Deeds of Appointment in Probate Explained

06 August 2018

By Probate Lawyer, Jessica Llewellyn

A Deed of Appointment is a legal document that appoints an individual (or professional body) into a specific role. There can be several types of Deeds of Appointment across various areas of law, which are each required for specific matters. In Probate Estate Administration the two most common Deeds of Appointment are for the appointment of a new Trustee and appointing out of a Discretionary Trust.

Deed of Appointment - Trustees

If the deceased died without a Will (called dying 'intestate') then inheritance laws called the Rules of Intestacy come into play to determine who should inherit what. The person responsible for dealing with the Estate is called the Administrator. This same person will also be a Trustee, responsible for overseeing any Trusts that are needed.

One of the situations in which a Trust will be needed on an Estate is where there are Beneficiaries under 18 years of age. Under the Rules of Intestacy Beneficiaries are entitled to receive their share of the Estate when they reach the age of 18 years. If they are under the age of 18 at the time of the deceased's death, then their share of the Estate will be held by the Trustees in what is called a Statutory Trust, until they reach this age.

Where the deceased left a Will this will usually appoint both Executors and Trustees. There may also be an appointment of other Trustees if there are specific Trusts set up in the Will, for example a Life Interest Trust. For more information on the types of Trusts available, see our Guide to Using a Trust in a Will.

There must be at least two Trustees to look after any Trust. Therefore if there is only one existing Trustee then they will need appoint a co-trustee to act with them. The co-trustee can be a relative, friend or professional chosen by the existing Trustee.

It may be the case that the existing Trustee does not feel it appropriate to continue to be the Trustee. For example, if the existing Trustee is the Aunt or Uncle of a minor Beneficiary they may feel it's more suitable that the minors' parents act as Trustee. The existing Trustee could therefore retire as acting Trustee and appoint the minors parents in their place, using a Deed of Appointment.

The new Trustees must be made aware of their duties as acting Trustees.

With our Probate Complete Service, we can prepare a Deed of Appointment to suit your requirements. We also take full responsibility for obtaining the Grant of Probate and dealing with the Legal, Inheritance Tax, Income Tax and Capital Gains Tax matters, and the Property and Estate Administration affairs. For a fixed fee Probate quote see Probate quotation.

Deed of Appointment - Appointing Out of a Discretionary Trust

Every person's Estate has a tax free allowance, under which no Inheritance Tax will need to be paid. This is called the Nil Rate Band and it's possible for unused Nil Rate Band to be transferred between spouses, essentially doubling the tax allowance that's available to the second spouse. Before the transferrable Nil Rate Band came into place in 2007 it was common to prepare a Will which included a Nil Rate Band Discretionary Trust. This could ring fence a portion of the Estate so that Inheritance Tax wouldn't be payable on it.

It may be possible that you are appointed to act as an Executor where there is a Discretionary Trust included in the deceased's Will. It's important to know what this entails.

The Discretionary Trust was likely included in the Will to ring fence part of the Estate which is the same value as the Inheritance Tax nil rate band, which is currently £325,000 in England and Wales. However, the introduction of the Transferable Nil Rate Band in 2007 meant that if someone leaves their whole Estate to their surviving spouse, then on the surviving spouse's death two Inheritance Tax Nil Rate Bands can be used. So currently on the second death that amounts to £650,000 in total.

If a person has included a Trust in their Will, such as a Discretionary Trust, the Trustees are essentially allowed to vary the Will within two years of the person's death to remove the Trust and make alternative arrangements. This is done with a Deed of Appointment and is common with Estates where a Nil Rate Band Discretionary Trust has been included.

All of the Trustees must be in agreement in order to alter the terms of the Will in this way. The Trustees do need to bear in mind that by removing the Discretionary Trust they are signing away the right that any other Beneficiary has to the Nil Rate Band Discretionary Trust.

While our Probate Solicitors and specialists can advise our clients as to how a specific option would apply to an Estate we are acting on, we cannot provide any recommendation as to which may be the most beneficial in specific circumstances. We would therefore always recommend that the Trustees seek independent financial advice in relation to this aspect.

Co-op Legal Services is the largest provider of Probate and Estate Administration services in England and Wales, trusted to deal with over £1.3 billion in Estates annually.

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