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Livnlov
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Posted on Sun, Dec 25, 2011 17:48

A response to a friends question led me to post this - hoping it helps someone somewhere. Enjoy - until it bores you to death, lol! WILLS – 1.Only effective after the death of the testator. 2.Testator cannot be a beneficiary 3.Testator cannot be an executor 4.Quite rigid, but can be updated with a new one – advisable to review every 5 years or so, and review against any changes in life such addition to the family, divorce, remarriage etc. (Case study – Mr. A gets divorced, but forgot to update/change their Will, in which they had left everything to his then wife. He dies – the spouse even though now divorced will inherit the estate. Of course the rest of the family are welcome to challenge the Will in a court of law, but since the testator is dead, he will not be any use as a witness, if you know what I mean). 5.Codocils can be added at a review or when necessary at an extra cost to modify, add or remove certain aspects of the Will. 6.It is advisable to use an attorney to draw one up to avoid writing a Will that is invalid – there are many things that can invalidate a Will – 1. A testator signs a Will, then gets a witness who did not see him/her sign his/her signature to sign the Will afterwards – that will is invalid. 2. A testator gets a beneficiary of the Will to witness his signature or a witness of the signature happens to be a beneficiary – that Will will be invalidated. 3. The testator only has one witness instead of two – that invalidates the will. 4. The testator was not considered to be of sound mind when the Will was drawn up. 5. The testator is believed to have been unduly influenced by a beneficiary (e.g. instructs a Beneficiary to be an Executor or Administrator of the Will). 7.If you die without a Will, the state will determine who inherits your estate in accordance with the laws of intestacy – nobody likes this - can actually make the testator pull out his/her hair from the grave! (Case study – Mrs. B was separated, never got round to writing a will, but then died before her divorce was final (decree absolute) – the separated/estranged spouse will inherit the lion share of the estate to a certain limit, and a life interest {income for the rest of his/her life} on 50% of the remainder of the estate, and the children will be left the other 50%. This can usually cause a lot of upset, lawsuits and counter lawsuits. It is always best to have a Will in order to avoid these sorts of problems. If it is a small estate (i.e. below £250,000), the children will end up with absolutely nothing which means if these children are step-children to the surviving spouse, it would be very devastating for them. Conversely, if the estate is much larger, it cause even more problems that are too numerous and detailed for me to do justice to on here. 8.There are specific named beneficiaries. 9.There are few types of Wills i.e. mirror will (where one spouse’s Will mirrors the other’s); single will (drawn up by a single person); Will trust (one that incorporate a Trust within it to tackle the tax man with regards to death taxes) 10.Will addresses who should get what and may not deal with death tax problems except a Trust is incorporated in the Will as in Will Trusts. 11.May not protect the beneficiary from divorce asset sharing. 12.I am sure there are other points, but can’t remember any right now as my brain is tired! TRUSTS – 1.Effective from the date it is setup, during and after the lifetime of the donor or settlor. 2.Donor/Settlor can benefit from the trust. 3.Donor/Settlor can be and are usually Trustees - so they retain control irrespective of whether they are beneficiaries or not. 4.Trust can be rigid or very flexible. There is no review necessary – flexible trusts tend to address these unpredictable life changes from the onset. Absolute trusts are different ball game – they are set in stone and cannot be changed without effectively almost nullifying the existing trust. 5.Codocils do not apply to trust for reason 4 above – one can simply set up a flexible trust or series of different absolute trusts. 6.Trusts are very complicated so one definitely needs to instruct an expert to set one up. Never attempt it on your own otherwise you could end up with a worthless piece of paper but worse still the entire purpose ends up being defeated and could have very serious and devastating effects as Trusts are highly time dependent (I will explain that later in ….below). 7.One can die without a Trust and it will make no major difference as long as there is a Will. Trusts are specific and not everyone needs one. It all depends on the circumstance of the individuals and should really not be a big deal for tax purposes if the estate is worth less than the Nil Rate Band (NRB). 8.Some Trusts are flexible and there need not be specific named beneficiaries but could have potential beneficiaries – these are particularly good for asset protection in the event of a divorce. They have their advantages as well as disadvantages. There are other trusts that however must have named beneficiaries – these do not protect against the named beneficiaries’ trust assets in the event of divorce, but protects the donors’ since the assets are no longer the donors’ once given away – but that completely depends on the type and wording of the trust as well as the time between the trust date and the date of filing of the divorce, and if the Donor is also a Beneficiary. 9.There is a wide array of trusts. 10.Trusts, if set up properly, at the right time, and monitored on an on-going basis, effectively addresses death taxes. They also deal with transfer of wealth on death as a Will would. 11.As earlier stated in 8 above, trusts can protect against divorce asset sharing. 12.I am sure there are other points – Have had too much fun today with the kids, lol! Basically, from the day a trust is set up, it becomes effective. A Will only becomes executable and effective on the death of the settlor or testator. A valid point to understand is that on death everyone has an estate; this could either be small, medium size or quite large – it could also be in the negative, which means the beneficiaries of such estate would have to settle the debts, sadly. When a trust is set up, the assets placed within the trust cease to be the assets of the estate. In other words, if a person had £1 million pound and then set up a trust and places £500K into the trust, subject to some rules, his estate would become worth only the remainder £500K. An interesting point to note is that gambling debts are not imputable for the purposes of death tax reduction i.e. if a man died worth £5 million, and had gambling debt of £4 million, the tax man will tax his entire estate less the Nil Rate Band and ignore his gambling debts. But if the same man died worth £5 million and had business or any other debts of £4 million, his estate will automatically be reduced by the debt to £1 million and his estate would only be charged taxes on £1 million less the Nil Rate Band. I hope I have not bored the living day light out of your souls this Christmas day! Consider this my boring Christmas present to y’all my friends!


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Missing1Love
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Posted on Tue, Jan 03, 2012 18:23

LivNlov -- Thanks for the post, very well done. One primary and important aspect I did not notice, namely: (some basics simplistic overview:) Why a Will and Why a Trust ????????? at least in the US, a Will will be processed through probate. A Trust in the other hand, avoids Probate. A Will will only diminish squabbling and Attorney costs. And "intestate" the state from handling your affairs. Probates can suck an Estate dry, from Court Fees, Lawyer fees, CPA and accounting costs, and Administrator, Trustee fees, et.al. Hence a Trust preserves the Estate. Further Trust are Private. No one can see the contents, while a Will is an open to view document by anyone after death. Trust are perfect way to leave monies to children and grandchildren without paying out immediately, or only paying the income derived - leaving the estate intact. Very Large Estates may consider creating a Charitable Foundation, which preserves the Estate, while paying Wages to the beneficiaries. The hurdle is that by IRS code a certain percentage of (which I can't remember 5% ?) requires to be used for Charitable purposes. But the plus is that the Estate avoids death taxes, if any. My answer barely touches the surface, you need to get a book on Trust, and on Charitable Foundation (which is actually very easy to set up. The IRS has all the forms to complete for free. You only need to submit for approval - an Attorney is not necessary, but I'm not suggesting that to protect the innocent.


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Thurrock
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Posted on Sat, Dec 31, 2011 01:22

Zillion Thanks LivnLov for such informative Will & Trust. My NRB Will is in place separated individually for Spain and UK as both has variation in distribution dependent on either blood relatives or spouse because the tax differs too and dependent on whether the inheritor/beneficiary is resident in which chosen country. OMG YOU are a petal treasure for your blog. I also noted you could be a UK Legal Legals because the figures you mentioned has the £ sign annotated which do suited me for my UK assets making it always within NRB as one time it was over but disposing of assets lowered its marked line. But your boundary do not include Spain, so I did another will there recorded in Madrid. I will always remember if my circumstances changes as lots of guys are getting interested who could tickle my interest for comapanionability, that I do another will if I go the path of matrimony or even take one as only a partner defacto. Merry New Year 2012 and enjoy your kids because before long you turn around and they are adults asserting themselves to parents. Cheers from Thurrock with loads of ta's xxxxxxxxx ooooooo wink

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"You can't reach for anything new if your hands are full of yesterdays JUNK" by Debbie Smith "Life has no remote.Get up and change it yourself." by Debbie Cameron Happy New Year to all Feliz Anyo Nuevo Gott Nytt Ar Frohe Neu Jahr Manigong Bagong Taon

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Curious2078
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Posted on Fri, Dec 30, 2011 18:42

Quoting Livnlov:

Thanks for the compliment Pat! Glad you like it. I agree with the "I 'Will' and 'Trust'" - those words are very apt indeed. Hope you had a lovely holiday and got to watch Love Actually again, lol! Liv.


You bet. Just like "It's a Wonderful Life" with Jimmy Stewart, the Alistair Sim version of "A Christmas Carol" and that uniquely American tv movie, "A Christmas Story," "Love Actually" continues to make me cry happily no matter how many times I watch it. HAPPY NEW YEAR, LIV. AND EVERYONE ELSE


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Hoping4Love2000
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Posted on Fri, Dec 30, 2011 10:32

WO GF! My HEAD HURTS TOO!!! LOL

Good thing I got nothing left to give except some body parts to science.. if they even want them!! HaHa~~ (Besdies I think #4 re: sound mind negates anything I have left to say! LOL)

GREAT Over-view.. but then.....  I EXPECT nothing less from you! :)

THANKS for answering my questions!

Love you!! XOXO



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fishyme
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Posted on Fri, Dec 30, 2011 03:31

ummm,wow,I really don't know what to say but I have learned lots more than I knew.The stuff I love that makes my head hurt is called Rum.Liv,if thats the stuff your into for your professional life Stay Away from Rum baby!

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Livnlov
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Posted on Wed, Dec 28, 2011 01:34

Quoting Curious2078:

Very interesting, Liv. Thanks for the smart blog. In my case, I WILL, by all means, TRUST my family to do the right thing. LOLOLOL

Thanks for the compliment Pat! Glad you like it. I agree with the "I 'Will' and 'Trust'" - those words are very apt indeed. Hope you had a lovely holiday and got to watch Love Actually again, lol! Liv.


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Curious2078
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Posted on Tue, Dec 27, 2011 17:38

Very interesting, Liv. Thanks for the smart blog. In my case, I WILL, by all means, TRUST my family to do the right thing. LOLOLOL


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Livnlov
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Posted on Tue, Dec 27, 2011 11:19

Lol, Diana! This is how sad my professional life is, lololol! But I love stuff that makes the head hurts - always have - welcome to my torture chamber, lololol! Thanks so much for the compliment. Have a wonderful holiday - what's left of it, that is! Liv.


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Diana3316
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Posted on Mon, Dec 26, 2011 11:02

Wow, what a comprehensive review. Thank you so much for that, Liv!! You are so smart! So much info...and definitely makes my head hurt. Ok...now I know what my New Years's resolution is going to be. To Get One!!! lolo *wink*


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