Congratulations to Mummy & Daddy Pig, who were blessed with a baby girl piglet, Evie Pig, on May 20! Our favourite Peppa and her adorable baby brother, George, are squealing with delighter over their baby sister, Evie.
Speaking to the BBC, Mummy & Daddy Pig expressed that they were “looking forward to lots of happy snorts and sleepless nights”. This moment of joy is the perfect time for the family to think about their long-term financial security and protection, and in that spirit, to squeal over their estate plan, factoring in Evie’s interests.
Taking the liberty of being the Pig family’s self-appointed estate planning attorney, we share a few ideas on how they can review and refresh their current estate plan (if any!).
The elephant in the room (or rather, the piglet in the house): the need for estate planning
For Mummy & Daddy Pig – as for many of us – the arrival of a new piglet signifies not merely an addition to the family but also a profound shift in both responsibility and commitment. As responsible parents of three minor piglets, it is crucial that parents reflect on how they wish to pass on their wealth to their piglets, both during their lifetime and under their Wills. Of course, these thoughts will change and mature as the piglets get older and as Daddy Pig’s business empire expands, requiring more sophisticated solutions. They should never leave such things to chance, and deliberate steps as needed.
Having guided many pigs through similar transitions, we find that the estate planning oriented lessons from Peppa’s expanding household are surprisingly inter-species and universal.
Key considerations for Mummy & Daddy Pig
Updating their Wills
With Evie’s arrival, Mummy & Daddy Pig’s Wills must now be revised to reflect their intentions for all three piglets, considering these likely only represented their desires towards Peppa and George. How should they go about this?
- Review, revise, and refresh: Both Mummy & Daddy Pig each need to urgently execute revised Wills to reflect Evie’s arrival. The current Wills likely distributed their assets equally between Peppa and George. If no change is made to the current Wills, Evie would lose out on any inheritance and financial security. Likewise, if they have not made any Wills, they should use this moment as a catalyst to do so, as intestate succession is clinical in whom it strictly allocates wealth to. If the parents wish to make any specific or bespoke asset allocations, they need to use a carefully crafted Will to do so, although it remains to be seen what succession laws apply to Mummy & Daddy Pig! Assuming they are Hindu, if Daddy Pig fails to make a Will, the Hindu Succession Act, 1956 will divide his assets equally among his 3 piglets and Mummy Pig, without regard to his personal wishes or the piglets’ individual needs – his assets would be split snout-to-snout, leading to unintended consequences. Both parents need to revoke (or even physically destroy) their old Wills and execute new ones, and sign these in the physical presence of two independent witnesses. They could invite Madame Gazelle and Mr. Bull – both being Peppa’s teachers / adults and family confidants – as the two witnesses. This ensures clarity and avoids any potential ambiguities or conflicts between the old and new provisions. Each new Will should also explicitly state that it revokes all previous Wills and Codicils. While they could consider Codicils (i.e., an amendment to their existing Wills), a cleaner approach would be a new self-contained Wills.
- Equitable (or unequal?) distribution of assets: A dilemma before Mummy & Daddy Pig is how to distribute their assets between the three piglets. Will Evie receive an equal share of Daddy Pig’s priced possessions alongside Peppa and George? Or do her parents have specific intentions for each piglet, perhaps considering their different needs or future aspirations? Would Peppa and Evie be treated differently from George because of their gender? Are there any other family members and friends they wish to benefit as well? Is any piglet or family member expecting any inheritance or specific asset, and will not receiving it raise the likelihood of a family dispute? The wisdom of their choice(s) will only be judged in hindsight, so the parents should take their time to carefully evaluate how they wish to bequest their estate. An equal split is wise at this early stage, but as the piglets grow older and have different interests and long-term needs, they can revise their choices at any time – that’s the beauty of using a Will. A new Will allows for a clear articulation of these intentions. It should contain the description of all their estate and unambiguous bequests in favour of the relevant legatees. If the distribution of assets isn’t strictly equal, then explaining the rationale behind it under each Will would mitigate the risk of potential disputes in the future. Of course, the parents should consider the possibility of transferring assets to the piglets during their lifetime, seeking proper legal advice and considering the tax and other implications of doing so. They can consider direct gifts to any or all of the piglets (say of financial assets, investments etc.), and separately set up a combined trust for their benefit (as discussed later).
- Re-evaluating the chosen executor: The executor has a key role in the Will, as the person responsible for carrying out the instructions under a Will. Mummy & Daddy Pig may have appointed each other as an executor in their respective Wills – and probably even appointed a trusted friend or a close family member as an alternate executor. However, with Evie’s arrival, the estate’s complexities may increase, hence it may be a good time to re-evaluate if the chosen executor is still the best fit and has the capacity to manage the distribution of assets for all the legatees. Daddy Pig has an older brother, Uncle Pig – a better choice, perhaps? They may also consider naming their minor piglets as backup executors.
Updating nominations for financial assets
Nomination approach: Mummy & Daddy Pig should update the nominations for all their financial assets, including their investments in bank accounts, fixed deposits, mutual funds, and shares. Such nominations should align with the bequests under their new Will. This approach will prevent ambiguities or inconsistencies and ensure smoother transmission of such assets. They should remember that nomination does not equal ownership, and simply gives the concerned piglet a trustee like temporary status – the account will belong to the rightful piglet heir under their Wills.
Given the rise in unclaimed deposits in India because of lack of nominations, nomination-related rules for various asset classes are evolving to facilitate better flexibility. The Securities and Exchange Board of India (SEBI) has also recently allowed up to ten nominees for each mutual fund folio and demat account. Therefore, Mummy & Daddy Pig can even consider naming all three piglets as nominees for particular account(s), allowing the relevant piglet to access the bank account without waiting for any probate (if so applicable).
- Bank account structuring: To ensure clarity in the distribution of funds, Mummy & Daddy Pig may open three separate bank accounts, with each account held jointly between them and one piglet.These accounts may be funded over time through savings, with periodic contributions and investments via the account, helping ensure equitable financial security for all the three piglets.
Guardianship
Being parents to three young piglets is both scary and exciting. Mummy & Daddy Pig would need to consider the scenario of who would look after the piglets in their complete absence if something were to happen to both or either of them. This is an emotional yet a vital decision.
Mummy & Daddy Pig’s erstwhile Wills may not have factored the guardianship especially for Evie. Under Indian law, parents are the natural guardians of their minor piglets. In the absence of one parent (say, Mummy Pig), the surviving parent (say, Daddy Pig) automatically assumes guardianship. However, if both parents (say, Mummy & Daddy Pig) pass away, it becomes crucial to nominate a testamentary guardian under their Wills to legally ensure the well-being and financial security of their piglets.
Even if Mummy & Daddy Pig had considered and named a testamentary guardian (perhaps Dottie Pig, Mummy Pig’s sister) under their current Wills, they should re-evaluate the choice to ensure the same guardian is suitable for all the three piglets.
Once a choice has been made, they can formalise it under their Wills and execute a separate guardianship letter addressed to the chosen individual, setting out their desires and seeking specific acceptance.
Private trust structure
As a part of their estate plan, if Mummy & Daddy Pig intend on protecting their significant estate and ensuring its smooth devolution, establishing a private trust can be a strategic tool.
A private trust essentially has three parties: (i) the settlor, who settles the trust; (ii) the trustee, who becomes the legal owner of the assets and administers the trust; and (iii) the beneficiary, on behalf of whom the trustee holds the assets, and who is entitled to the benefits of the trust.
- Protection and succession of business assets: Assuming Daddy Pig fully owns his thriving infrastructure consulting company, he may consider settling / transferring it into an irrevocable, discretionary trust. Here, he could appoint Mummy Pig and himself as trustees, with himself as the managing trustee. The three piglets could be discretionary beneficiaries. A single trust can cater for all beneficiaries here. The use of a private trust (ideally set up and funded during his lifetime) can facilitate the retention of business assets (in this case, the shares of his company) within the family, preventing fragmentation of ownership. Trust structures can also protect the family’s assets from potential creditors, divorces, and myriad legal challenges. Daddy Pig may also consider transferring his sty (i.e. house) into the trust. However, given the expensive stamp duty implications associated with this, he should weigh the pros and cons before doing so. He does not need to go in whole-hog and transfer all assets on day zero, and can consider a staggered funding plan over his lifetime.
- Flexibility and control: Mummy & Daddy Pig might want to ensure their piglets don’t receive a large lump sum before they are a certain age and have attained the necessary level of financial maturity to handle it, mitigating the risk of imprudent spending. In such cases, a trust structure can mandate distributions at specific ages or milestones, such as higher education, starting a business, marriage, and so on. A well-drafted trust deed provides the desired flexibility and control, helping outline specific clear rules on the utilisation of trust assets. They can also spend time preparing a tailored ‘Letter of Wishes’, to be read alongside the trust deed, to set out their commercial intention on the uses of the trust.
If Mummy & Daddy Pig already have a trust in place, now is a good time to revisit the trust deed and formally include Evie as a beneficiary.
Change of tax residency / domicile
The Pig family here is undoubtedly British. However, given changing geopolitical circumstances affecting the appeal of the United Kingdom (UK) as a key business destination, Daddy Pig should consider moving to greener pastures overseas that have better economic muddy puddles to play in! Peppa’s affluent friends, Suzy Sheep and Danny Dog, have already redomiciled themselves abroad and escaped the UK tax net!
If Daddy Pig stays in the UK, he would be subject to an exorbitant 40% inheritance tax. Daddy Pig’s domicile status is unclear; however, if he is a non-dom, he has a narrow window to safeguard his global assets from UK taxation. Besides, the introduction of a VAT charge on school fees could make it quite expensive to put the three piglets through private school in the UK!
Daddy Pig can take inspiration from Indian global business families such as Mr. Laxmi Mittal, and reconsider his UK tax residency. He could explore potential migration to other countries such as the UAE, which offers much favourable personal and business tax regimes. Relocating to Abu Dhabi would allow Daddy Pig to efficiently manage his wealth, protect his global earnings, and ensure financial security for his young family without the UK’s escalating tax obligations. He could look at several visa options for this and even consider setting up his company in the Abu Dhabi Global Market (ADGM).
Conclusion
The arrival of a new piglet is the perfect reminder – in the farmyard of life, plans matter. Estate planning helps manage and keep the farm together – literally!
For Mummy & Daddy Pig, taking proactive steps towards revisiting their Wills, updating their nominations, and evaluating the use of a trust, etc., isn’t just about bracing for the worst, but it’s also about ensuring that their legacy – be it Daddy Pig’s business empire or his iconic sty – is protected and passed down onto the next generation of piglets.
A bespoke and well-structured succession plan will safeguard their legacy, ensuring it remains beneficial for generations to come. Seeking professional legal assistance is highly recommended for crafting an estate and succession plan that is both legally sound and seamlessly effective.
