Discretionary wills – the virtue of flexibility and privacy
There was a lot of commotion recently over the fact that Prince Philip’s will was to be kept secret for 90 years, but in fact everyone has the opportunity to keep their wishes secret in a way, by making a discretionary will. Unlike Prince Philip’s estate though, the value of the estate on the probate cannot be kept secret.
Some clients are concerned about their wills being published as it is easy for the contents to be taken out of context. Lifetime provision is private whereas provision on death is public. As an example, say a mother leaves £1 million to son A and £250,000 to son B; to the outside world that might look like she favoured A over B, but the outside world does not know about the £750,000 she gave B during her lifetime.
By a discretionary will, you name a class of beneficiaries who might benefit and give your executors discretion as to how your estate is distributed between them. You might also give them the power to add beneficiaries into the list. You would leave them a Letter of Wishes setting out provision for specific beneficiaries or what to do with certain assets, but such wishes are not binding on them. Crucially, for those who are concerned about the publicity of wills, it is only the will which is published and not the Letter of Wishes.
Discretionary wills are becoming more commonplace in practice, not for the secrecy angle particularly but for flexibility. Some clients will not consider them – they want absolute certainty as to who gets what. Others welcome the flexibility a discretionary will provides: the structure can last much longer than a more specific will. When the testator’s intentions, assets or family circumstances change, the letter of wishes can be updated without having to go through the formalities of signing a will or codicil in front of two witnesses each time.
A discretionary will essentially empowers your executors to distribute according to circumstances at the time of your death rather than those in force at the time you write your will.
As ever, it is important to keep your will under review as your intentions, assets, family circumstances and tax law change.