Direct Cremation

Let’s face it, the majority of us want to avoid talking about Funerals, let alone our own!

However, if we really think about it, there are probably a few things we would like and so it is important to get out wishes down whilst we can.

The expense of a Funeral can be a large burden on our nearest and dearest at an awful time and with so many possibilities and considerations, the choices really can be endless.

So, one option is Direct Cremation but what is that, what does it involve and why should you consider it?

We take a look below…

A Direct Cremation takes place without a Funeral Service and most Funeral Directors will now offer this in addition to the traditional Funeral Service options.

A Direct Cremation can benefit those that are looking to keep costs down as well as those with few or no family. As we know, the costs of Funeral can be high and, if not planned for in advance, can leave a heavy strain on your loved ones. A Direct Cremation can also save money on an expensive coffin as there will be no Funeral Ceremony and so no procession.

This type of Cremation is also of benefit for those that do not want a big fuss, or service or would prefer their family and friends to have an alternative celebration away from the actual Funeral Service. Some may leave monies or wishes in relation to holidays, experiences or the like for their family to enjoy in their memory rather than a formal and traditional Funeral Service.

However, some of the possible downsides that you may want to consider are…

When a Direct Cremation takes place, as there is no Funeral Service this does mean that there is nothing for family or friends to attend or leave flowers at and there will be no opportunity (at a Service) for readings or eulogies. There is also no opportunity for viewing on a Chapel of Rest and no choice as to the time and place of the Cremation as this is scheduled by the Funeral Director as no one is able to attend.

Thus, although a Direct Cremation may seem like a good idea for you, and may be preferential in terms of costs, it may be worth considering any friends and families and how they may want to celebrate your life following your death.

As we said at the beginning, talking about Funerals is not a subject that any of us really enjoy.

We outline some of the other potential considerations in our article: What to consider when planning a Funeral

If you have any questions or want to discuss putting a funeral plan in place, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk for a free, relaxed and considerate discussion on how we can help

Leah Waller

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13th November 201923rd April 2020

Starting a conversation about the ‘Elephant in the Room’

Starting a conversation about the ‘Elephant in the Room’

With over 30million people in the UK without a Will, there are so many reasons that it is one of those things that gets put off, moves down the ‘To-Do List’ and sometimes just never ever gets done BUT it doesn’t have to be the difficult conversation that many expect!

Many of us put off making a Will because we don’t want to tempt fate or presume that those we want to take care of will be able to inherit our assets anyway but that isn’t always the case.

Where there is no Will, the Rules of Intestacy kick in and this means that you lose control over who you would want to inherit and this is chosen for you…

So, if you are one of those 30million that have been putting off making a Will, or have a Will that may need updating, why not take a look at some of these considerations…

Who do you want to inherit your Estate?

We all would like to think we are immortal, right?

Unfortunately, that isn’t the case and so we should have consideration for who we would want to benefit from everything we have worked hard for, when we are no longer around.

This will depend on your circumstances and is likely to change at different stages of your life, depending on your relationships, children, grandchildren, nieces and nephews, perhaps even godchildren or second marriages.

Estate Valuation

The value of your Estate is calculated by totalling everything that you possess, own or have an interest in at the date of your death (this will include property – residential, buy-to-lets, commercial and holiday homes), money, bank accounts, savings, ISAs, Stocks & Shares, Cars, Jewellery and personal possessions.

Any liabilities or debts will then be deducted from this total, including mortgages, loans, utility bills, credit cards plus any funeral expenses.

Inheritance Tax

If your Estate valuation totals more than £325,000 then you may have an Inheritance Tax Liability. However, there are other reliefs available including relief if you are leaving your residential property to direct descendants, if you have any business assets and if you are married or in a civil partnership and leaving your estate to your spouse or civil partner. It is worthwhile seeking advice from a professional in order to ensure you are taking advantage of all the reliefs that may be available to you.

There may also be other options available to you, depending on your Estate Valuation, your income and projected needs over your lifetime, in terms of Trusts and Financial planning to reduce any Inheritance Tax liability, again it is worthwhile seeking expert advice in relation to this.

Gifting

You may well benefit from making gifts during your lifetime, but this may not be possible for everyone.

Once you have a better idea of your Estate Valuation, who you want to benefit from your Estate upon your passing and whether you have any Inheritance Tax Liability, you may want to consider whether you could benefit from making gifts during your lifetime.

Each of us is able to make gifts of £3,000 each year without attracting any Inheritance Tax liability (and we can carry this over for one-year too!).

However, any gifts that exceed this may still be liable for Inheritance Tax if made within seven years of your death…again, we would recommend seeking professional advice if you are considering making gifts during your lifetime.

Wishes

Do your loved ones know what your plans are for the future, do you have certain expectations in relation to your later life care (this could be dealt with in a Lasting Power of Attorney) or perhaps even your funeral?

You may even want to give gifts in your Will with a condition attached (upon reaching a certain age, to be used for certain circumstances or only to be received upon meeting a condition).

Setting these out can be really helpful, not only in giving you peace of mind but also in preventing any unnecessary arguments or disputes when you are no longer around.

Charities

Another consideration that may be worth thinking about, is whether you would like to leave anything to Charity upon your passing.

If you are leaving 10% or more of your Estate to a Charity then your Inheritance Tax Liability will be reduced from 40% to 36%.

We are always happy to have a free chat to answer any questions that you may have, offer advice or help you to put something in place.

If you have any questions or would like to discuss putting a Will in place, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk for a free consultation

Leah Waller

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6th November 201923rd April 2020

Will the Government Inherit my Assets?

Will the Government Inherit my Assets?

Without a Will in place, everything that you have worked hard for is left beyond your control. Having a Will in place (that is up to date!) is the only way to ensure that the people you want to benefit from everything that you have worked hard for, actually do!

In the absence of a Will, the Rules of Intestacy decode where your hard earned assets end up and this may not be where you would have chosen…

There are more than 30 million people in the UK without a Will, so if you haven’t got your in place yet, you are not alone! BUT, that is no excuse to sit back and relax!

Many of us put off the talks around later life planning for fear of tempting fate or upsetting someone but this has led to an eye-watering £48million of deceased property being unclaimed and so passing to the Crown!

Something else you may want to consider is, whether Care Home fees will be eating into everything you have worked for…

These talks do not have to be all doom and gloom!

That is where we come in!

We are more than happy to discuss what you want, put plans in place and give advice. Whilst none of us want to expect the worst, we should always plan for it…having peace of mind that we are covered no matter what happens is a great feeling!

So, instead of avoiding those all important conversations like the plague, open up the conversation, discuss it with your family and if you need advice, have any questions or want to get something in place…set up a FREE CONSULTATION with us.

If you have any questions or would like to arrange a free consultation, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk

Leah Waller

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30th October 201923rd April 2020

What is Inheritance Tax and how can I reduce it?

What is Inheritance Tax and how can I reduce it?

Most of us will pay taxes for a large proportion of our lives and then still leave our loved ones with a tax bill to pay upon our death for Inheritance Tax…it doesn’t seem fair does it?

So what exactly is Inheritance Tax? When is it payable and is there anything that you can do to reduce your Inheritance Tax bill?

Let’s take a look…

Inheritance Tax only becomes payable on death and is calculated taking into consideration the value of everything that you own at the date of your death and including any gifts that you made within the seven years prior to your death. Any debts or liabilities that you have at the date of your death will be deducted from the value of your assets and this final balance is what is used to calculate whether any Inheritance Tax is payable.

If you are leaving your assets (property, money, personal possessions etc.) to your spouse or civil partner then this will be exempt from Inheritance Tax, as are any gifts made to Charities.

However, anything left to children or anyone else will be subject to Inheritance Tax where the value exceed the Inheritance Tax Threshold.

The Inheritance Tax Threshold is currently set at £325,000 per person and an additional £150,000 can be claimed if you are passing your residential property to a direct descendent (children / grandchildren), this is termed the Residential Nil Rate Band. The figure of £150,000 is set to rise to £175,000 in April of 2020 meaning that each person will have £500,000 before having to pay Inheritance Tax. This is also transferable between spouses and civil partners, meaning that if you pass everything to your spouse or civil partner upon your death then no Inheritance Tax will be payable and from 2020 (if both your death and your spouse/civil partner passes after April 2020) then your Estate can total £1million before any Inheritance Tax is payable.

If your estate is worth more than £2million then you lose the right to claim all of the Residential Nil Rate Band, thus for every £2 over the £2million valuation, you will lose £1 of the Residential Nil Rate Band.

Inheritance Tax is payable at 40% of anything above the Inheritance Tax Threshold (or Nil Rate Band).

If you are leaving 10% or more of your Estate to Charity (whether one or multiple Charities) then your rate of Inheritance Tax will be reduced to 36%.

Now, we mentioned above that any gifts made in the seven years prior to your death will be taken into account when calculating the value of your Estate. HOWEVER, if these gifts were made from surplus income then they do not need to be taken into account when calculating your Inheritance Tax liability. We all benefit from a £3,000 allowance each year which we are able to gift before Inheritance Tax become payable and so it may well be important to consider this when assessing the value of a deceased loved one’s Estate.

There may be other exemptions on gifts that you can benefit from such as gifts on marriage, you can find out more about this in our article – Inheritance Tax: What can be done to reduce your exposure?

Another consideration that we would always advise looking at is putting your property into a Trust, meaning that upon their death the property passes to whoever they want it to (perhaps their children, grandchildren, nieces or nephews) but their spouse is entitled to benefit from the property and live there until their death or until they remarry (if this happens). This not only has the benefit of protecting the property for your intended beneficiary but also protects you and your spouse if the property is valued in relation to Care Fees as the share in Trust will not be taken into consideration.

As always, we would always recommend reviewing your Will regularly to ensure that it still does exactly what you want it to and that you have considered possible benefits and exemptions that you could benefit from.

Check out our article – Inheritance Tax: What can be done to reduce your exposure? For more information on reducing your Inheritance Tax liability.

If you would like to discuss your Inheritance Tax liability, or putting a Will in place, call us on 01727 865 121 or email us at info@TotalLegacyCare.co.uk for a free consultation

Leah Waller

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2nd October 201923rd April 2020

Wouldn’t it be great if we could predict the future?

Wouldn't it be great if we could predict the future?

We all have busy lives and so sometimes just predicting what today is going to ring is an achievement, let alone way into the future! It would be great though, wouldn’t it 😉

Unfortunately, none of us know what is just around the corner and so planning for it is key. That is where Lasting Powers of Attorney (LPAs) come in! LPAs are relevant during your lifetime and ensure that someone that you trust and have appointed as your Attorney can act on your behalf when you are unable to. Check out our article, Why Do YOU need an LPA? 5 reasons YOU should put your LPA in place for more information on LPAs.

We all know that age is going to hit us hard at some point but that ‘point’ is way off in the future, right? Unfortunately, this may not be the case…

Just looking at a few celebrities, we can see that an LPA may be needed a lot sooner than we would have hoped!

Chris Tarrant was just 67 years of age when he suffered a stroke that led to an emergency operation and ongoing rehabilitation to help him to regain his speech and physical movement.

Michael Schumacher was only 44 years old when a skiing accident resulted in him being placed into a medically induced coma (for six months!) and suffering life-threatening head injuries.

Micahel Schmacher is a father of two children, who were aged just 14 and 16 at the time of the accident.

Richard Hammond was involved in an awful car accident whilst filming for Top Gear at the age of just 37 causing major brain damage after being in a coma for two-weeks, this also led to significant memory loss and depression.

However, it is not just celebrities that this happens to and when we take a look at the facts, they are hard-hitting! Just a couple of statistics for you:

Every 90-SECONDS, someone in the UK is admitted to hospital with a brain injury;
Every THREE-MINUTES, someone in the UK is diagnosed with Dementia (and this is not just a condition that affects those over 65!);
Every FIVE-MINUTES, someone in the UK suffers from a stroke;
One in Six people within the UK will have a stroke during their lifetime;

So, enough of the doom and gloom….

What can we do to ensure we are protected, plan for our future and our family’s future and give us some much needed peace of mind?

The answer is a simple one…. Get your Lasting Powers of Attorney in place whilst you still have capacity to do so!

There are two types of Lasting Power of Attorney:

Health & Welfare Lasting Power of Attorney; and
Property & Financial Affairs Lasting Power of Attorney.

(to find out more about these check out our article Why do I need an LPA?)

An LPA allows you to appoint an Attorney, or Attorneys, to make decisions for you, and on your behalf when you are unable to. This could just be a temporary measure due to a temporary loss of capacity either physically or mentally or a more permanent arrangement.

You can give your Attorneys guidance and state your preferences, should you choose to do so, within your LPAs and set out the extent of the power that you want your Attorneys to have.

So, what if you don’t get around to getting these all important LPAs in place?

If you do not register LPAs whilst you have the capacity to do so then you lose control to a certain extent as it is then for your loved ones, or a professional, to apply to the Court of Protection for a Deputyship Order in order to manage your financial affairs on your behalf.

This process is costly – a court fee of £385, not to mention legal fees if you seek legal advice and potentially a fee for a professional to verify your lack of capacity to support the application being made, and timely – the application can take around 4 months to be granted from the date of submission however, if there are objections made to the application then this process can take 9-12 months!

Once you have lost capacity you lose the ability to choose who you want to appoint to manage your affairs for you and ultimately the choice is left to the Court of Protection – this may not be who you would have chosen had you been able to make the choice yourself.

You also lose the opportunity to give guidance to your appointed Attorneys and advise of your preferences.

In relation to your health and welfare, if you do not make an LPA to cover this whilst you have the capacity to the Court of Protection will be reluctant to appoint a Deputy in relation to your healthcare decisions unless the circumstances are extremely complex. Again, meaning you lose the control to appoint who you trust to make decisions on your behalf.

Getting an LPA in place doesn’t have to be complicated, time consuming or expensive and can ensure that you have peace of mind and take the burden away from those closest to you.

If you would like a free chat to see how we can help or if you have any questions please do not hesitate to get in touch for a FREE consultation on info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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25th September 201923rd April 2020

What to consider when Inheriting

What to consider when Inheriting

Mandy Rodgers is a Wealth Manager with St. James’s Place Wealth Management and has kindly put together the following considerations that you should have a think about when receiving an inheritance…

Receiving an inheritance can generate mixed feelings – sadness that a loved one has passed away, possibly relief that maybe some debts can be paid off, or uncertainty over how best to make use of your inheritance in your lifetime whilst ensuring there’s something left to pass down to future generations.

Receiving an inheritance may be the first time you’ve had to worry about investment options and can be quite daunting if that’s not something you have experience of. There is no one right answer as everyone’s circumstances are different, but some things to consider are…

Paying off any expensive credit cards & store cards first

A lot of mainstream mortgages today are at very competitive interest rates, around the c. 2% mark, so it wouldn’t necessarily make sense to pay down a mortgage as your money could be put to better use depending on your attitude to investment risk & return.

For some people, they just want to know the mortgage is gone and paid off. For others, if the mortgage payments are affordable and they’re happy the mortgage will be paid off before retirement they might prefer to invest their inheritance elsewhere to potentially generate capital growth… or maybe a middle option would suit, where they could pay off a lump sum (to reduce the monthly mortgage payments or reduce the mortgage term) and invest the rest (take proper advice on your situation, and check with your lender first to see whether early repayment charges apply)

One thing’s for sure, with cash savings interest rates at a fraction of 1% and inflation at c. 2%, money held in cash will go backwards in real terms, so that’s probably not the answer

Many people have in the past opted for ‘bricks & mortar’, and have bought Buy to Let properties. Whilst property has been a good performing asset class the tax rules around second properties have become particularly punitive and so on its own, residential property is becoming less attractive. Coupled with the fact that it brings with it the hands on hassle of dealing with tenants, and managing repairs & maintenance (which are often underestimated), it’s not always the ‘passive’ investment it’s thought to be

I work with clients to provide professionally managed and well diversified investment options that suit their personal circumstances and objectives. These are tailored to their attitude to risk and regularly reviewed and managed by me to form part of their overall financial life plan. Using the most appropriate investment tax wrappers is also important, to ensure everything is as tax efficient and admin easy as possible during your lifetime, and will pass down to the next generation as tax efficiently as possible too. If you’ve had to pay Inheritance Tax on your inheritance, you’ll understand the importance of timely tax planning!

The key point is to get some proper financial advice and look at options that work for you and your situation. Unless you’re familiar with the financial industry there’s every chance you

‘don’t know what you don’t know’

and a professional can inform you and guide you through the options to make the best decision for you and your family.

If you would like to discuss your financial situation / inheritance, contact…

Mandy Rodgers

07824 408990

mandy.rodgers@sjpp.co.uk

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.

Leah Waller

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11th September 201923rd April 2020

Will my Will be disputed?

Will my Will be disputed?

A recent survey by Direct Line Life Insurance found that almost a quarter (24%) of people are prepared to fight for their inheritance in relation to a loved one’s Estate.

We tell you quite a lot about how important it is to have a Will in place, but even with the best will in the world and with a Will drafted by professionals (rather than a DIY Will) could arguments still be raised?

Unfortunately, as we all know (and probably have experience of!) where there is money involved, arguments are not far behind! In 2018, the HM Courts and Tribunals Service evidence a 6% increase to the number of claims in relation to probate disputes.

So, although there are steps we can take (and we will have a look at those!) to ensure your Will is as water-tight as can be, here are a few of the common reasons that a Will is disputed:

Lack of mental capacity

In order to make a valid Will, the Testator (the person making the Will) must understand what they are doing, the effect that the Will has and the consequences. The Testator must be of sound mind and free from any disorder of the mind that may prevent the exercise of natural mental faculties.

A person may dispute a Will where they believe that the Testator did not have the mental capacity and ability to do so at the time that the Will was made.

Legal Requirements

There are certain requirements that must be met in order for a Will to be valid and if these are not met then the Will could be disputed.

Undue Influence

Undue Influence would occur where someone is forced to sign a Will, or has unreasonable pressure placed upon them to sign a Will, that they do not agree with or would not have made had they had control of the decision.

Although this is the most common dispute when loved ones want to contest a Will, this is the least successful claim as the burden of proof is extremely high and requires the person making the claim to prove that undue influence was present.

Rectification and Construction

This claim may exist where there is an error made in the drafting of the Will or the actual intentions of the Testator were not reflected by the person drafting the Will.

Failure to Provide

You can bring a claim against an Estate if you believe that the deceased should have provided for you within their Will and they have not done so. This would be a claim under the Inheritance (Provision for Family and Dependants) Act 1975, and in order to claim you would need to be:

- a child of the deceased;
- any person who was not a child of the deceased, but was treated as a child of the family by the deceased, within a marriage or civil partnership;
- the spouse or civil partner of the deceased;
- a former spouse or former civil partner of the deceased, that has not subsequently married or formed a new civil partnership;
- a person who had, during the whole of the period of two years ending immediately before the deceased’s death, lived in the same household as if he or she were the husband, wife or civil partner of the deceased; or
- any person who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased.

Having a Will prepared by a professional cannot eliminate the risk of claims being brought in the future but this does increase your protection and a professionally prepared Will means that it has been prepared by someone outside of the family that has taken the necessary steps to eliminate as many risks as possible and to satisfy themselves that the legal requirements are complied with, that the Testator had capacity and was free from undue influence.

If you would like a FREE chat to discuss putting your Will in place, get in touch on info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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14th August 201922nd April 2020

Polygamous Marriages

What is the effect of a Polygamous Marriage on Inheritance?

We know that matters are more complicated when you die without leaving a Will, and everything that you have worked hard for may not end up with those that you want it to BUT what happens where a person dies leaving more than one spouse?

One question that often comes up is:

When someone dies without a Will their Estate (all of their assets, property and possessions) are distributed in accordance with the Rules of Intestacy (you can check out our simple flowchart here).

In simple terms, where you die without a Will but leaving a spouse and no children, your surviving spouse will receive everything. Where you leave a spouse and children, your surviving spouse will receive the first £250,000 of your Estate and all of your personal possession, plus half of everything above the first £250,000 with the other half being split between any children.

Although you may be happy with your Estate to pass in this way, a lengthy and costly process may follow through the courts for your money to go to your loved ones and this could be avoided by having a Will in place.

So what happens where there is more than one spouse?

This may occur where the deceased is domiciled in a country where polygamous marriages are recognised and legal but owns property in England & Wales leaving it to be determined by the laws of England & Wales to determine what happens to such inheritance.

Current case law, in England & Wales, recognises ALL spouses within a valid polygamous marriage as a ‘surviving spouse’ for the purpose of the Rules of Intestacy. This means that where the deceased leaves more than one spouse but no children, all surviving spouses would each receive an equal share of the deceased Estate. Where deceased leaves more than one spouse and children, the surviving spouses will each receive an equal share the first £250,000 of the Estate, plus an equal share each in half of everything above the first £250,000 with the other half being split equally between any children.

Anything that passes to a spouse upon death, passes free from Inheritance Tax and so where there is a polygamous marriage this is also the case and so all gifts made to a spouse in a valid polygamous marriage will be exempt from Inheritance Tax.

However, where the deceased is domiciled outside of England & Wales then the amount passed to a spouse will only be free from Inheritance Tax until the Nil Rate Band threshold is reached (currently £325,000) regardless of whether it is passing to a spouse or not.

In order for a polygamous marriage to be recognised and valid in England & Wales it must have taken place outside of England & Wales and adhere to that country’s legal requirements in relation to marriage.

If you have any questions please do not hesitate to get in touch for a FREE consultation on info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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7th August 201923rd April 2020

Environmentally friendly funerals

Is it possible to have an environmentally friendly funeral?

With an increased concern (and quite rightly so!) on being environmentally friendly should we be considering how to plan an environmentally friendly funeral and is this possible?

In short…YES!

Now, to what extent you go to is entirely up to you, whether you take a few steps to be environmentally friendly or go the fully environmentally friendly.

Planning your funeral, and paying for it in advance, has so many benefits!

Not only does it mean that you get the funeral that YOU want but it also saves your loved ones a huge emotional burden as well as a financial one!

Having a funeral plan in place means that any unnecessary arguments are removed and your loved ones are content in the knowledge that they are giving you the send off that you wanted.

Here are just a few ideas for you to consider:

Coffins

If you are choosing a burial, you may want to consider a coffin that is made from biodegradable materials to minimise the impact that your arrangements have on the environment.

An important consideration, if you are planning on being environmentally friendly, is the distance that your coffin has travelled and whether you want to choose a manufacturer that is local to you, to reduce this.

Some biodegradable materials that you may consider are:

- Willow
- Bamboo
- Cardboard

An alternative option, if you would like a wooden coffin, is to choose a locally sourced wood such as:

Pine
Oak
Cherry

Another consideration may be to have no coffin at all. This (although this may be surprising to some!) is an option, if you would prefer to have a material shroud instead of a coffin, this is a great environmentally friendly alternative.

Burial or Cremation?

Burial is a more environmentally friendly choice, as opposed to cremation, as it avoids the emissions of carbon monoxide, mercury and dioxin.

Travelling

Considering the travelling arrangements of those attending your funeral may be important to you. Although, you may not have control over all those that attend, you can express your wishes (such as car sharing or electric cars to be used) and could also make arrangements for an electric hearse and funeral cars.

Flowers

You may want to consider asking for flowers to be locally sourced and/or handpicked and to refrain from the use of packaging (or at least packaging that is not biodegradable).

Memorial Location

Choosing a Memorial Location that is close to your loved ones could reduce travelling when your loved ones wants to visit.

Funeral Stationery

Asking that minimal funeral stationery is used and using only recyclable paper is another environmentally friendly consideration.

Carbon Offset Contribution

You may want to consider leaving a gift in your Will to the Woodland Trust or another Carbon Offset Scheme as a contribution towards offsetting your lifetime carbon footprint (this is currently estimated at £8,000). Of course, you can leave a donation of any amount that you feel is appropriate.

If you would like a FREE chat to discuss putting a
funeral plan in place, get in touch on
info@TotalLegacyCare.co.uk
or 01727 865 121

Leah Waller

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want to book a
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31st July 201923rd April 2020

Bank of Mum & Dad

Bank of Mum & Dad:
The implications of helping the younger generation getting on the property ladder

Helping the younger generation to get an all important foot on the property ladder may be the only option for many parents but what should we, as parents, consider before shelling out the deposit?

Perhaps the simplest way to help the younger generation in getting a foot on the property ladder, is by giving them a decent sized deposit as a GIFT. There are no tax implications on this gift of money, as parents can pass money (as much as they like!) to their children without incurring any tax liability.

However, if you (the parent) pass away within seven years of making the gift then it may be subject to Inheritance Tax. Where your Estate is worth more than £325,000 (the current Inheritance Tax Threshold) Inheritance will be payable on everything over this amount, including any gifts given within the seven years prior to your death.

Where money is gifted and the property is being bought by your child with a partner, it may be worth considering what would happen should the relationship between your child and their partner take a downturn and the property ultimately be sold.

Possibly a better option for parents not in a position to give an outright gift, is to LOAN your children the money for a deposit.

However, some mortgage companies may not be prepared to enter into arrangements where money has been loaned and so this could limit the mortgage options. Where a mortgage company is happy to accept the arrangement, they may want to know the exact repayment arrangements in order that these can be taken into account when calculating the mortgage and affordability and therefore meaning that a lower amount can be borrowed.Where you have loaned the money and receive repayments, you may be liable to Income Tax on any interest that you charge on the loan amount (if any interest is charged).

If you are going to loan the money, then it would be worthwhile drawing up a formal loan agreement to include all of the agreed terms in relation to repayment, any interest and the expectations of each party.

Another option would be for you to BUY THE PROPERTY with your child. You could purchase the property as TENANTS IN COMMON to reflect the amount of the property that is owned by each individual (perhaps dependant on the amount that you are putting into the property and how the mortgage will be paid).

However, if this means that you would own more than one property then it will count as a second home and you would therefore be liable to an additional 3% on Stamp Duty and may also have Capital Gains Tax implications when the property is sold if you are still listed on the property as an owner/proprietor at Land Registry or on the mortgage.

If this option is taken, it would be advisable to draw up a Declaration of Trust to include the proportions owned by each person and what happens if one party wants to sell.

So, although helping your children take that all important step to get on to the property ladder may seem like a great idea, it is extremely important to think about the best way of doing this…for yourself and for your children!

If you would like a FREE chat to discuss your options, get in touch on info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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Category: Probate