The importance of making a will cannot be overstated. Not only will your affairs be dealt with by the Executor of your choice and your estate left to those you wish to benefit, but other matters such as appointing Guardians for infant children can also be addressed. There is also the issue of Inheritance Tax Planning to think about for those with larger estates and a consideration of the ways in which such tax can be mitigated or eliminated on death.

inheritance tax planning

What you need to know about Wills

If you do not have a will, the estate will be divided in accordance with the Intestacy Rules (see below). Although these may be appropriate there are many reasons why this may not be the case. Some of the reasons are as follows:

1. Where the spouse/civil partner does not necessarily inherit the house. For example, where the family home is not owned as joint tenants or by one spouse alone.

2. Unmarried partners and dependants do not have an automatic right to inherit under intestacy. A will ensures that they are not left in financial difficulty or even homeless.

3. Those who have re-married and have children from an earlier marriage, who may not benefit under intestacy.

4. To avoid unnecessary Inheritance Tax (IHT). This may be the case where Intestacy rules distribute the deceased’s estate to people other than their spouse, and this value exceeds the nil rate bands which can lead to an unexpected IHT bill.

5. To manage assets for those who may be considered too young to inherit, not trusted to manage for themselves, or who cannot care for themselves.

6. To appoint guardians to look after minor children.

7. To avoid money going to a bankrupt person or someone who may be in the process of a divorce.

8. Donations to favourite charities.

9. To benefit individuals who are not related10. To ensure advantage can be taken of the Main Residence Nil Rate Band – this alone can be worth up to £140,000 from April 2020 onward.

If you do not have a will or up-to-date will in place, contact Tom Slator for a free consultation.

Lasting Power of Attorney (LPA)

At the same time as making a will, an individual should also consider making an LPA.

An LPA is a legal document that allows you to appoint individuals you trust, known as attorneys, to make decisions on your behalf. Naming an attorney means that if you become ill or are involved in an accident and lose mental capacity, you know exactly who will be making decisions for you. An LPA can be set up when an individual is well and can either start immediately or take effect as capacity fails.

There are two types of LPA:

1. The Property and Financial Affairs LPA

This LPA allows your attorneys to make financial decisions; for example, paying your bills, dealing with your savings and investments, operating your bank accounts, collecting any income, benefits and pension due to you, maintaining your home and even buying and selling property.

2. The Health and Welfare LPA

This LPA allows your attorneys to make decisions concerning your health and wellbeing. It includes decisions about your medication and treatment and where you live. You also have the option of allowing your attorneys to make decisions regarding life-sustaining treatment. You do not have to have existing health problems to make an LPA.

Will Review Service

Tom Slator provides a Will review service and offers an initial free consultation. Calculations are made of the potential Inheritance Tax liability and suggestions made as to how any inheritance Tax liability may be reduced. The Will Review considers all aspects of the client’s personal and business life and how this should be reflected in their Will.

The first stage is to consider your Personal Asset Summary, which will include details of all the client’s assets and liabilities with valuations and notes regarding where they are located and who holds documents of title to the assets. The Net Worth figure (the difference between the total asset valuation and liabilities) will give you an idea of whether IHT will be payable on your estate when you die. If IHT is payable you should consider estate and inheritance tax planning.

Case Study

Review of Will and Inheritance Tax position

We have worked with a client who wanted to change his will to include new beneficiaries. He was mainly unaware that Inheritance Tax would be payable on his estate.

We discussed the overall position with him and his objectives for leaving his estate. We then presented three scenarios with estimates of the Inheritance Tax payable.

The client instructed that he would like to go ahead with one of the scenarios and we re-drafted his will accordingly. This included acting as joint executor with another person chosen by the client.

We also assisted the client in drafting a Letter of Wishes to be held with the Will and assisted in arranging for a Lasting Power of Attorney for health and welfare and property and financial affairs to be put in place.

Total fees about £2,500 (including VAT)

contact tom