Glossary
We appreciate private client law uses a lot of legal jargon so we have put together
the most commonly used legal phrases and an explanation below to assist.
Agricultural Property
Agricultural property can qualify for relief against the charge to inheritance tax on death provided certain conditions have been satisfied. If you have any agricultural property which you think might qualify for this relief, please discuss this further with your advisor.
Attorney
An Attorney is the person acting for a Donor (i.e. person creating the power) under a power of attorney. Whilst the donor has mental capacity the attorney must act on his/her instructions and must always act in his/her best interests.
Bare Trust
A bare trust is a trust in which the beneficiary has a right to both income and capital albeit it is often controlled by a Trustee on his or her behalf. A bare beneficiary and may call for both to be remitted into his own name.
Bloodline Trust
See Discretionary Trust
Business Assets
Some business assets can qualify for relief against the charge to inheritance tax on death provided certain conditions have been satisfied. This relief is available in respect of businesses which are wholly or mainly trading. The relief is not available in respect of investment businesses. If you have business assets which you think might qualify for this relief, please discuss this further with your advisor.
Court of Protection
The Court of Protection in English law is a superior court of record created under the Mental Capacity Act 2005. It has jurisdiction over the property, financial affairs and personal welfare of people who lack mental capacity to make decisions for themselves.
Default Beneficiaries
In the event that no one is left to inherit your estate e.g. in the event of a family accident, please specify who you would like to benefit in default e.g. extended family or a charity
Deputy
A Deputy is usually appointed by the Court of Protection to look after the finances of a person who lacks capacity.
Disabled Person’s Trust
A Disabled Person's Trust can be a way of ring-fencing assets for the beneficiary so that their means-tested benefits are not affected. A Trust can protect a disabled person who could otherwise be vulnerable to financial abuse or exploitation from others.
Discretionary Trust
A discretionary trust, in the trust law of England and Wales, is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in a document created by the Settlor. Trusts of this nature can also be referred to as “Wealth Preservation Trusts” or “Bloodline Trusts”.
Domicile
Your domicile is important in deciding how your estate is to be structured. It could also have a significant bearing on the amount of tax which might be payable in the event of your death. Your domicile of origin is generally where you/your forefathers were born and domicile of choice is the country where you intend to reside in the future on a permanent basis.
Donor
The Donor is the person giving the power under a power of attorney
Executors
The role of your executors is to report the details of your estate on your death to the appropriate authorities and make distributions to your intended beneficiaries. It is recommended that you should always appoint at least two executors. If you would like to appoint someone independent, it is advisable to appoint a Solicitor.
Guardians
If there are children under the age of 18 you can appoint one or more guardians to look after them if you (and the other parent) should die.
Inheritance Tax
Inheritance tax is charged on the value of your estate that is above £325,000 (for the tax year 2021-2022 and usually increased annually). Will are often used as a useful tool for inheritance tax planning measures. Under certain circumstances, the survivor of a married couple is entitled to double the allowance. There is also a main residence nil rate band to consider which tends to be £175,000 per person for those individuals who has children and have an estate less than £2m.
Interest in Possession Trust
An interest in possession trust is a trust in which at least one beneficiary has the right to receive the income generated by the trust or the right to enjoy the trust assets for the present time in another way.
Life Interest Trust
A life interest is a form of right, usually under a trust, that lasts only for the lifetime of the person benefiting from that right. A person with a life interest is known as a life tenant. A life interest ends when the life tenant dies.
Life insurance
The reference to “Life assurance” is a reference to policies which only produce money in the event of death. You might for instance have a life policy linked to your mortgage.
Lasting Power of Attorney
Lasting powers of attorney in English law were created under the Mental Capacity Act 2005, and came into effect on 1 October 2007. The LPA replaced the former enduring powers of attorney which were narrower in scope. A lasting power of attorney (LPA) is a legal document that allows someone to make decisions for you, or act on your behalf, if you're no longer able to or if you no longer want to make your own decisions.
Mental Capacity Act 2005
The Mental Capacity Act 2005 is an Act of the Parliament of the United Kingdom applying to England and Wales. Its primary purpose is to provide a legal framework for acting and making decisions on behalf of adults who lack the capacity to make particular decisions for themselves.
(Ordinary) Power of Attorney
An ordinary power of attorney (OPA) is a legal document in which someone (the donor) gives another person (the attorney) the right to help them make decisions, or take decisions on their behalf. It can also be called a general power of attorney. An OPA can only be used if the donor has mental capacity.
Probate
Probate is the entire process of administering the estate of someone who has passed away. This involves organising their money, assets and possessions and distributing them as inheritance – after paying any taxes and debts. If the deceased has left a Will, it will usually name the Executor chosen to deal with the estate.
Philanthropy
The desire to promote the welfare of others, expressed especially by the generous donation of money to good causes and often charitable causes.
Personal Injury Trust
A personal injury trust is a legally binding arrangement for holding and managing funds received as a consequence of an injury. The trust must be managed according to specific rules. It is important that the right kind of trust is used, suitable for the person's circumstances.
(Ordinary) Power of Attorney
An ordinary power of attorney (OPA) is a legal document in which someone (the donor) gives another person (the attorney) the right to help them make decisions, or take decisions on their behalf. It can also be called a general power of attorney. An OPA can only be used if the donor has mental capacity.
Statutory Will
A Statutory Will is therefore a will that is made and ratified by the Court of Protection on behalf of an individual who lacks capacity. Once the will is made it is considered as legally binding as a regular will. Applications for Statutory Wills are complex and often costly
Settlor
A person who makes a settlement, especially of property in establishing a trust.
Trustees
Trustees are responsible for assets comprising the Trust Fund for the benefit of beneficiaries. They will have legal responsibilities for carrying out the functions of the trusts. An independent trustee can enable that your wishes are carried out. If in doubt, you can appoint Private Client Solicitors to act as your trustees.
Vulnerable Persons Trust
See Disabled Persons Trust
Will
A will or testament is a legal document that expresses a person's wishes as to how their property is to be distributed after their death and as to which person is to manage the property until its final distribution.
Wealth Preservation Trust
See Discretionary Trust
Private client legal services
We have extensive experience in relation to wills, trusts, tax, estate planning, succession, wealth preservation, probate, mental capacity law and philanthropy. Our priority is to ensure that your legacy planning produces the best possible outcome for you and your family.
