Wills

The fundamental purpose of creating a Will is a thoughtful and responsible way to spare your family the emotional and financial burden of organising your Estate at the time they can least cope.
  • Make sure your assets pass to your loved ones.
  • Minimise your tax burden.
  • Designate guardians for minor children.
  • Keep your family wealth, within your family.
If you have no Will, the laws of intestacy apply and the courts could decide who and where your assets go.
Many people think that they are too young to write a Will, or it is too costly, but the vast majority simply just put it off.
We have devised a simple and effective structure so that no matter why you haven’t written one now, we can make sure you do not suffer the issues of your inheritance either going to the wrong person, or to the State through the laws of intestacy.
Current law creates the issue that without a Will;
  • If you are not married, your partner may not receive anything.
  • Your spouse/civil partner may not automatically inherit all of your Estate.
  • There could be lengthy delays for your beneficiaries and disputes.
  • Minor children could be taken into care whilst Guardians are appointed.
  • Previous spouses may be able to make a claim.
Inheritance Tax Planning

Your Estate is everything you own at the time of your death, including Jointly owned assets

Each individual pays a standard inheritance tax rate of 40% of your total estate valued over £325,000 (during the 2018/19 tax-year)
(for example – if you leave an estate worth £500,000, the tax is 40% of £500,000-£325,000 = £70,000)

Exceptions:
  • If you are passing on a home to a direct descendant
  • If you are married or in a civil partnership

As of April 2017, there is an additional allowance if you leave your property to your children, grand children, adopted child and so on.  Currently an additional £125,000 is available and increases to £175,000 by 2020*

Unused Nil Rate Band

Your surviving partner can use both allowances, if they recieved their partners estate and none of the original Nil Rate Band was used up.  For example, This essentially means that beneficiaries could use both parents allowances on the death of the last surviving parent

Lifetime Gifts

One of the simplest ways to reduce your IHT bill is to make gifts from your estate while you are alive;

  • Small gifts out of normal income
  • £3,000 per tax year
  • Wedding gifts to children (£1,000) or grandchild (£2,500) or great grandchild (£5,000)
  • Payments to help with another person’s living costs, such as an elderly relative or a child under 18
  • Gifts to charities and political parties

Based on our understanding in the 2018/19 tax-year, all the above are IHT free immediately

Potentially Exempt Transfers

Generally, as long as a gift is made more than 7-years before death, you won’t pay tax on them
(not including Businesses and Trusts)

Long Term Care

The political debate over Care Costs will continue to rage, as it is expected that 1 in 4 of us will require long term care at some point.  Average residential costs have risen to around £1,000 per week

If you own more than £23,250, (which includes your property, any cash or savings and stocks and shares) you will be expected to fund the full cost of your care fees, even if you have to sell your family home to do so

ConvHow your Estate Plan protects against this threat:

Conveying your property into a Probate Preservation Plus Trust means that the value of the property is deemed as being nil and so it cannot be assessed as part of your Estate.

What is a Probate Preservation Plus Trust?

The PPPT Scheme is essentially Lifetime Asset Protection planning. It is available for people who wish to place the family home into Trust in their lifetime, thus protecting those assets from potential attack from the threats detailed in the previous pages.

What does the package include?

The Probate Preservation Plus Trust package includes; the cost of conveying part of your property into a Probate Trust in your life time, the cost of the Probate Trust and an indemnity policy which will reimburse you the full amount of the package should the planning fail to protect your home from being sold to pay for care fees.

*It is essential to note that deprivating your estate solely to avoid care costs might be challenged by local authorities, so we suggest estate planning is considered as early as possible

Divorce and Extended Families
Marriage after divorce

With over 20 years of providing financial advice and guidance, the main issue that arises consistently, is protecting inheritance and monies from ex-spouses, or moreimportantly, making sure children from different relationships do not lose out

The Office of National Statistics puts the divorce rate during 2018 at approximately 42%

Having an extended family is not that unusual and making sure all your children and current partner benefit in the right manner from your estate requires a Will written specifically for your circumstances

Existing Will on Divorce / Dissolution

When a “decree absolute” (a court order which finalises a divorce) is made or, in the case of a civil partnership, a “decree of dissolution” (a court order which brings a civil partnership to an end) is made, any provisions contained in a will which benefit the ex-spouse or ex-civil partner are automatically revoked.

Consequences of revokation

Your ex-spouse or ex-civil partner will not, therefore, inherit your estate once a decree absolute or a decree of dissolution has been made.

If in your will you specified alternative beneficiaries then your estate will pass to such beneficiaries in accordance with the terms of your will.

If your ex-spouse or ex-civil partner was the only beneficiary named in your will your estate will be distributed in accordance with the rules of intestacy

Who will inherit my estate in the period between separation and the decree absolute or the decree of dissolution?

Since any provisions are only revoked upon the granting of a decree absolute or a decree of dissolution during the period leading up to that point any gifts set out in your will to your ex-spouse or ex-civil partner will take affect.

My ex-spouse or ex-civil partner was appointed as my executor

Once a decree absolute or a decree of dissolution has been made, this appointment will also be revoked

Business Assets and Creditors
After years of hard work and dedication, making sure your business assets go to the right people is one of the most important things you will do for your business
Without the appropriate Business Succession strategies in a business owners Will –
  • Your shares in the business might not go to your intended beneficiaries
  • Business partners may not be able to buy out the deceased’s share
  • You could find that your business partner’s spouse or children are now your business partners
  • The value of your business could depreciate owing to the inexperience of the beneficiary
  • The business may have to be sold and the proceeds become liable to Inheritance Tax
Most of the disputes we have been asked to provide advice for, surround business assets, especially family businesses and partnerships.  If you relate to any of these, you need to speak to us;
  • How do you value the business shares on death of a shareholder
  • Do you have the first right to buy your business partner out on death
  • Who would run the business immediately after the death of a business owner
  • Do you have some family members employed

Most disputes centre on family members and employees (sometimes one and the same) thinking they are entitled to more than others.

Once it is written down, everyone can relax

Trusts

Trusts have been instrumental in mitigating tax since medieval times. Initially created for the Nobility and wealthy landowners to avoid paying taxes to the Crown
Nowadays the tax advantages of a Trust is available to anyone with assets to protect
Assets held in Trust can protect family assets against;
  • Divorce or seperation settlements
  • Creditors or bankruptcy claims
  • Future Inheritance Tax bills
Because they don’t stay young forever
With savings rates so low, you might consider investing for children in a Designated Investment Fund;
  • Account in name of Parents/Carer – designated for child/children
  • Open ended – no end date (unlike Junior ISA)
  • No limits on contributions (unlike Junior ISA)
  • Child does not know it exists until you tell them
  • You have full control of investment choices
  • Wrapped in a Trust – no tax liability to parent/carer
Keeping it in the family
Maintaining family wealth and assets is the key to financial well being, Trusts can help protect against tax, ex-partners, care fees, bankruptcy and many other of life’s tangled webs
  • Before giving a deposit for house purchase, consider lending through a Trust.  If the relationship ends, the Trust recieves the funds back, rather than being shared with the other party
  • Life assurance policies should pay into a Trust to avoid increasing the estate for inheritance tax calculations
  • Who gets your pension?
  • Trusts can pay income and keep assets (money or property) away from vulnerable beneficiaries or young children
  • Divorced with children – put a Trust in your Will to protect against your ex-spouse having control prior to children reaching adulthood
  • You have full control of investment choices
  • Wrapped in a Trust – no tax liability to parent/carer