Welcome to our February 2016 Newsletter.  In this newsletter we discuss the pitfalls to preparing a DIY Will.

If you wish to to download the newsletter in PDF please click on the link below.

February 2016 Newsletter

Are DIY Wills better than no Will at all?

Sometimes they can be – if the circumstances of the person making the Will are very simple. Often they think that their circumstances are simple when, in fact, they aren’t. Problems arise when the person making a DIY Will doesn’t realise how the law works and so makes assumptions without knowing the consequences. Some of these problematic areas include:

1. What’s actually in their estate and can be gifted in their Will and what isn’t;
2. Assumptions that their children will inherit on 2nd death;
3. Consequences for Inheritance Tax (IHT); and
4. The signing and witnessing of the Will.

Jointly held assets, such as a property (owned as joint tenants) or a bank account will pass between the co-owners automatically under the law of survivorship and not under the terms of a Will. If you, therefore, add a clause in your Will that leaves a jointly held asset to someone other than the co-owner, it is never going to work.

Case Study 1: Alan is going through a divorce wants to make a DIY Will leaving everything to his children instead of his soon-to-be-divorced spouse, not realising that his home (his biggest asset) would be excluded.

Case Study 2: John is going through a divorce. He has two sons, Jack and Joe. He has already given Jack considerable sums of money over the last five years. He makes a DIY Will and leaves the home to Joe and his remaining cash to Jack. The home would be excluded as it is jointly owned so Joe inherits nothing.

Other excluded assets would be policies held in trust such as life insurance and death benefits from your pension and employer. A common assumption is that these would be included in the estate and can therefore be mentioned/gifts in the Will.

Case Study 3: Mary’s husband and father to her children have separated. She makes a DIY Will leaving her home, her death benefits from her pension and employer and her £8,000 ISA and joint bank account to her children. Her children actually only inherit the ISA as the home and bank account are jointly owned and the death benefits from her pension and employer are not dealt with through her Will as they are outside her estate.

People who have children from a previous relationship often just make a Will leaving everything to a new partner and then on the partner’s death to their children, not realising that on their death this will only ever guarantee that the partner will inherit, but that their children may see none of their inheritance. (There are regular stories in the press where children from a first marriage inherit nothing with everything passing to their step- or half-siblings).

Case Study 4: Paul and Jane are married. They each have children from previous relationships but none together. Paul gets on well with Jane’s children but Jane has concerns regarding the lifestyle of Paul’s children). They agree to make DIY Wills leaving everything to each other then equally between all their children. Paul dies first leaving everything to Jane. Jane then changes her Will to leave everything to her own children.

Importantly, does a person making their Will understand the IHT implications of how they left their estate? If your lack of knowledge means that your beneficiaries pay more IHT than they needed to – will they be happy you did a DIY Will?

Case Study 5: Phil and Sue are happily married with two children. Their home is their main asset worth approximately £1M – they think it is owned jointly but in fact it was set up as tenants in common when they made tax-efficient Wills in 2005. They have some cash in a few bank accounts which they have said that they don’t need to inherit from the other. They want to simplify their Wills so they make DIY Wills leaving everything to their children. The half share of the house passes to the children and, because its value exceeds the tax-free threshold it is taxed.

Although some DIY Will packs come with guidance and instructions, quite often there’s too much information so the important stuff isn’t read properly. One of the most important facts that get overlooked relates to the signing and witnessing of the Will.

Case Study 6: Harry and Sally are married with a son, Jamie. Jamie and his wife, Katie, have no children yet but are planning to have children in the near future. Harry and Sally are going on holiday soon so make simple DIY Wills leaving everything to each other then Jamie then to his future children. They read somewhere that Jamie cannot be a witness so they ask Katie and a friend to witness their signatures. Harry and Sally are tragically killed in a car accident on holiday. Jamie cannot inherit as Katie was a witness to the Wills.

A Will is one of the most valuable documents you will ever own if it’s done properly. It’s important to get it right and if there are any problems, it’s important that your beneficiaries have some recourse of action. If you have done the Will yourself – where can they go? If a professional does your Will, and gets it wrong, then they will have insurance which your beneficiaries can claim on.

A Cornerstone Wills Estate Planner will understand many aspects of the law in this context and be able to advise on Inheritance Tax planning to ensure that your Will is a valid, legal, tax-efficient document that your beneficiaries will be grateful you were considerate enough to do.

Welcome to our October 2015 Newsletter.  In this newsletter we discuss new legislation relating to a new tax threshold on the home – the Residential Nil Rate Band.

If you wish to download the newsletter in PDF please click on the link below.

October 2015 Newsletter

The good and bad news of the new Residential Nil Rate Band (RNRB)

In the Summer Budget 2015, the government announced it will phase in a new residence nil-rate band (RNRB) from 6 April 2017 when a residence is passed on death to a direct descendant. It will be:

• £100,000 in 2017 to 2018
• £125,000 in 2018 to 2019
• £150,000 in 2019 to 2020
• £175,000 in 2020 to 2021

It will then rise in line with the Consumer Price Index (CPI) from 2021 to 2022.

The intention is to reduce the burden of Inheritance Tax for most families by making it easier to pass on the family home to direct descendants (including step-children) without a tax charge, so that by 2020 homes up to the value of one million could pass tax-free to children and descendants. This would utilise a couple’s current Nil Rate Bands of £325K each and the maximum RNRB of £175K each, making a total of £1million.

The existing nil-rate band (NRB) will remain at £325,000 until the end of 2020-21.

However, there is a sting in the tail with the additional benefit of the RNRB in that there will be a tapered withdrawal of the value of the RNRB for estates with a net value of more than £2million. This will be at a withdrawal rate of £1 for every £2 over the £2millon threshold. Therefore estates that have a value of £2.35 million will not benefit from the RNRB whatsoever.

For couples with larger estates effective inheritance tax planning is now even more important to ensure that the estate on 2nd death doesn’t exceed the £2.35m value so the extra benefit of the RNRB is not lost. Basic Wills which leave everything to the surviving spouse on 1st death will not necessarily achieve this. Also, tax-planning options on other assets which could bypass the spouse/civil partner on 1st death (such as insurance proceeds, death in service benefits and lump sum pension death benefits) should definitely be considered.

Note that estates that pass to beneficiaries other than direct descendants will not benefit from the RNRB and as with the existing NRB, the new RNRB cannot be transferred between couples who are not married or civil partnered for use on 2nd death. Therefore planning recommendations for cohabiting couples is to preserve the benefit of both of these allowances for use on 2nd death so the extra the allowance is not lost. (Note that a ‘direct descendant’ will be a child and their lineal descendants where ‘child’ includes, unlike all other pieces of related legislation, step-children and foster children.)

The government also announced that legislation would be included in Finance Bill 2016 to make sure that those who wish to downsize to a less valuable property or cease to own their own home are not discouraged from doing so.

Note that the rules around the RNRB are still subject to government “tweaking” until it becomes law, and is not effective until April 2017, so there may be additional factors to consider which we will endeavor to keep our readers informed of in good time.

Welcome to our May 2015 Newsletter.  In this newsletter we discuss pension reforms introduced in April and how they impact on any tax-planning you may have put in place to mitigate inheritance tax on any lump sum payable on your death.

If you wish to download the newsletter in PDF please click on the link below.

May 2015 Newsletter

Pension Update

In our November 2013 Newsletter one of our Top 5 IHT Planning Tips was to ensure that any death benefits from your pension was paid to a Family Trust. This not only protects any lump sum on the death of your chosen beneficiary (usually the surviving spouse) from being taxed on their death but also protects the money from being lost through long term care, remarriage, etc.

Since then, however, the pensions industry has been in the throes of a revolution. A wave of reforms introduced in April (which only apply to those with defined contribution schemes) has meant that new advice needs to be issued.

One of the major reforms relates to the so called ‘death tax’ on pensions. The change abolishes the 55% tax which is currently charged on lump sum death benefits from pension funds being used to provide benefits like income drawdown.

From April 2015 pension funds left by anyone dying before the age of 75 will be free of tax if they are taken as a lump sum. They will only be subject to tax if dependents of the deceased choose to buy an annuity. In this scenario it is still best advice to redirect your death benefits to a Family Trust. If the death occurs after the age of 75 then there are different options available to you – all with different tax implications. It is for this reason that, on reaching the age of 75, you should undertake a review of your pension and nomination of any death benefits to determine the most efficient tax solution.

Finally, on a separate but related note, you ought to consider setting up a Lasting Power of Attorney so that someone can manage your health and welfare and your finances (in particular your nomination of death benefits from you pension) should you be unable to make those decisions for yourself

Welcome to our March 2015 Newsletter.  In this newsletter we discuss the issues that someone who suffers from dementia may encounter on joint assets (home, bank accounts and investments) if there is no registered Lasting Power of Attorney available.

If you wish to download the newsletter in PDF please click on the link below.

March 2015 Newsletter

A client guide following a diagnosis of Dementia

Many people are concerned if a friend or relative receives a diagnosis of dementia. Often they are told to get their affairs in order, but what does this actually mean?

Case Study Mr & Mrs Jones are married with two children and four grandchildren. They own their house jointly which is worth £180,000. They have ISAs, joint savings and a joint current account totalling £45,000. As Mrs Jones isn’t a tax payer most of the savings are in her sole name to save income tax. Mr Jones has a pension from his employer which accounts for most of their income and Mrs Jones has a small state pension.They have been very careful to move money to get the best interest rates. They have worked hard, paid their taxes all their life and wish to pass on their wealth to their children and grandchildren. Mrs Jones has just been diagnosed with dementia – so what should the family do?

The Family Home

Problem 1: In most cases a property is owned jointly and this means if one partner dies the house is automatically passed to the survivor (regardless of the contents of the deceased’s Will). If that person then needs care the whole house will be liable to being sold to pay for care fees.

Joint Accounts

Problem 2: if a bank becomes aware that a party to a joint account has lost capacity they can freeze the account until either they have seen and recorded a validated/registered Lasting Power of Attorney or a Deputyship Order is in place.

Problem 3: if the contributions into the joint account are unequal (e.g. one partner has a larger income) the financial assessor will consider any joint asset to be owned 50/50.

Problem 4: if you have a joint account and one partner dies the money in that account automatically passes to the survivor irrespective of what the Will says. This can mean that all savings would be at risk to long term care fees and not just those of the person needing care.

Lasting Power of Attorney (LPAs)

Problem 5: Without LPAs banks, building societies, utility companies etc. will refuse to speak to anyone other than the account holder.

Wills

Problem 6: The “Great British Will” that most people have leaves everything to each other and then the children, then grandchildren. If unfortunately the surviving partner suffers from dementia and consequently needs care, all the assets are now owned by them and subject to care fees.

Local Authority Financial Assessment Forms

Problem 7: the local authority from does not differentiate the types of investment some of which must be disregarded e.g. Life Assurance Bonds.

It is therefore important to see independent financial advice as to the suitability of an investment. It is also imperative that if such investments are in place they should be recorded correctly on the form. Speak to Cornerstone Wills as with our experience as `Dementia Friends’ we can help families resolve these problems as sympathetically and effectively as possible.

Welcome to our February 2015 Newsletter.  In this newsletter we discuss what you, as a business owner, should consider and set up in preparation for you becoming seriously ill, incapacitated or dying.

If you wish to download the newsletter in PDF please click on the link below.

February 2015 Newsletter

Business Owners

If you are a business owner; as a sole trader, partner or shareholder, two very important considerations within the management and planning of your business must be:

1. “what do you want to happen to your business if you become critically ill?”
2. “what do you want to happen to your business if you die still owning the business?”

Perhaps in expressing these questions to you in this manner you’re not particularly concerned, perhaps because you’re not aware of the consequences. But, perhaps, if they were expressed with a slightly different slant you would be more concerned:

1. “what would happen to your business if a business partner becomes critically ill?”
2. “what would happen to your business if a business partner dies?”

Further questions to item 1. might include: can the bills and wages be paid?, what deals or contracts need signing?, what business decisions need to be made or voted upon?

And additional questions to follow item 2 might include: do I want to share the running of the business with my business partner’s spouse or partner or children and accept their voting rights?, do I want to share business profits with someone who is not contributing to the growth of the business?

From your own personal perspective further questions ought to include: do I wish the business to die with me? Do I want the proceeds to pass to my spouse/family? What are the potential repercussions for my spouse, partner or family stepping into my shoes? What are the tax consequences for my family on the option I have taken?

A simple pair of mirror Wills will rarely be enough to manage a business asset post-death. A Business Lasting Power of Attorney needs to be established if you become incapacitated.

Cornerstone Wills can have a full and in-depth conversation with you and your business partners. This is vital as ultimately it could preserve the continuity of trade of your business at your death or incapacity, save large amounts of Inheritance Tax and ensure that your business interests pass into the right (rather than the wrong) hands.

Welcome to our January 2015 Newsletter.  In this newsletter we recommend making a Will one of your New Year’s resolutions.

If you wish to to download the newsletter in PDF please click on the link below.

January 2015 Newsletter

Wishing all our readers a happy and prosperous 2015.

It seems that a lot people have the tasks of sorting their Wills and finances as one of their New Year’s Resolutions. Wills are one of those important tasks, a bit like insurance, that you know you need to do but put off as you hope it won’t be needed for a while!

We’ve all heard stories about people who die before they finalise their Wills or say it was always something they were going to get around to and in our May 2014 newsletter we highlighted some famous people who died without making a Will; yet most people don’t hesitate to insure their possessions, their cars, their homes, so why put your family’s financial security as less important than your possessions and your home?

So if you have insured yourself with a Will already, have you considered if it needs to be reviewed? Have your circumstances changed? Have the circumstances of any of the parties to your Will changed? Does your Will do enough to protect your assets from your partner re-marrying after your death or the costs of long term care or the tax man?

Your Will may be up to date but have you protected yourself with a Lasting Power of Attorney, i.e. appointing someone to look after your financial and welfare affairs if you cannot look them yourself, even on a temporary basis.

So, don’t let it stay on your to-do-list, contact Cornerstone Wills so that we can assist you with these important tasks.

If you are happy with the experience you received from us and knowing what a difference completing your Will has made to you, your peace of mind and that of your family, then tell family, friends and colleagues to make it one of their New Year’s Resolutions too.

Remember we will give a voucher for any referrals we receive if the service is taken up.

Welcome to our December Newsletter.  In this newsletter we discuss your options should your existing Will contain the Nil Rate Band Discretionary Trust. We also discuss common myths with Wills.

If you wish to to download the newsletter in PDF please click on the link below.

December 2014 Newsletter

What should you do with your existing Wills with the Nil Rate Band Discretionary Trust?

Over the last three to four months Cornerstone Wills have been visiting our existing clients and discussing their Estate Planning options and any changes to their current set up.

One key area of conversation has been the drafting and registering of Lasting Powers of Attorney and a second has been with regards to our recommendations for updating the Wills.

The Wills for these clients were drawn up prior to October 2007 when only one tax-free allowance (Nil Rate Band or NRB – currently £325,000) was used when it came to second death and the estate passing to the children. At that time we regularly drafted tax-efficient Wills to ensure that both NRBs were utilised by including the NRB Discretionary Trusts (NRBDT) in both Wills – allowing £130,000 more to be gifted to the children instead of to the tax man!

So what happened in October 2007? The Labour government introduced the Transferable Nil Rate Band meaning that 2xNRBs could potentially be claimed on second death (see our website for further details).

To date we have not recommended to our clients that the NRBDT be stripped out of every Will and revert to a basic (spouse-to-spouse mirror) Will as they do offer some level of asset sheltering (e.g. from remarriage, bankruptcy and long term care).

However, there are potential downsides to retaining the trusts within the Wills. For example, if the NRB was significantly increased after first death then you might end up paying more tax than with a basic mirror Will. Also, you might have been able to shelter more of your assets if the NRBDTs had been replaced with a more flexible trust.

At these recent appointments several options were discussed including a) retaining the NRBDT and b) removing the NRBDT and reverting to a basic mirror Will.

Both of these are usually dismissed in favour of this option: Remove the NRBDTs and replace with a Flexible Life Interest Trust.

With this type of trust the benefits are:

1. As it’s a life interest trust in favour of the surviving spouse, there’s still no tax on first death
2. You will still get 2xNRBs available on 2nd death – so there’s your tax planning
3. The surviving spouse has access to the whole of the trust fund (like a mirror Will)
4. Further tax planning is available to the surviving spouse after first death.
5. The whole of the estate of the first to die is protected from 3rd party claims against the survivor.

Please contact Cornerstone Wills if you or your parents or other family members you would like to discuss further.

“Common Law” Myths

Research shows 61 per cent of the county wrongly believe that if a couple live together for five years or more they enter into “common Law” marriage and earn the same rights as those who are married.

The fact is “Common Law” marriage was abolished in 1753 and the two million cohabiting couples have virtually no legal protection.

Some of the myths are:

• they have no automatic right to share in the family home if the relationship ends
• no inheritance rights on the family home if their relationships ends or one partner dies without leaving a Will.

Please call us or visit our website for more help with this.

Welcome to our October Newsletter.  In this newsletter we discuss our recent training to be a Dementia Friend, our new membership of Symponia and protecting from the costs of Long Term Care.

If you wish to to download the newsletter in PDF please click on the link below.

October 2014 Newsletter

Dementia Friends

Dementia is a growing problem in our elderly population and there are a number of myths on this disease. Five things you should know about dementia:

1. It’s not a natural part of ageing
2. It’s caused by diseases of the brain. The most common of these is Alzheimer’s
3. Its not just about losing your memory – it can affect thinking, communicating and doing everyday tasks
4. It’s possible to live well with dementia
5. There’s more to a person than the dementia

At Cornerstone we are now trained to be Dementia Friends and will be using our badge to start conversations with clients who have this diagnosis and their families so they know a little more about dementia and to encourage them to go to a Dementia Friends information session.

Estate Planner members of Symponia

We are pleased to announce that we are now official Estate Planner members of Symponia.

As a member we can help with `care fees planning’ to put in place a simple, yet comprehensive, methodical and stepped plan, enabling you to step back, breathe a little and concentrate on the welfare of the person needing care, with the added reassurance that the Estate Planning side of things is being taken care of by a dedicated, appropriately trained and suitably qualified professional. We cover Surrey and South East England area for Wills, Estate Planning, funeral plans and Power of attorney needs.

To find out more about Symponia please click on the link.

Protecting for Long Term Care

Councils claim on 8 properties a day to recoup care costs (source FT Adviser).

At least eight people a day have a legal charge placed on their property to recoup care costs, according to data obtained under the Freedom of Information Act by NFU Mutual.

Research conducted by ICM on behalf of NFU among 2,000 UK adults last month, found that Protecting for old age care costs were cited by 51 per cent of respondents as a factor they fear could impact future wealth.

Since 2009 local authorities have placed legal charges on more than 15,000 properties, which equates to around eight a day. Since that time, council income from care home residents in England has increased by 18 per cent.

In some areas people may be forced to sell their house to pay for care, although many councils operate a deferred payment scheme that allows people to keep their
home during their lifetime.

From April 2016, some elements of care charges will be capped, potentially reducing overall costs, and all local authorities will also have to offer deferred payment schemes so no-one should be forced to sell their home, but annual interest of around 4 per cent will apply.

However, any money spent on care fees prior to this date will fall outside the cap, as will the cost of accommodation and food, hotels and any amount spent above the local authority’s ceiling.

In addition, from 2016, local authorities will be obliged to offer access to advice from a regulated independent adviser.

Furthermore, research from the Institute and Faculty of Actuaries claimed just 8 per cent of men and 15 per cent of women will benefit from the £72,000 limit on what people have to pay towards their care.

In contrast to care home costs, only 11 per cent of people aged between 45 and 64 are as concerned that inheritance tax will affect their family’s wealth.

For more help with this please view the Long term Care page on our website showing you the options available.

Welcome to our September Newsletter.  In this newsletter we discuss the differences between Enduring Powers of Attorney and Lasting Powers of Attorney. We also discuss recent changes in legislation to the laws of intestacy and the definition of “chattels”

If you wish to download the newsletter in PDF please click on the link below.

September 2014 Newsletter

Enduring Power of Attorney (EPA) vs Lasting Power of Attorney (LPA)

We are being asked to draw up and register Lasting Powers of Attorney for more clients than ever before, as recent media coverage has drawn people’s attention to the importance of having such documents in place before they are needed. This year 10% of our clients are now asking for LPAs, compared with 5% last year. We are often asked by our clients and associates (especially those who already have EPAs) “what’s the difference between an EPA and an LPA?”.

We have summarised the key differences below but they are explored in greater details on our website.

1. The Enduring Power of Attorney (EPA) can no longer be made as it was replaced by the Lasting Power of Attorney (LPA) on 1st October 2007, although those EPAs made prior to 01/10/2007 are still valid (so long as all pages are correctly signed and witnessed and dated before this date).

2. There is only one type of EPA dealing with just your finances whereas there are two types of LPA: one dealing with your finances and another dealing with your health and welfare.

3. Under an EPA, if all your attorneys are unable to act then the document fails and you have no one to act for you (an application will now have to be made to the Court of Protection). Whereas, under an LPA, you can appoint replacement attorneys to cover this scenario.

4. Under an EPA your attorneys only have a common law duty to act in your best interests, under an LPA they have a statutory (legal) duty to act in your best interests.

5. When registering an EPA you must inform your relatives – and you have no choice in who they can and cannot be. This could be someone from whom you are estranged. When registering an LPA you make the decision as to who is informed of the registration.

For further information on Lasting Powers of Attorney, please refer to our website and view the following two youtube videos.

this link is to a BBC One Show article narrated by Dominic Littlewood (re Heather Bateman).

this link shows Social Services taking Betty Figg from her family

Where there’s no will, there’s a hellish legacy

Why are the British so careless about protecting the people they love? We should all be forced to write wills.

One of my friends left his wife nine years ago. It was an acrimonious parting, and she moved abroad to live with another man. Contact between the couple practically ceased. My friend met a woman he was gloriously happy with, had children, and started a thrillingly new stage of his life.

This year he died, suddenly and unexpectedly. The grief over his death has been appallingly hard for his partner to deal with. What has made it even worse is the financial chaos my friend left behind.

In the decade since splitting up, he had never got around to divorcing his wife or rewriting his will. He had always meant to. He had filed divorce papers but never completed them: he had seen a solicitor about updating the will just a month before his death, but had found the £300 cost off-putting and decided to deal with it some other
Foreign Property Business Owners Follow us on these sites time.

The property he owned and the inheritances he was about to receive would have been enough to make up for the loss of his salary for perhaps a dozen years, while his children grew up. Instead everything he possessed, from his clothes to his watch to his bank accounts, now belongs to a woman he no longer cared for and who was equally indifferent to him. She is in line for a glorious windfall, but his partner doesn’t have enough money coming in to pay the bills.

Nothing that his family were relying on is theirs any more. Even the small amount of life insurance, paid for by his existing partner on the assumption that she and the children would need it in the event of his death, has gone to his wife. His partner’s only option is to appoint lawyers and start an expensive and uncertain appeal against the will, arguing that she and the children were dependants deserving support.

My friend would have been horrified if he had understood that he was creating this nightmarish situation. He simply never stopped to think about the consequences. He knew he ought to have an up-to-date will, but he couldn’t take it seriously, just as most of us don’t.

Britons are astoundingly casual about making wills. Almost two thirds of adults and almost a third of over-65s don’t have one at all, while more than a tenth of those who do say it needs rewriting. In 2010, 60 per cent of those who died left no will, a proportion that HMRC says has remained stubbornly constant over a number of years.

Secretly many of us appear to believe that we aren’t going to die, or at least not until we’re ancient and have plenty of warning of it, and that meanwhile it would be morbid and unseemly to think about it. When the National Consumer Council surveyed more than 2,500 people about their reasons for not writing wills seven years ago, four in ten said they had never got around to it, three in ten had never thought about it and one in ten refused to think about dying. One in six said they were too young to consider it; among the over- 65s, in a display of amazing chutzpah, that response rose to almost a fifth.

In a random sample of six of my friends, all house-owning professionals with children, five had no wills. All of them — even the two unmarried couples — assumed that they didn’t need one, that their desires were perfectly obvious, and that some sensible person would sort everything out fairly if a catastrophe happened. “It’s not my kind of thing,” said a designer. A radio producer thought “it’s sort of dramatic — seems a bit self-important”. None had made plans for the children to have guardians. “I won’t die at the same time as my husband,” a teacher assured me.

Not one understood the consequences of intestacy. They all assumed that if their partner died, everything would pass to them. Married couples had no idea that if their partner’s estate was worth more than £250,000, they would lose control over half the remainder because it would be kept in trust for the children until they turned 18. The two unmarried couples believed they were protected by being common-law husbands and wives. They didn’t realise that there is no such status in English law, and that although their children would inherit, without a will they themselves would get nothing at all. A childless single man didn’t realise that half his wealth would go to the father who abandoned him as a baby.

This ignorance of the rules causes terrible distress. People can be left embittered, impoverished or even homeless. It’s an indication of a broken system. Britons couple an absolute belief in the right to leave their money as they please with a profound reluctance to get on with making that decision.

The state leaves people to make a will or not as they please, but that laissez-faire approach is indefensible when lives can be so damaged as a result. That’s particularly true at a time when family structures are so fluid and the old assumptions about who is loved and who needs support can’t be counted on.

Our governments insist that everyone wear seatbelts, save for pensions and stop smoking in public. It is much more important that people be made think responsibly about inheritance. It should be socially unacceptable to avoid it. Perhaps it should be compulsory to produce a will when we buy a house, register a birth or get married, with financial penalties if we don’t. Refusing to think about others, averting our eyes from our own mortality isn’t cool. It is, as my bereaved friend bitterly observes, supremely
selfish. The one person it doesn’t affect is the person who dies, but it can leave everyone else’s spirit tangled in hell

Article from: Jenni Russell of the Times newspaper Published at 12:01AM, August 13 2014

Changes to Intestacy & Chattels

The Inheritance and Trustees’ Power Bill has received Royal Ascent and will come into force on 1st October 2014. Whilst this doesn’t sound terribly exciting, it does contain at least two measures which might be seen as improving the rules for how an estate is distributed if somebody dies without a Will (“intestate”).

Under current rules if, for example a husband dies without a Will in place leaving no children, the surviving wife would received the first £450,000 of the estate. She would also receive half of the remainder and personal effects; with the other half passing to member of the husband’s family in a strict pecking order (parents first, then siblings and nieces and nephews). If there are no parents, siblings, nieces or nephews alive, only then does the entire estate pass top the surviving spouse. The same rule applies to civil partners.

Under the new Bill, where there are no children the entire estate would pass to the surviving wife, which seems a rather more sensible approach.

The other change simplifies the situation where a spouse dies and the couple do have children. Currently, if for example the husband dies first, the surviving wife received the first £250,000 of the estate, personal belongings and a life interest (i.e. the right to income) in half the remainder. Under the new arrangements the surviving spouse would receive half of the remainder absolutely instead of just the life interest. The remaining assets are held for the deceased’s children.

While the above changes are welcome, they are still limited so it is important to guard against complacency. Dying intestate still often causes enormous expense and delays and assets paaing to children could trigger a charge to ineritance tax. You should also consider what would happen if you and your spouse or partner both died together. You may also need to make a Will to appoint Guardians for children under 18 and to protect their assets. Very importantly, unmarried couples are not covered by the new rules and still receive nothing from their partner’s estate if they die intestate.

The Inheritance and Trustees’ Power Bill also brings a new more modern definition of personal chattels which covers all tangible movable property except for property: Currently defined as:

• Consisting of money or securities for money
• Used at the death or an intestate solely or mainly for business purposes
• Held at the death of the intestate solely as an investment

The new amended definition defines personal chattels as; Tangible movable property other than such property which consists of money or securities for money, or property used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate as an investment.

Welcome to our May Newsletter.  In this newsletter we discuss two items:

1. Our Top Inheritance Tax Tip – Make a Will and have a valid Will

2. Some pitfalls with Property Preservation Trusts drawn up through other sources

If you wish to download the newsletter in PDF please click on the link below.

May 2014 Newsletter