Wills, Inheritance Tax, Power of Attorney

Firstly write a Will, your estate otherwise may not be passed on as you require.

         A common misunderstanding is that all your estate will get

           passed on to a surviving partner. This is not necessarily true.

        If you make a Will, after all assets are accumulated, above

          £650,000 for married couples or civil partners will probably incur

          Inheritance Tax at 40%. If you were married or in a civil partnership this

          still applies.

          Single person's get £325,000 Inheritance Tax allowance.

          Some Trusts, Property sell offs are being reviewed and may no longer

          be tax saving or necessary, get advice.

         Couples with assets of £650,000 or more can save

          their heirs £120,000 by providing a discretionary trust so both parties

          can use the tax-free IHT allowance.

       If you haven’t a Will and your estate would be worth over £450,000,

          then partners may only get £250,000 and the rest is shared

          between blood and marriage relatives. Tax will be paid at 40%.

       Think about what you want to leave and to whom.

Remember codicils to a  Will can be cheaper than getting your Will rewritten, but also document where you  file them and tell people where they are. Also the codicils highlight your most recent thoughts.

Secondly on Inheritance Tax.

     If all assets are very low i.e. less than £10,000 then things can be

        very easy.

     If all assets are below £240,000 then you need to complete forms in

        IHT205.

     If assets are above £240,000 then you need to complete forms

        IHT200 and others.

        Be prepared to specify all gifts ( property & money) given in the last

            seven years.  Note Gifts between husband and wife are exempt.

            Annual gifts to children can be £3000, and £5000 on marriage.

            You can make as many gifts of £250 as you want to different

            individuals.

        Be prepared to provide a cash flow over the last seven years to

          demonstrate gifts can come out of income.

        Be prepared to complete possibly in excess of 50 pages of forms.

     You will need an evaluation of all stocks and shares, property, and

        other assets. So get the financial pages on the day of death so

        you get the correct evaluation.

Thirdly on Lasting Power of Attorney.

     Get your solicitors to prepare a Lasting Power of Attorney well

        before you feel it may be needed, you or the designated people can

        activate it at the appropriate time. Basically it allows the person/

        people you designate to control your financial affairs.

The form is over 20 pages with 30 pages of notes!!!! Also the LPA cannot be registered until the donor lacks capacity. Costs have rise substantially.

Points of General Interest.

  Please try to arrange your financial affairs so someone i.e. your

      executors, can find all the records and can interpret them.

  Remember to record where your Will and details of major assets are.

  Remember to keep at least seven years of financial history.

  In some cases having Joint Tenancy ownership means that only one  

     person can claim the allowance on property, whereas Tenants in  

     Common ownership enables each of you to own 50% of the property

     and each claim that as part of your £600,000 Inheritance Tax

     allowance. Please seek financial advice.

  You can minimise your Inheritance Tax exposure by seeking

     professional advice, but remember this should be verified annually as

     the Chancellor has a habit of trying to remove the facilities that avoid

     people paying this tax.

  Plan for the bank accounts of the deceased person to be closed, joint

     accounts can under some circumstances also be closed on death

     unless you have stated joint account and surviving spouse.   

  Remember Probate can take a number of months so you must plan to

     be able to pay bills from a surviving spouse’s account for this period

    (six to twelve months or more if a complicated estate). A limited

    number of expenses ( like funeral expenses) can in some case come

    from a closed account.

On Inheritance Tax  very helpful helplines and websites are available :

                 08453020900 is the Government Inheritance Tax and Probate

                                        help line.

                 www.hmrc.gov.uk/cto  for Inheritance Tax, Capital Gains Tax

                                                           advice and forms.

                 www.hmcourts-service.gov.uk/cms for information on Wills

                                                           and the Probate Service.

Other online help sites are : www.direct.gov.uk

and                                         www.step.org