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Making a Will

Many people will put of making a will for a number of reasons, some believe that the ones they love will automatically receive the inheritance, or that writing a will is something they only need to do much later in life.

The truth is that many of us put it off until it's too late. However, It is important to bear in mind that, if you don't make a will, the law decides who gets what from your estate when you die. As a result, this could mean that your estate and inheritance may not be divided up as you might have wished. For instance, your husband / wife / civil partner / parents / children etc wouldn't necessarily inherit your whole estate automatically.

The answer is everyone. In particular, anyone with dependant relatives, (children under the age of 18, elderly relatives or relatives with a disability who have special needs), anyone who owns property or has any type of asset which you would wish relatives, friends or charities to benefit from.

This is a common misconception and dependant on the size of your estate, there are set rules which will be applied to determine who inherits and how much if you do not make a Will.

This is called having died Intestate. There are specific rules of intestacy which set out who will inherit and by how much if you do not leave a valid will, this may not be what you would have wished and in the worst case scenarios where relatives cannot be traced, your assets will be taken by the Crown.

No. You need to make a list of your property and assets and consider who you wish to benefit from your estate, ensuring provision has been made for dependant relatives. You should also consider who you would want to look after your children (Guardians) if they were still young.

    Anyone who:

  • is not blind.
  • is capable of understanding the nature and effect of what they are doing.
  • is aged 18 or over.

    A witness should not be:

  • a beneficiary in the will.
  • married to, or be the civil partner of a beneficiary.

In these circumstances the Will remains a valid and legal document, but the gift to the beneficiary cannot be paid.

Lasting Power of Attorney

A lasting power of attorney (LPA) is a particularly important document which unfortunately is unheard of by many. A LPA allows you to appoint someone you Trust who can take control of your affairs if you was to become incapable of doing so yourself.

    There are two types of LPA:

  • Property and Financial Affairs LPAs deal with financial matters and replace Enduring Powers of Attorney.
  • Health and Welfare LPAs cover health and welfare issues such as where the donor (the person making the LPA) should live, arrangements for day-to- day care and consenting to or refusing medical treatment.

Inheritance Tax

Inheritance tax is set at a flat rate of 40% on your death (or 20% during your lifetime). It is payable on the value of your estate above what is known as the nil rate band, which is currently set at £325,000 for a sinle person and £650,000 for married or civil partnership couples.

You can pass on certain gifts and assets without paying Inheritance Tax, even if your estate is over the threshold. Examples include:

  • Charity exemption. Any gifts you make to a 'qualifying' charity , during your lifetime or in your will , will be exempt from Inheritance Tax. Sometimes a donation to charity in your will may also reduce the rate that tax is paid.
  • Spouse or civil partner exemption. Your estate usually doesn't owe Inheritance Tax on anything you leave to a spouse or civil partner who has their permanent home in the UK, nor on gifts you make to them during your lifetime - even if the amount is over the threshold.
  • Small gift exemption. You can make small gifts of up to the value of £250 to as many individuals as you like tax-free.
  • If the deceased owned a business, farm, woodland or National Heritage property, some relief from Inheritance Tax may be available.
  • Wedding and civil partnership gifts. Gifts to someone getting married or registering a civil partnership are exempt up to a certain amount.
  • Annual exemption. You can give up to £3,000 away each year, either as a single gift or as several gifts adding up to that value. You can also use any unused allowance from the previous year but you use the current year's allowance first.
  • Potentially exempt transfers. If you were alive for seven years after making a gift to someone, the gift is generally exempt from Inheritance Tax, no matter what the value.

In relation to Inheritance Tax, giving away your home is considered as making a gift. The set of laws about passing on property can be complicated, so it's a good idea to contact Asset Wills for some free advise by either calling on 0800 612 0558 or by email: info@assetwills.com

When passing on property, there are two main things about gifts to be aware of:

  • The seven-year rule. You can make an outright gift of your home to someone, no matter what it's worth, and it will be exempt from Inheritance Tax if you live for seven years after making the gift. This is known as a Potentially Exempt Transfer.
  • Gifts that you continue to benefit from. If you give your home to your children with conditions attached to it, or if you continue to benefit from the home yourself, this is known as a 'gift with reservation of benefit' and the gift won't be exempt from Inheritance Tax, even if you live for seven years afterwards.

Trusts

A Trust is a legal arrangement where one or more 'Trustees' are made legally responsible for holding assets. The assets - such as land, money, buildings, shares or even antiques - are placed in Trust for the benefit of one or more 'beneficiaries'.

The Trustees are responsible for managing the Trust and carrying out the wishes of the person who has put the assets into Trust (the 'settlor'). The settlor's wishes for the Trust are usually written in their will or set out in a legal document called 'the Trust deed'.

Trusts can be set up for a number of reasons, for example:

  • to control and protect family assets.
  • when someone is too young to handle their affairs.
  • when someone can't handle their affairs because they are incapacitated.
  • to pass on money or property while you are still alive .
  • to pass on money or assets when you die under the terms of your will - known as a 'will Trust'.
  • under the rules of inheritance that apply when someone dies without leaving a valid will (England and Wales only).

There are a number of different types of UK family Trusts and each type of Trust may be taxed differently.

There are other types of 'non-family' Trusts. These are set up for many different reasons. For example, to operate as a charity, or to provide a means for employers to create a pension scheme for their staff.

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BASIC WILL

A Will is a legal document that clearly sets out your wishes for the distribution of your estate after your death. Having a clear, legally valid and up-to-date Will is the best way to help ensure that your assets are protected and distributed according to your wishes.

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MIRROR WILLS

mirror wills consist of two separate documents that are almost identical. The surviving partner is usually named as the beneficiary of the first death, and then the same beneficiaries on the original will are handed the estate upon the second person’s death.

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LASTING POWER OF ATTORNEY

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In the event that you became incapacitated through serious illness or injury, disability, stroke or dementia… who would you want looking after your property, finances, health and welfare?

Free phone: 0800 612 0558