Legal Jargon

The process of dealing with a deceased person’s legal and tax affairs. This can include dealing with bank accounts, pensions, personal belongings, property, paying debts, liabilities and any inheritance tax due.

The assets and liabilities of someone who has died. This includes any property, savings and investments and belongings and any outstanding debts. It is the responsibility of executors or administrators to ensure that the debts are paid from the estate and that beneficiaries receive the amounts due to them.

A discretionary trust, as the name suggest, ensures that the assets and any income belonging to the trust is managed and used entirely at the discretion of the trustees. The trust will name more than one beneficiary (referred to as a class of beneficiaries) and it is for the trustees to decide which beneficiaries will receive trust assets, whether this is income or capital payments or the right to live in a house owned by the trust. This means that a beneficiary cannot claim a right to any specific trust asset and those assets cannot be considered theirs for tax purposes or considered in a financial assessment for care fees.

An umbrella name for discretionary or interest in possession trusts, also known as vulnerable persons trusts. They are useful because they benefit from special tax rules as long as certain conditions are met.

A person formally appointed by the Court of Protection to look after the affairs of a person who can no longer do so themselves, where they have not made a Lasting Power of Attorney.

A document used to make adjustments to the way a deceased person’s estate is distributed.

The Court of Protection is responsible for protecting and overseeing the interests of people who are unable to do so for themselves owing to illness or lack of capacity and who have not made a Lasting Power of Attorney.

A person or organisation that is owed money for a loan or provision of a good or service by a person or organisation. When a person dies, debts to creditors must be paid out of the estate before any inheritance can be disbursed.

A trust established and maintained solely to manage and direct funds for charitable purposes that benefit the public or a certain section of the public. Charitable trusts are divided into four categories: those that relieve poverty, those that promote education, those that advance religion, and others, which includes areas such as animal welfare. Charitable trusts enjoy significant tax advantages and must only use the income and capital for the purposes set out in the charity trust deed. Charitable trusts differ from non-charitable trusts in that they may be run in perpetuity.

A tax relief or discount that can be used to reduce how much inheritance tax is due on a deceased person’s estate. You or your executors may be able to claim business property relief on the value of a business or its assets, reducing them by either 100% or 50%, so long as the deceased held the business or asset for more than two years.

Business property relief can be claimed when assets are transferred during your lifetime or under your will. The business must be “wholly or mainly” trading to qualify.

It has been established that at least 50% of the businesses assets must involve trading, in determining this turnover, profits and asset base may be considered individually, but the business will be assessed as a whole.

Business Property Relief can be claimed at 100% on:

– a business or interest in a business
– shares in an unlisted company

Business Property Relief can be claimed at 50% on:

– shares controlling more than 50% of the voting rights in a listed company
– land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled
– land, buildings or machinery used in the business and held in a trust that it has the right to benefit from

There are some types of business and business circumstances that do not qualify for business property relief.