Will Inheritance Tax be payable on my Estate?

Will Inheritance Tax be payable on my Estate?

  • Inheritance Tax is payable at 40% upon death where an estate exceeds 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 (for 2018/19 this is £325,000 per person)).

For more information on the Nil Rate Band and Residential Nil Rate Band, check out our article – Inheritance Tax: Record £5.2billion paid by UK in 2017/18

It is therefore important to know what your estate is, what assets form part of your estate and how your estate is valued. You can then plan accordingly to try and reduce your Inheritance Tax liability where possible and prepare for such an Inheritance tax bill if necessary.

First things first…What is your estate?

Your estate includes all of your assets, whether owned outright, solely or jointly. The combined total of this will then be used to calculate your Inheritance Tax liability.

However, any liabilities or debts that you leave will be deducted from the value of your assets before any Inheritance Tax is calculated. Any debts or liabilities owing at the time of your death are payable by your estate and so this value is reduced from the total value of your assets.

What assets are included when valuing your estate?

When calculating the value of your estate, all of your assets are valued at the date of death, and these assets will include:

          any asset which you can dispose of (sell, transfer or gift) in your Will, or which will pass by the Rules of Intestacy if you do not have a Will in place. This includes:

 

o   Property, Land, Buildings and any Interest in Property, Land, Buildings

including your home and any other property, land or buildings that you own or own with anyone else (including those that have a mortgage on them). This also includes any properties, land or buildings that you have an interest in.

 

o   Personal Items

including all household items and any items or possessions owned by you such as jewellery, clothing, glassware, silverware, china, porcelain, electrical goods, any works of art, vehicles, caravans, boats, planes and any collections (stamps/coins etc.).

 

o   Bank and Building Society Accounts / Savings

the money in all banks, buildings societies, saving accounts and ISAs as well as any accrued interest (whether or not credited to the account yet) at the date of death.

 

o   Premium Bonds / NS&I Products

savings with National Savings and Investments which may take a similar form to a bank or building society or may well be investments or premium bonds.

 

o   Pensions

Where pension payments continue after death they may be taken into account when valuing assets upon death, although these may well be exempt where the payments are made to a surviving spouse or civil partner.

Any lump sum payment that is made from the pension, upon death, may be liable to Inheritance Tax and form part of your estate but this will depend on the pension scheme rules and nominations.

o   Life Insurance Policies

payments from Life Insurance policies may be included within your assets unless they are written into trust for your beneficiaries. However, this will depend on the Life Insurance policy and terms of such policies.

 

o   Shares and Investments

including all stocks, shares and investments held either solely or jointly by you upon your death.

 

o   Employment Benefits

you may be entitled to outstanding payments from your employer if you die whilst still in employment, and if so, this will form part of your estate. However, if you have been paid in advance there may be a debt due from the estate to your employer. You may also be due share incentives, as part of your employment package, and this should also be considered.

 

o   State Benefits

your estate may be due some state benefits from the date of last receipt to the date of death. The Department for Work and Pensions should be written to in order to obtain this information.

 

o   Other Items

 

§  Lifetime Gifts that have been made within the seven years prior to your death that have reduced the value of your estate may need to be included.

 

§  Credit / Refunds including those that are due from utilities that have been paid in advance.

 

          any assets that are passed to others regardless of your Will or the Rules of Intestacy

 

o   this will include any property that passes because it was held by you as a joint tenant and therefore automatically passes to the other joint tenant/s upon your death.

 

          any assets that are included by way of legislation or statutory provisions

 

o   Trusts that you have a qualifying interest in (Interest in Possession, Immediate Post-Death Interest, Disabled Person’s Interest or Transitional Serial Interest).

 

o   Gifts with a Reservation of Benefit including any gift that is given by you but that you retained an interest in or that you continued to benefit from (such as a property that you have transferred but continue to reside in).

 

o   Gifts of an asset, or where you have helped to buy an asset and received a benefit from that gift or asset during your lifetime

 

We said earlier that your estate value is reduced by any debts and liabilities, so let’s take a look at what that could include:

  • Funeral Expenses
  • Outstanding utilities accounts such as gas, electric, water, landline, mobile phone, internet/broadband, TV, insurances etc.
  • Council Tax
  • Credit accounts such as credit cards, catalogues, standing orders, direct debits etc.
  • Overdrafts and Loans
  • TV Licence
  • Mortgage or Rent
  • Miscellaneous accounts such as a milkman, gardener, newsagent or similar.
 You may find it useful to check out our article – Inheritance Tax: What can be done to reduce your exposure?

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

 

Leah Waller

Got a Question or want to book a FREE Consultation?

Let’s get SOCIAL! #SocialChallenge

Let's get SOCIAL!

#SocialChallenge

As small business owners we all know how important a presence on social media is but we also know how time consuming it can be. Not to mention how difficult it can be in coming up with ideas for content!

So, here’s a challenge for us all…

Let’s all agree to post on social media every day in November and here’s how:

We have set out 30 days of content ideas below. So, look at the daily theme, put in about 30 minutes of planning time, snap some photos and get sharing across social media, simple right?

We will be using Instagram, Facebook and Twitter and will try and post early each day to give you all some ideas.

We would love as many businesses to join in as possible using the hashtags #TLCchallengeTBC and #SocialChallenge so that we can see all the posts and really get to know the people behind the business.

And, for those of you wondering…Why #TLCchallengeTBC?

We are part of an amazing online community bring businesses together – The Businesses Community  (definitely worth checking them out if you haven’t already!) – and we challenged them and all of their members to post on social media every day in November but why stop there? 

This is a challenge for everyone, so let’s do this!

~ Leah & Neil

 

  1. Shout out your brand

  2. People behind the brand

  3. Why did you begin?

  4. Link to your website

  5. How was your brand born / created?

  6. when you are not working, you are…

  7. Shout out a Charity you love working with

  8. Best piece of advice for a start-up

  9. Favourite quote

  10. Share your latest blog or article

  11. Share a family photo

  12. Best social media platform for your business

  13. Share your social media accounts

  14. Best thing about working on your own business

  15. A business achievement you are proud of

  16. A review for a local business

  17. Where in the world is on your bucket list?

  18. Favourite music artist or band

  19. Top tip to help you relax at work

  20. Tell us how your product/service helps

  21. A local business that has brought value to me

  22. My ideal contact to grow my business

  23. A fun fact about the people behind the business

  24. Today I am…

  25. A month to Christmas, what’s on the wish list?

  26. Picture of your pet

  27. Your favourite supplier and why

  28. One goal I will achieve in the next 6 months

  29. Favourite Insta post you’ve posted

  30. Thank you #FunFriday

How I chose the guardians for my children…

How I chose the guardians for my children...

When choosing to put guardians in your Will what should you consider?

Often, when we are taking instructions from our clients, the conversation around putting guardians in place is one of the toughest.

For many, the main reason for getting their Will sorted is heavily influenced by who should look after their children if the worst happened. As a parent, it is especially hard to imagine someone else bringing up your children, nobody wants to think about what will happen if they are not around, but it is always worthwhile planning for and having measures in place should the tragic situation arise.

So, who is best to choose as guardians, what should you consider and how is best to tackle this difficult consideration and the conversation with your proposed guardians?

Using my own circumstances as an example, when I put my Will in place, I had to consider all of the following:

 

1)     Where would my children like to be (who with and location) if both of their parents were no longer around to look after them?

 

2)     Friends; I thought that during this tricky time of grief, my children would need to remain with as close to a normal routine as possible. Location was key to this so they can keep contact with friends, remain at a school they are familiar with, have family close to them and continue with clubs and activities they are used to and enjoy. This is not possible for everyone but was a consideration for me.

 

3)     Stability; choosing guardians that are able to look after my children until they are 18 and/or no longer need guardians was extremely important. Faced with the loss of their parents and moving in with guardians once is traumatic and I wouldn’t want this to happen again should their chosen guardians not be around until they reached an age they could live independently.

 

4)     The age of my proposed guardians; if the worst should happen now, it may be ok for my parents to cope with looking after my children, but what happens in 10 years’ time, will my parents be too old to cope or will it be too much for them?

 

5)     Am I burdening someone with the challenge of bringing up two (possibly additional) children?

 

6)     How will I finance my children through schooling and further education if I no longer had a regular wage coming in, I couldn’t expect someone to take on the responsibility of looking after my children and the added financial burden too?

 

All of these thoughts and worries ran through my head and I have always been a believer in the phrase “never ask someone to do something for you that you wouldn’t do in return for them”.

After careful consideration with my wife, we decided that the best person to be guardian of our children, should the circumstances occur, was my sister.

I wanted to have the conversation with my sister to ensure she was okay with this decision and once I had that conversation she was honoured and relieved that I had asked and had said that it was something that had been playing on her mind for a while but didn’t want to address it.

My sister also asked if I would be guardian to her children and this prompted her to put her Will in place soon after.

It was important to me to consider location; if my sister was a hundred miles away or even in a different country, would I have made the same decision? Probably not. Would I have wanted to put the burden on my parents? Would I look to a friend to be guardians of my children? There is a lot to consider all whilst bearing in mind what is best for my children. Then I had to consider reserve guardians, what if my sister was not willing to act if the time came, or she was no longer around. I went through the same considerations when putting my reserve guardians in place to cover this eventuality. 

One thing playing on my mind when I first began planning my Will and who I would appoint as guardians was, if I don’t plan, prepare and choose guardians, who will?

In circumstances where guardians have not been named in a Will, and no provision has been made for the children, the responsibility falls to the Local Authority to place children with guardians. The Local Authority have a duty to take care of the children’s best interests whilst making their decision, but this could take time and there is a possibility of being placed in temporary care whilst this process takes place. A harrowing thought that urged me to get my wishes written in my Will.

Like most of our clients, when I finally signed my Will, I felt a relief that despite what the future holds for me, I have taken the precautionary measures to ensure my children are looked after by the right people.

The lesson I learnt when dealing with this was that it’s always best to have these conversations and speak openly about your concerns. We managed to resolve two issues in one; guardians for both my children and my nephews.

I’m not saying that this is the solution for everyone and other family dynamics are different but, having these conversations are always worthwhile and ensuring that those people that you would like as your guardians understand the responsibility and are happy with the decision. 

 If you would like to discuss your Will and potential Guardians, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk for a free discussion on how we can help.

 

Neil Barras-Smith

Got a Question or want to book a FREE Consultation?

I have been appointed as an Executor, what now?

I have been appointed as an Executor, what next?

Being appointed as an Executor can be seen as a privilege or a curse, but worse of all is when it comes as a surprise!

If you are asked to be an Executor, many questions will be raised including the following:

          What is an Executor?

          What does an Executor do and is there a specific process to follow?

          Does being an Executor cost me anything?

So, let’s have a look at some of those questions…

An Executor is appointed by someone in a Will, so that when that person passes away the Executor can collect and protect the estate, property and assets of the deceased and carry out the distribution of such items in accordance with the deceased’s wishes.

If you are appointed as an Executor, although this can involve a considerable amount of work, it is a privilege. By being appointed as an Executor, the person appointing you has put their ultimate trust in you to carry out their final wishes to collect in and distribute their estate and possessions as they wanted.

Some of the initial steps to take upon becoming an Executor are:

          Ensuring that a Death Certificate is obtained

As the Executor you will be responsible for notifying certain people, companies and authorities of the death and so the Death Certificate will be required. It is possible to obtain more than one copy of this and so it may be wise to do so.

          Finding the Will

As the Executor you will need the Will in order to apply for Probate.

 

          Consider whether you require help

As the Executor you do not have to carry out all of the administration of the estate by yourself, you can ask for professional help from solicitors, probate specialists and/or tax advisers.

If the estate is relatively small and doesn’t have any complexities, the Executor may well decide that they can carry out the process by themselves and this is also fine.

 

          Applying for the Grant of Probate

This is the official document giving you authority to administer the estate of the deceased, collect in and deal with their assets and then distribute them accordingly.

 

          Collecting in the Assets

The Will and any accompanying documents that the deceased may have left may well give specific instructions as to what the deceased has and, importantly, where it can be located, however such specifics may not be given.

As the Executor you will need to ensure that you collect in and account for all of the deceased’s assets including property, stocks, shares, bank accounts, ISAs, personal items etc. The Executor will also be responsible for ensuring that relevant insurance is in place for the assets until they can be distributed in accordance with the Will.

          Paying the estate debts and any taxes

The estate is responsible for paying the funeral costs and any taxes due in relation to the deceased and the estate. The Executor is not responsible for paying these personally however, the Executor is responsible for ensuring that these are paid from the estate. The Executor should also put a notice to debtors in the London Gazette.

          Distribution

The Executor will then be responsible for distributing the estate assets, following the payment of all debts and taxes, in accordance with the deceased wishes as set out in their Will. A detailed record of this, and all the steps taken by the Executor, should be kept throughout the process.

Remember, if you are putting your Will in place, have a chat with your proposed Executors and let them know that you trust them implicitly and so that is why you would love them to be an Executor. Having the conversation may well be difficult but it will save, what can be a shocking, surprise should anything happen to you and they are required to act.

An Executor has the right to refuse to act, if they are unwilling do so and so discussions at the time that a Will is put in place are important to overcome this. An Executor may be unable to act, through incapacity or if their death occurs before yours, however having conversations with your proposed Executors, when putting your Will in place, should prevent any surprises and limit the risk of them renouncing their obligations when the time comes.

We are always happy to have a chat with you about who you may want to appoint as your Executors and even help with the discussion with Executors and answer any questions that they may have.

  

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

Got a Question or want to book a FREE Consultation?

When should I make a Lasting Power of Attorney (LPA)?

When should I make a Lasting Power of Attorney?

 

Much like when deciding to make a Will (see our Article – When should I make a Will?), there is no right answer, to the question: when should I make an LPA? Everyone’s circumstances are different and so timing will be different for everyone. 

 

Everyone’s lives take different paths and at different ages and there is no one rule that will fit for all.

 

There are two types of LPA; a Property & Financial Affairs LPA which allows your Attorneys to make decisions in relation to your finances, bank accounts, stocks/shares, ISAs, your utilities as well as any property that you own or have an interest in, and a Health & Welfare LPA which allows your Attorneys to make decisions in relation to your health, medical treatment, day-to-day activities, living arrangements, accommodation and general welfare.

 

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

 

Recovering from an Illness or Injury

Ideally you would have an LPA in place to cover you prior to any incapacity (whether mental, physical or both) through illness or injury but should you not, it is extremely important to make this a priority once you have recovered.

 

Should anything happen subsequently, or completely separately, you will want to ensure that your loved ones can make decisions for you, on your behalf, if you are unable to without any hassle and delay. If you have already experienced a stint in hospital through illness or injury you will be all too aware of the delays that can be caused and the distress to loved ones through the lack of an LPA.

 

Once in a Lifetime Trip / Travelling

If you are embarking on a once in a lifetime trip or travelling it is important to consider an LPA. An LPA not only allows your Attorneys to
take decisions when you no longer have the capacity to do so but also if you are unable to because it requires you being physically present or a physical signature which may well be impossible if you are overseas, especially for an extended period.

 

Buying your first property

When most people buy a property it is usually their most valuable asset, so you need to prepare for this and ensure that someone that you trust is able to make decisions on your behalf if you are unable to do so through lack of capacity or because you are not contactable due to being abroad or in unforeseen circumstances.

 

Getting married

When you get married you may wish to review your LPA and consider who was appointed as your Attorney/s and whether this should be updated to include your spouse.

 

Having a baby

Whether you have your own children, are fostering or adopting, having a child  (or children!) changes your life and means that you are responsible for more than just yourself. It is important to have LPAs in place so that your loved ones can make decisions, without delay and without the expense of going through the Court of Protection, in relation to any health, welfare, financial or property decisions that may be required.

 

As your children get older you may want to consider appointing them as your Attorneys.

 

Attorneys must be over 18 years of age.

 

Buying a new or bigger property & Investing in buy-to-let
properties or second homes

When investing in more property you should also consider reviewing your LPAs, should you be unable to take decisions in relation to that property, either through lack of capacity or because you are not physically available or contactable, you need to ensure that someone that you trust implicitly is able to, and has the power to make such decisions.

 

Investing in assets abroad 

When you invest in assets abroad it is important that you are aware of the legal obligations in that country and whether you should be appointing an Attorney to deal with assets in that country.

 

Equally, if you decide to spend more of your time abroad then you may well have large periods of time that you are not in the UK and will be unable to make quick decisions or be available for signing of documents should it be required and so having an Attorney appointed that can do this on your behalf is important.

 

Getting divorced or Dissolving a Civil Partnership

If your spouse is appointed as your Attorney and you subsequently get divorced or the civil partnership is dissolved then the former-spouse will no longer be able to act as an Attorney.

 

It is important to review your LPA at this stage to ensure that you have replacement Attorneys in place or that new Attorneys are appointed.

 

Getting re-married

As we have set out above, when you get married, you may want to appoint your spouse as your Attorney (if you have not already done so) and so your LPA should be reviewed to ensure that the people you trust most with your affairs are appointed under the appropriate LPAs.

 

Owning a business

If you own a business you should consider our Article – Should I have a Lasting Power of Attorney in place to protect my business?

 

There may be circumstances in which you are unable to make commercial decisions and if that should happen, it may well be that the person that you would most trust to step into that position is unable to and powerless.

 

Depending on the setup of your business an LPA should be considered to assist with succession planning and setting out your business plan in order to limit disruption to your business and relieve those closest to you of the burden that comes with uncertainty and the possibility of making a Court of Protection application, avoiding any delays.

 

Retirement

This is another milestone where your circumstances change and you may well want to review and update who you have appointed as your
Attorneys. 

 

As set out above, you may be fortunate enough to spend some of you time once retired, abroad and so may well need Attorneys in place in the UK to take decisions for you when you are unable to or not available.

 

Ill or Poor Health

A Lasting Power of Attorney must be put in place whilst you have 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.

 

An LPA must therefore be put in place before your health deteriorates so much so that you lose capacity and are unable to obtain the signature of a certificate provider to register your Attorneys. Leaving an LPA too late can mean that you are unable to appoint those you want as your Attorneys and can mean a long and expensive court process for your loved ones.

 

 

An LPA can be revoked at anytime, Attorneys can be removed and new Attorneys appointed as and when you review your LPAs and any changes are required.

 

There is never a right time to put your LPAs in place but as you can see there are many milestones throughout your lifetime in which your LPAs may be required and so getting them in place early and keeping them under review throughout these milestones is important.

 

If you would like to discuss putting a Lasting Power of Attorney in place, 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

Got a Question or want to book a FREE Consultation?