Another area where we can provide actuarial support is with respect to the valuation of life interests in Will Trusts. This is where a Will Trust has been written to provide benefits for an individual for the remainder of his/her life—known as a life tenant—with residual assets only being divided thereafter. It is often the desire of the parties involved to break such a Trust, with a view to the assets being divided between the beneficiaries much sooner.
We can help by placing an independent valuation upon the life interest, with a view to determining how much of the residual assets held by the Trust should pass to the life tenant in lieu of the continuing interest, and how much should then pass to the other beneficiaries (the remaindermen). We take account of the specifics of the Will Trust, the parties themselves and the assets held by the Trust to arrive at a solution that we deem to be equitable for all parties involved.
In such cases, we have taken instruction both from life tenants and from remaindermen, often with the latter being charities in receipt of a bequest. Work in this field tends to be by single instruction but it is possibly for us to be jointly instructed if this is desired.
The services that we can provide in this area are as follows:
It is noted that we cannot provide any legal advice upon how such Will Trusts might be dissolved: we can only perform the associated calculations. Further, while we understand that there may be inheritance tax advantages associated with such an action, this is not a matter upon which we can provide advice. Tax planning advice should be sought from a suitably-qualified adviser.
Below is a recent example of where we were able to assist with the valuation of a life interest in a Will Trust. Names and identifying details (pension schemes, amounts etc) have been changed in the interests of client confidentiality.
Alfred had a life interest in a Will Trust, in that he was entitled to the income arising from the residual assets of an estate following a number of bequests. The residual assets were worth c. £2m. Upon Alfred’s death, the remaining assets were to be divided between three remaindermen, being Brian, Colin and Donald. The parties wished to break the Trust such that all could receive an immediate cash settlement.
We were told that Alfred was aged 50 but was in poor health, and we were presented with medical evidence to suggest that he would have future life expectancy of around 20 years. No medical evidence was provided in respect of the remaindermen, and we were also given details of how the c. £2m assets were invested. We made some assumptions upon future asset returns, and along with making an allowance for Alfred’s future life expectancy, we determined that he needed £350k to settle his life interest in the Will Trust. This left £1,650k to be split between Brian, Colin and Donald, such that each would receive £550k. In our analysis, we showed the sensitivity of the results to i) the rate of future investment returns to be assumed; and ii) Alfred’s life expectancy.
Pension issues arising on divorce are often very significant: the divorcing couple’s pensions may indeed be the most valuable assets that they possess. However, such pension matters pose a number of complex issues that need to be considered.Learn more Quote Request
We are able to provide an assessment of loss of pension rights for use in legal proceedings and employment tribunals. An individual may lose pension rights following the action of others, for example, through unfair dismissal or through an accident (whether at work or otherwise).Learn more Quote Request
Another area where we can provide actuarial support is with respect to the valuation of life interests in Will Trusts. This is where a Will Trust has been written to provide benefits for an individual for the remainder of his/her life.Learn more Quote Request
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