Wills, Trusts and Probates
As solicitors who have practised in the area of Wills/Probate for the past 20 years, we have come across several situations where people have died, without leaving a Will and it has caused all sorts of problems. There is a general assumption that if you are married, involved in a civil partnership or simply co-habiting with someone, then that person will inherit the whole of your estate on your death. That is not necessarily the case.
Sometimes, particularly where you have complicated assets and/or family situations, it is difficult to know how to word your Will. For example, where you have business interests, the value/structure of the business can change from time to time, which makes it difficult to judge what the position will be when you die. There can also be family issues, for example, if you have young children, you will not know, at the time of making your Will, whether any, all or none of them will become involved with your business. Added to that, the rules of Inheritance Tax are constantly changing.
Lasting Powers of Attorney (LPAs) were introduced in 2007 to replace Enduring Powers of Attorney. There are two different types of LPA: one dealing with property and financial affairs, and the other with health and welfare issues.
One of the most common misconceptions we come up against when speaking to clients is that probate is not needed because the person who has died has got a Will. This, however, is not the case.
The term Probate actually defines the legal process of dealing with a person’s estate after they have died, even when they have left a valid Will. Those trusted with this probate role are referred to as Executors, not to be confused with executioners! If there is no valid Will then Letters of Administration are required. Both of these procedures define legally who is entitled to deal with the affairs of the deceased and it is the Probate Registry which oversees these procedures and they issue a court document appointing who is entitled to deal with the affairs. This is commonly referred to as the Grant of Probate.
During your lifetime, you will want to retain the greatest amount of control over your estate. You will also wish to ensure that your estate is preserved for the next generation when you die and in order to do this you may wish to think about creating a trust.
Do you need help with estate administration?
When someone close to you dies, there is often a lot to do, at what can be an emotionally draining time. One task that needs to be considered at an early stage is the sorting out of the deceased person’s financial affairs.
Making sure your assets pass to the right people in the right way is not always easy. Whether you are considering making a will or thinking about gifting assets, effective tax and trust management is an essential way to protect your assets and control what happens to them during your lifetime and when you die.
If your assets (your home, possessions and financial investments) exceed the inheritance tax free limit of £325,000, known as the nil rate band, when you die anything over the limit will be taxed at the rate of 40%. Therefore, if your estate is valued at £500,000, inheritance tax to the sum of £70,000.00 would be payable to the Revenue (unless specific exemptions apply).
We have an expert team with vast experience in this field who understand all about capacity issues and how they can affect you and your family.
If a person has not made a lasting power of attorney and has an unexpected car accident, is involved in an injury at work or becomes unable to manage their affairs through old age or illness, a friend or family member will need to apply to the Court of Protection to be appointed as a Deputy to have the legal authority to manage their affairs.
Bright Solicitors recommend that in addition to making a will, making a lasting power of attorney is just as important when planning for your future. Losing mental capacity and being unable to make your own decisions is something that we all hope will not happen to us. But, for many people it will and this may be due to an unexpected car accident, injury at work, disability, stroke or the onset of an illness such as Alzheimer’s disease or dementia.
Making a will is one of the most important things you can do to safeguard the future of your family and your business.
With effect from the 6th April 2012, the Chancellor has introduced a reduced rate of Inheritance Tax.
If you leave 10 per cent or more of your estate to charity on death, the rate of inheritance tax on the part of your estate that is chargeable will be reduced from 40 per cent to 36 per cent.
These proposals broadly mean that for deaths occurring on or after 6 April 2012, estates that include charitable legacies of at least 10 per cent of the net estate will benefit from the reduced 36 per cent rate.
Inheritance tax is currently only paid on estates worth more than £325,000. An estate of £1m therefore would currently see beneficiaries receive £730,000 with the taxman taking £270,000. If, however, 10 per cent of that estate above the £325,000 threshold is given to charity, the beneficiaries would only receive £713,800 and the taxman would take £218,700. The charity in this instance would receive £67,500.