There is a strong link between Wills and Inheritance Tax (IHT), its a fact that with the right planning correctly communicated through your will you can reduce your exposure to IHT. Unfortunately, many never get around to setting up a will and become what’s known as intestate.
Dying intestate results in your estate becoming subject to intestacy laws which is a slow process that controls how your property will distributed upon your death and may end up being given to the government if you have no living relatives. Your estate includes money in bank accounts, savings, shares, property and other assets you own at the time of death, if you have a large estate your exposure to Inheritance Tax becomes greatly increased.
So having a Will in place is highly recommended and If you already have a Will then you should ask yourself when was the last time you reviewed your Will.
How do I go about getting a will?
If your circumstances are simple you can write your own will which is valid as long as you get it witnessed and it contains all of the formal requirements, you can also consider using a will-writing kit, which are available from most stationers. However, you should bear in mind that a will that is badly worded could lead to misinterpretation and result in your relatives being saddled with large legal fees whilst its meaning is agreed.
Another possibility is the use online services such as http://www.tenminutewill.co.uk or use a personal Will writing service which should ensure the language and terminology used cannot be misinterpreted and ensure your final intentions are clear. Will writing is not regulated by the government although there are several voluntary bodies, such as the Society of Will Writers and the Institution of Professional Will Writers. To be 100% confident your will is dealt with by a qualified person and you have consumer protection we recommend using the services of a solicitor or member of the Law Society.
What to consider when you make a will?
You should do everything you can to make sure that your wishes are not contested. Make sure you do not ask any of the beneficiaries of your will to help draft it. Older people may ask grown-up children to help them write a will, but this means the will could be challenged by other potential beneficiaries. Make sure your will is properly signed and witnessed by two people who are not beneficiaries.
You will need to decide who your executors are. These are the people who will administer your will. You can pay for a bank or solicitor to do this, or a friend can offer to do it for free however please remember being the executor of a Will can be demanding.
Other items to consider are:
- Do you have assets that you would like to give to someone in particular.
- If you have young children, you will need to appoint guardians.
What about tax planning?
Inheritance tax is 40 per cent, but it is known as the “voluntary tax” because it is relatively easy to get out of paying it with proper planning. Anyone who dies with total assets of more than £325,000 could leave their family with a tax liability. But if you leave your assets to your spouse or civil partner, no tax is payable. If you want to avoid tax and leave money to your children talk to Bourne Accounts for advice on setting up a discretionary trust.
You could also:
- make make gifts which will not attract Inheritance tax.
- Or make the most of IHT reliefs with Investments or agricultural property.
How much should a Will cost?
To save money, check if your employer, union or home insurer offers a free or discounted solicitor will-writing service. Some insurance policies provide a legal “add-on” you can use to have a will checked. If you are on a low income, aged over 70 or disabled you may be entitled to legal aid.
Will Aid is an annual fundraising campaign involving nine of the UK’s leading charities, with the support of solicitors who donate their skills for free. They encourage people to have their Will drawn up by a professional solicitor in exchange for a charitable donation. Expect to pay a voluntary £95 per single person and £150 per couple. Visit www.willaid.org.uk for more information.
Where do I keep my will?
If a solicitor has made the will, they will usually store it, or you can pay an annual charge to have it stored at a bank. You can keep it yourself, but this is not the safest option.
How often should I review my Will?
If you get married, divorced or have a child, make sure your will reflects this. Ensure that it is properly changed – either with an official change called a codicil if the change is minor, or by making a new will. Either way, make sure the changes are witnessed.
These and many other scenarios, particular to your circumstances, may be available. The key is to explore these planning strategies before the burden of responsibility for settling tax is passed to your executors, and ultimately, your family and beneficiaries.
The Importance of Making Wills and Inheritance tax
If you would like personal advice concerning Wills and Inheritance Tax in order to reduce the burden for your loved ones and ensure that you have all the right plans in place to ease your family’s inheritance tax costs, contact our very own IHT expert Paul Johnston at Bourne Accountancy online or call 01883 708090.
Bourne Accountancy also provides free business advice via our website www.bourneaccountancy.co.uk, and dedicated IHT site http://inheritance-tax.bourneaccountancy.co.uk. We cover the following areas should you wish to meet in person: Addington, Ashtead, Banstead, Biggin Hill, Beckenham, Bletchingly, Bromley, Chipstead, Caterham, Carshalton, Coulsdon, Crawley, Croydon, Dorking, Godstone, Horley, Kenyley, Lingfield, Merstham, Oxted, Purley, Redhill, Reigate, Sanderstead, Selsdon, Shirley, Sutton, Tandridge, Tatfield, Warlingham, Westerham, Whyteleafe.