Wills and Estate Planning

Making A Will

Issues that typically need to be addressed when making a will are…

Appointment of executors

These are the people whom you trust to ensure that the terms of your will are carried out after the date of your death. It is usual for between one and four executors to be appointed. Your executors will need to:

  • Identify and value all of your assets and debts.
  • Make an application, if required, for a grant of probate.
  • Settle your income tax affairs and pay any debts.
  • Pay any inheritance tax due on your death.
  • Carry out your instructions set out in your will.

Appointment of guardians

A person with parental responsibility is entitled to appoint a guardian in a will

Specific gifts

Do you want, for example, to leave a specific item of furniture or jewellery to someone?

Pecuniary gifts

Do you want to leave a gift of cash to particular people?

Specific gifts

Do you want, for example, to leave a specific item of furniture or jewellery to someone?

Inheritance Tax Planning – see Estate Planning

Residuary estate

To whom would you like to leave the rest of your assets? Is it going to be divided in percentages? Perhaps you wish to remember grandchildren as well as children? Friends? Charities? It will usually be sensible that a substitute appointment will also be made in case the first-named residuary beneficiary dies before you. Should any trusts be created in the will?

Estate Planning

Estate planning will only normally be relevant if the assets in your estate at the date of your death (taken together with the lifetime gifts which do not fall within particular exceptions) exceeds the “inheritance tax nil rate band” – currently £325,000. If the inheritance tax nil rate band of £325,000 is exceeded then your estate may have to pay tax at 40% on the balance. There are certain exemptions which will avoid or reduce the amount of inheritance tax that would otherwise be chargeable. Exemptions which can apply include the following:

Gifts to spouse or civil partner

Gifts to a husband or wife or civil partner are generally exempt from tax. This applies to gifts made by married couples which are made in lifetime or on death.

Charitable gifts

Gifts left to charities are usually exempt from inheritance tax.

Annual Exemption

Each individual is allowed to make gifts each year up to £3,000 and which, once completed, are outside the scope of inheritance tax. This annual exemption of £3,000 can be doubled if the exemption was not used in the previous tax year.

Gifts on Marriage

Up to £5,000 can be given free of inheritance tax by parents to children and up to £2,500 by grandparents.

Gifts out of Income

Regular amounts given out of income without affecting your standard of living can be made. These gifts need to be carefully structured in order to ensure that there is the best possible chance of successfully claiming the exemption.

Small Gifts

Some gifts of up to £250 per recipient each tax year will fall outside the scope of inheritance tax.

Potentially Exempt Transfers

Certain gifts may not be chargeable to Inheritance Tax if the donor survives for seven years.

Insurance Policies

Lifetime insurance policies can be created and under which benefits payable from the policies are written in trust for beneficiaries and which will assist them in paying any future tax bill.

Business Property and Agricultural Property Relief

Certain business and agricultural assets qualify for inheritance tax relief. There are stringent conditions which have to be observed before relief can be successfully claimed and on which we can advise.

Deed of Variation

After your death it may be advantageous to enter into a “Deed of Variation” of a will or intestacy. Such deeds can be made for up to two years after a death and can be used to vary provisions of a will or intestacy. Such deeds are most usually made when a gift is left in a will to a beneficiary who has no need of the gift and may increase the inheritance tax potentially payable on the beneficiary’s death. In those circumstances the beneficiary can re-direct the gift to someone else. The ability to make deeds of variation can offer considerable scope for substantial tax savings.

Planning Ahead – Long Term Care

As things currently stand your local authority is responsible for arranging most care services in your area. As you may know, this is a means tested provision and your income and assets will normally be taken into account. These will include all of your pensions including the state pension, personal savings, shares and any other investments. Even your home can be taken into account.

The local authority will only provide help towards the costs of residential nursing care if your income or assets fall below a certain level set by the Government.

The current legislation is under review at the moment and there is a great deal of debate. However, it is currently complex and whilst a number of schemes operate in the realms of wealth preservation it is important that you take independent legal advice when entering into such plans.

Care Costs

Of course some people can afford to pay their own care costs. However, with fees amounting to £30,000 per year for some full time nursing care it is not only prohibitive for some but certainly a drain on resources, even for those with substantial savings.

People are now looking to long term care plans to help them meet the cost of care.

These plans vary from regular premium pure insurance type products to one off single premium products which combine inheritance tax planning and protection of capital. The choice of which type of product is most suitable depends on an individual’s own circumstances and professional independent financial advice should be sought.

Your home is certainly one of your major assets, as well as the place where you live and in many cases have grown up with your family. If you are intending to pass your home on to members of your family then long term care is certainly a topic you will have to consider.

Who Would Look After You

Being looked after by relatives can place a tremendous emotional strain on the people you love. Even those who are willing to help parents or elderly relatives through this period need some kind of financial support or relief. Long term care does not necessarily mean moving into a home, but can mean providing additional nursing care to supplement that provided by your family.