Estate Planning, Trusts and Family Provision
Core concepts
Estate planning uses wills, trusts, lifetime gifts, insurance and nominations to achieve the testator's objectives efficiently. Understand the main trust structures: fixed, discretionary, bare, and charitable trusts, and the use of life interests and powers of appointment.
Family provision
Family provision legislation allows certain dependants - spouse, children, and sometimes others - to apply to the court for reasonable provision from the estate where the will or intestacy fails to make adequate provision. The court considers the applicant's needs, the size of the estate, the testator's moral obligations, and the claims of other beneficiaries.
Traps
Questions test time limits for family provision claims, the classes of eligible applicants, and the effect of a testamentary contract or mutual will. They also test the rule against perpetuities and the accumulation rules, and the tax consequences of lifetime gifts versus testamentary gifts.
Worked example
A testator leaves everything to a charity, ignoring a dependent child. The child may apply for family provision; the court balances the testator's testamentary freedom against the child's need.
Rule of thumb
Identify the objective, then the vehicle (will, trust, gift), then the tax and family-provision consequences.