does a Will Outright a Trust? appeared first on Wakefields Lawyers.