Wills

Making a Will is one of the best gifts you can give your family.  You are making matters as simple as possible for them by doing so and avoiding all of the additional complexity and mess that dying "intestate" can bring. Not only that but, if you don't make a Will your estate will be distributed in accordance with the current so-called "intestacy rules".

This poses a simple yet crucial question- would you rather decide who to leave your estate to or would you be happy for the government to do that for you? It's a no-brainer surely!

Not having an up-to-date Will is just as bad as not having a Will at all so please review your Will every five years or so or as soon as there is a major change of circumstances in your life.

If you don't make a Will or if you don't update your Will you will be missing some good asset protection opportunities.

Let me give you a couple of examples:

1. Sarah and Tom are in their forties with two joint children. They are concerned that if one of them dies the survivor is likely to remarry and that as a result of that remarriage their children may lose out.
2. Emily and Max are in their seventies and they are concerned about the impact of care home fees on their estate. They have heard that some couples lose everything where the survivor of them needs to go into a care home. They are keen to protect as much of their estate as possible to pass to their children when they pass away.

Both couples are advised to set up a special type of will, called Asset Protection Wills and sever the joint tenancy of the property so they own their home as Tenants in Common in 50-50% shares.

Sadly in each of the examples above the wife passes away. Her share of the house and other assets in her sole name do not pass to her husband absolutely so they do not then form part of the husband’s own estate. Nor do the assets pass to the children because the husband still needs to benefit from those assets. Instead the wife’s assets pass to a Flexible Life Interest Trust*. So, as far as the family home is concerned, the husband still owns his half share but has a life interest in the other half. This means he gets to stay in the property for the rest of his life and his interest is protected. The life interest is flexible meaning that should the husband wish to move house, the whole arrangement can apply to the replacement property. The advantage is that the wife’s half share is ring-fenced and guaranteed for her children one day when the husband passes away.

*The Flexible Life Interest Trust is not suitable for couples who are unmarried or not in a civil partnership. For these couples we would use a Discretionary Trust on first death. This offers asset protection in much the same way.

Tom remarries a few years after Sarah’s death and then sadly divorces. Only his share of the property will be taken into account in the divorce settlement OR

Tom remarries and is still married when he too dies. His new Will made after marriage benefits his new wife over his children who now receive a much smaller proportion of his estate but at least they still receive the whole of their mother Sarah’s estate OR

Tom doesn’t make adequate provision for his wife when he dies, preferring to benefit his children. His wife brings a successful claim as the Court finds she is not adequately provided for as his spouse. The children lose on some of Tom’s estate but still receive the entirety of Sarah’s estate.

Max begins to struggle at home and moves into a residential care home. The Local Authority carry out a financial assessment. They can only include Max’s half share of the property in the calculation. Emily’s share is protected and out of reach of the Local Authority. The house still needs to be sold because Max does not have enough cash assets to fund his care but only the net proceeds of sale from his half of the property can be used to fund his care.

So in a nutshell, APWs protect a proportion of your estate should the survivor of you decide to remarry or require nursing or residential care in the future. What is more, there really aren’t any downsides to an APW. You can also maximise what you are ring-fencing and protecting by adding in cash assets as well as the property share.

The most significant change introduced by the Budget is the inclusion of unused pension funds and death benefits when calculating the Deceased’s Inheritance Tax liability.

This one change alone will convert hundreds of thousands previously exempt estates into taxable estates. Listen carefully and you can hear HMRC rubbing their hands together!

Increasing the cumulative total in this way will also take many individuals and married couples over the £2million mark meaning their estates will start to lose the Residence Nil Rate Band. This means that that an otherwise eligible estate of a single person will be limited to a standard nil rate band of £325k (rather than £500k) and that of a widow or widower will be limited to £650k (rather than £1million).

Estate planning is therefore the most important thing you can do for your family. There are perfectly legal and uncomplicated ways of avoiding inheritance tax altogether but action needs to be taken early on and then consistently over the years.

The current Nil Rate Bands are locked in until April 2030 yet house prices will continue to rise. Your inheritance tax liability is going to get progressively worse over the years if you do nothing about it. So please take the advice, look at options and take action.

Make a start by signing up for my pre-recorded seminar Inheritance Tax following the 2024 budget.

Whether you just require some advice and guidance at the outset, or perhaps need our assistance with obtaining the Grant, calculating inheritance tax or completing the IHT 400 account. Or perhaps your friend or loved one has died without leaving a Will. Or perhaps you need us to correspond with HM Revenue and Customs on your behalf. Or perhaps you're almost at the end of the process but need some estate accounts.

We can help with whatever you need.

What's more we will never charge a percentage of the estate value (as some Solicitors choose to do). We will charge you a fair price based on the amount of time we spend on the file.

Having said that we do offer a very competitive fixed fee for online Probate applications!