When should I make a Will?

When should I make a Will?

We often hear:

  • I’m too young to think about a Will
  • I don’t have time to make a Will
  • I don’t have anything to leave in my Will
  • My family know what I want to happen to my things when I die
  • I haven’t got around to sorting my Will yet but I know I should…

So, when should you put a Will in place?

Honestly, there is no right answer, no one size fits all! Everyone’s circumstances are different and so timing will be different for everyone.

Everyone’s lives take different paths and at different ages.

Below we have set out some of the milestones that making and reviewing your Will should be considered:

Buying your first property

When most people buy a property it is usually their most valuable asset, so when buying your first property it is important to consider (among all the other considerations when taking the plunge and buying your first property!) who your property, along with all your other possessions, should be left to.

Getting married

When you get married any previous Will that you may have is revoked and so is completely invalid. Once you are married, priorities change and so may your wishes in relation to your possessions so shortly after a marriage, or in contemplation of marriage, your Will should be reviewed.

If a Will is created in contemplation of a specified marriage then the said marriage will not revoke the Will, however any other marriage will revoke an existing Will.

Having a baby

Whether you have your own children, are fostering or adopting, having a child, or children, changes your life and means you are responsible for more than just yourself.

A growing family comes with so many considerations, worries and changes, not least the major question as to who you would want as the guardians of your children should you no longer be around. If guardians are not stated in a Will there is a possibility that the local authority may become involved and place the children in care whilst they decide who is best to look after your children… a worrying thought!!

Buying a new or bigger property

As we said, your property is usually your most valuable asset and so when buying any new property and with a change in financial circumstances, your Will should be a key consideration to ensure it still covers you and what you want to happen to your property and possessions.

Investing in buy-to-let properties or second homes

When investing in more property you should also consider your Will and taking advice in relation to the financial implications on the properties that you own, not only during your lifetime but also in relation to Inheritance Tax and what can be done to try and reduce this.

Investing in assets abroad

When you invest in assets abroad they may not be covered by your Will that has been made in the UK. When buying property or any other assets that will be kept in another country you should consider whether legal documentation is required in that country to cover your assets and your inheritance wishes.

Getting divorced

So, you’ve got divorced, do you still want your property and possessions to go to your former-spouse?

Although a marriage revokes a Will, a divorce doesn’t! It is worth reviewing your Will at the end of a marriage to ensure that what you want to happen is set out in your Will…it’s unlikely that you still want your former-spouse to inherit all of your worldly assets.

Getting re-married

As we have set out above, when you get married, whether for the first time or a subsequent marriage, any existing Will that you have in place is revoked.

You may also want to consider putting exclusions within your Will to state that any former-spouse should not benefit under your Will. You may also want to protect inheritance for children you may have had from preious relationships.

Owning a business

When you take the leap to start your own business, your financial situation will change again and you are potentially bringing more assets into your estate. Depending on the business setup you may need to take this into account within your Will. There are also tax reliefs you can utilise for businesses if planned properly.

Death of a Grandparent / Receipt of Inheritance

When you are a beneficiary under a loved one’s estate you are bringing more assets, and therefore more value, into your own estate. This is an important time to take account of the value of your estate and whether you should be taking steps to try and limit or reduce the amount of inheritance tax that may well be payable on your own estate.

Grandchildren

When you have grandchildren, as when you have children, your family is growing again and this is another generation that you may well wish to make specific provisions for within your Will.

Retirement

This is another milestone where your financial circumstances change. You may well be taking steps to consider your finances and assets and so this is the perfect opportunity to review your Will and provisions that you have set out.

Death of a Parent

This is a situation that none of us want to think about.

However, with more assets coming into your estate, the possibility of additional properties and valuables becoming your own, it is worth considering the tax implications and ensuring that your Will properly provides for your own loved ones in the way you want to.

There is never a right time to put a Will in place but as you can see there are many milestones throughout your lifetime in which your Will and future wishes should be considered and reviewed to ensure that your present Will does what you want it to.

To put a Will in place, is more simple than you think. It’s not an arduous task and we make it as simple as we possibly can.

If you would like to have a free chat about your Will, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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Inheritance Tax: What can be done to reduce your exposure?

Inheritance Tax: What can be done to reduce your exposure?

The Government received £5.2billion in Inheritance Tax last year but only one in twenty estates actually paid Inheritance Tax.

So, let’s have a look at some of the ways you may be able to reduce your exposure to Inheritance Tax:-

  • Nil Rate Band

The Nil Rate Band is a personal allowance, that each individual is able to gift, upon death, without attracting any Inheritance Tax. The Nil Rate Band for 2018/19 is set at £325,000 per person and this is considered by the Government every April.

  • Residential Nil Rate Band

In addition to the Nil Rate Band (explained above), if you are passing property to a direct descendant (a child, grandchild, great-grandchildren, step-children, adopted children or foster children) then you are entitled to claim the Residential Nil Rate Band. The Residential Nil Rate Band is currently set at £125,000 and this can be added to your Nil Rate Band of £325,000 meaning that you can pass £450,000 including a property (to a direct descendant) and this will be exempt from Inheritance Tax.

  • Gifts to Charity

If you leave at least 10% of your estate to charity, then the rate of Inheritance Tax that will be paid is reduced from 40% to 36%.

  • Lifetime Gifts

Gifts of large sums of money given during your lifetime may still be liable to Inheritance Tax if you do not survive for seven years following the gift being given. Although the rate of Inheritance Tax may reduce depending on when the gift was given in relation to the time of death.

  • Gifts of £3,000

You can make gifts of up to £3,000 in each tax year and this will not attract Inheritance Tax. This £3,000 is a combined total but if no gifts are given in one tax year then this can be rolled forward to the next tax year (this can only be rolled forward one tax year though!).

  • Small Gifts of £250

In addition to the £3,000 that you are able to gift, you are also able to gift the amount of £250 to an individual without attracting Inheritance Tax, for example as birthday or Christmas presents.

  • Gifts upon Marriage / Civil Partnership Ceremony

A parent can gift up to £5,000 (grandparents can gift £2,500 and anyone else can gift £1,000) on the day of, or shortly before, a marriage or civil partnership ceremony and, as long as the wedding or civil partnership ceremony goes ahead then the gift will not attract any Inheritance Tax.

  • Occupation

If you die in active service whilst employed as a police officer, fireman, paramedic or whilst serving in the armed forces your estate may be exempt from Inheritance Tax.

  • Trusts

Setting up Trusts during your lifetime for the benefit of someone else means that the money placed into Trust will no longer form part of your estate. However, once placed into a Trust, the money is no longer yours and cannot be removed by you without forming part of your estate.

Trusts take careful consideration and planning and should be discussed fully with a professional before being put in place.

If you would like to have a free chat about your Inheritance Tax liability and planning for the future, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

Is it too late to make a Lasting Power of Attorney once being diagnosed with Dementia?

Is it too late to make a Lasting Power of Attorney once being diagnosed with Dementia?

A Lasting Power of Attorney is put in place so that someone that you trust implicitly can manage your finances & property and/or your health & welfare on your behalf.

A Lasting Power of Attorney must be put in place whilst the Donor (the person giving the Power) has capacity and a Certificate Provider is required to certify this in order for the Power to be registered by the Office of the Public Guardian.

So, once diagnosed with dementia is it too late to make a Lasting Power of Attorney? 

This will depend on how soon the diagnosis takes place and whether the individual that has been diagnosed has lucid or ‘good’ days and is still of sound mind.

If the individual still has lucid days where they are clear on their finances, current affairs and appear to be unaffected by the dementia then it may well be that a Lasting Power of Attorney can be prepared at this time and instructions taken from the individual. A Certificate Provider will meet with the individual and go through, carefully and sensitively, the current circumstances and ask questions as to that individual’s circumstances and personal affairs as well as current affairs in the news and media to ascertain their general capacity and mental wellbeing. If the Certificate Provider is content that the intended Donor has capacity, then the Lasting Power of Attorney can be applied for.

When registering a Lasting Power of Attorney, notification can be given to up to five people although this cannot be given to those that are being appointed as the Attorneys. This provides extra security for the Donor and allows the person, or people, being notified of the intended registration the opportunity to object to the Power being registered for any of the following reasons:-

  • if they believe that the Donor does not have mental capacity;
  • if the person being notified has a genuine belief that the Donor was under undue pressure to give the Power or is a victim of fraud;
  • if the person being notified has a genuine belief that the Attorney would act in a way that is beyond their powers under the Power or would not be in the best interests of the Donor;
  • if the Donor of the intended Attorney, or Attorneys, have already passed away;
  • if the Donor and intended Attorney were married or in a civil partnership and this has now ended;
  • if the intended Attorney does not have the mental capacity to be appointed as an Attorney;
  • if the Attorney is bankrupt;

The clear advantages of having a Lasting Power of Attorney in place means that, if both a Health & Welfare Power and a Property & Financial Affairs Power are registered, then the Donor is able to appoint the people they know and trust (whilst still of sound mind to make such a decision) to make decisions for them at a time in which their health is deteriorating and takes an unnecessary stress away at a difficult time for them and their loved ones.

We are always happy to have a chat with you about putting a Lasting Power of Attorney in place, the Powers that are available and whether this is still a viable option for either yourself or a loved one.

If you would like to have a free chat about Lasting Power of Attorneys, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

Care ISAs: Are they worth the investment?

Care ISAs: Are they worth the investment?

With the proposal of Care ISAs being introduced we look at what they are and whether you should consider getting one in place.

The Government will give much more detailed information as to the Care ISA in the Autumn when their social care proposals are outlined but for now we know that the Care ISA is one proposal in the Government’s plans to get individuals thinking about, and saving for, the costs of their future care at a much earlier stage.

One of the benefits proposed with the new Care ISA is an exemption from Inheritance Tax for any funds left in the ISA at the time of death. However, with the ever increasing cost of care, this is likely to benefit only the very wealthy, who can afford to put large sums into the Care ISA to ensure that it is not all used up by care costs during their lifetime allowing a lump sum to be paid to their beneficiaries free from any Inheritance Tax.

It is also worth considering whether the Care ISA is different or any more advantageous to other pensions, investments or Trusts, that are already available and do not attract Inheritance Tax.

The Care ISA, although seemingly a great idea to provide savings for care in later life, may just be seen as yet another expense that is a luxury rather than a necessity for most. When reaching the age where going into care is a necessary consideration, it is likely to be too late to begin a Care ISA and those with time on their side, to consider saving for care in their future, are likely to consider savings for or paying off education, getting on to the property ladder and starting a family a more important and necessary expense, followed by private pensions and then possibly a Care ISA much further down their list of priorities.

Latest figures show that just one in twenty estates attract Inheritance Tax and so it is unlikely that the Care ISA will be of great benefit to the large majority when considering tax planning and planning for theirs and their families’ future and much less likely to achieve the Government’s aim of enticing us all to save more for the costs of future care.

With more information due in Autumn on the Care ISAs, we will consider the benefit of Care ISAs again later in the year.

If you would like to have a free chat about your Inheritance Tax liability and planning for the future, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

Should I have a Lasting Power of Attorney in place to protect my business?

Should I have a Lasting Power of Attorney in place to protect my business?

None of us want to put our loved ones, and those we trust implicitly, in difficult and onerous situations but sometimes this is unavoidable.

There may be circumstances in which you are unable to make commercial decisions and if that should happen, have you considered what would happen to your business?

As a business owner, being unable to make decisions for your business could happen in any of the following circumstances (some being a lot more common than expected!):

  • HOLIDAY: if you are on holiday and uncontactable (this may seem unlikely with today’s technology although not beyond the realms of possibility with exotic and remote locations becoming far more accessible, and retreats and social detoxes becoming more popular) or even if you are stranded abroad and not able to make contact with people at your business;
  • ACCIDENT: if you are involved in an accident that leaves you unable to communicate decisions, attend the business or results in a temporary, or even permanent, loss in capacity;
  • SHORT TERM ILLNESS: if you unexpectedly fall ill that leads to the short term loss of capacity, leaving you unable to make or communicate decisions, or an illness that prevents you from communicating decisions or working on your business in the usual way;
  • LONG TERM ILLNESS: should the worst happen and you fall ill with a long term illness resulting in the complete loss of capacity, resulting in you being unable to make any decisions in relation to either your personal or business finances and no prospect of this improving or changing.

If the above should occur, who on your business could carry out the following:

  • have the authority to make legally binding decisions
  • prevent the freezing/closure of business bank accounts
  • access bank accounts
  • pay your staff
  • pay suppliers
  • sign cheques
  • authorise bank payments and transfers
  • arrange insurance renewals
  • continue with Service Level Agreements
  • enter into contracts
  • invest assets

A family member, spouse or partner may not always have the power to step in and carry out your duties if you are unable to and having this uncertainty makes planning near on impossible and exposes your business to unnecessary risk.

How will a Business/Commercial Lasting Power of Attorney help you and your business?

This will very much depend on how your business is set up, whether that be a Limited Company, Partnership or of you are a Sole Trader.

If you have a Limited Company, much of your business affairs will be dictated by the Articles of Association that we’re adopted upon incorporation of your business. These Articles may well provide for circumstances in which a Director loses capacity and termination of their appointment. However, if you are a sole Director then an Article terminating your appointment upon loss of capacity would not be appropriate as this would leave your business with no Director. A Lasting Power of Attorney will then ensure continuity of the business should you lose capacity and be unable to act.

If you are unsure what the Articles of Association for your business provide for, and whether they are right for your business then our specialist, Leah Waller, can help you – Leah@TotalLegacyCare.co.uk.

If your business is set up as a Partnership, then the Partnership Agreement between yourself and the other Partners should have provision for the loss of capacity by a Partner and this may well be sufficient to cover your business should you lose capacity. If you have any doubts or are unsure whether, or how, your Partnership Agreement covers this then it may be appropriate to consider a Lasting Power of Attorney.

If you are a Sole Trader, then you are unlikely to have any documentation that sets out, or provides for circumstances in which you lose capacity as you, in essence, are the business and this is not a separate legal entity from you as an individual.

In such circumstances, a Lasting Power of Attorney to cover your business is an important consideration to ensure certainty and prevent risk and disputing should you lose capacity.

So, what if I don’t have a Lasting Power of Attorney in place that covers my business? In some circumstances it won’t be possible for someone to step in and act for you, in relation to your business, and if this should happen it may be necessary for an application to be made to the Court of Protection in order that a Deputy can be appointed to act for you.

You will have no say in who the Court of Protection appoints as your Deputy and this you cannot guarantee that this will be someone that you would have chosen if you had the power to do so. The Court of Protection process can take longer than six months to complete and be expensive, leaving your business – and your staff and clients – vulnerable and without direction at a time that is already extremely difficult due to your, often unexpected, absence.

If you haven’t already got a Lasting Power of Attorney in place for your personal finances, then you may want to have one Lasting Power of Attorney created to cover both your personal financial affairs and your business interests and assets. However, you may not want, or expect, the same people dealing with your personal finances to deal with your business; they may not be the best placed person to do so or the burden may simply be too much.

You can therefore make more than one Lasting Power of Attorney, one to cover your personal financial affairs and another to take account of your business, giving you the control to ensure that both are protected and in the hands of those you trust. This will also ensure certainty and clarity for your Attorneys so that they are clear on their responsibilities.

A Lasting Power of Attorney for your business should be an important consideration when succession planning and setting out your business plan to limit disruption to your business, relieve those closest to you of the burden that comes with uncertainty and the possibility of making a Court of Protection application and avoid delays.

If you would like to discuss putting a Lasting Power of Attorney in place to protect your business, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk for a free discussion on how we can help

Leah Waller

Inheritance Tax: Record £5.2billion paid by UK in 2017/18

Inheritance Tax: Record £5.2billion paid by UK in 2017/18

With the Government collecting £5.2billion in Inheritance Tax last year, it is well worth considering whether your estate is liable for Inheritance Tax.

 

Although the record amount of Inheritance Tax paid in 2017/18 is nothing to be sniffed at, with only one in twenty estates actually paying Inheritance Tax there are ways of ensuring that your estate is not liable for Inheritance Tax, but in order to do so we must consider when Inheritance Tax is payable.

 

Inheritance Tax is payable upon death, where an estate exceeds the Nil Rate Band, at a rate of 40%. So, what is the Nil Rate Band?

The Nil Rate Band is a personal allowance, that each individual is able to gift, upon death, without attracting any Inheritance Tax.

 

The Nil Rate Band for 2018/19 (this is considered every April) is set at £325,000 per person, this may not seem like a lot considering the increase in property prices. However, in addition to the Nil Rate Band, if you are passing property to a direct descendant (a child, grandchild, great-grandchildren, step-children, adopted children or foster children) then you are entitled to claim the Residential Nil Rate Band. The Residential Nil Rate Band is currently set at £125,000.

 

If you are married and the estate is passed to the surviving spouse upon the death of the first spouse, then no Inheritance Tax is payable. Don’t worry, the deceased’s Nil Rate Band and Residential Nil Rate Band is not lost…

Upon the death of the surviving spouse, the Nil Rate Band and Residential Nil Rate Band can be combined to allow for the estate to pass to a direct descendant without attracting Inheritance Tax up to a value of £900,000 (in the 2018/19 tax year) by taking advantage of both spouses Nil Rate Band and Residential Nil Rate Band.

 

With the Government committed to increasing the Residential Nil Rate Band by £25,000 to April 2020, by the tax year 2020/21, an estate that includes a property and that is taking advantage of both spouses Nil Rate Band and Residential Nil Rate Band will be able to gift £1million to a direct descendant without attracting any Inheritance Tax.

 

If your estate is valued at over £2million then your use of the Residential Nil Rate Band attracts conditions and so if your estate is valued at over £2million then we will need to consider your exposure carefully to limit this where possible.

 

If you would like to have a free chat about your Inheritance Tax liability and planning for the future, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

 

Leah Waller