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Wills

As the Law Society’s ‘Make a Will Week’ publicity says, “Making a Will Won’t Kill You”, but not making one could cause all sorts of complication and may mean paying unnecessary tax. Most of the wills that On Legal prepares for clients are straightforward, simple documents that ensure that a person’s estate goes where they want it to go after their death. Some are more complex affairs that not only deal with a person’s estate but also allow that person to avoid or minimize inheritance tax on that estate.

It is particularly important to make a will if:

·        You are not married to your partner

·        You have young children

·        There are people who could make a claim on your estate because they are financially dependent on you

·        You have an overseas property

·        You own all or part of a business

Inheritance tax has been described as a "tax on thrift" and potentially  affects any estate valued at more than £285,000. This is a tax on the little bit of money that the Government has not taken off you in taxes over the years. HM Revenue & Customs will always make sure you pay all the tax you should, but has no responsibility to ensure you do not pay too much! £285,000 may sound like a lot of money but the threshold for inheritance tax, or nil rate band as it is called, rises in line with retail prices, not property prices, so the rise in property values has taken a lot of people into the inheritance tax bracket. By taking simple steps, however, you can often avoid inheritance tax altogether or reduce the amount your beneficiaries have to pay. Typically, the cost of re-arranging ownership of property and assets to equalize estates, setting up a discretionary trust in your will and reviewing your affairs generally will cost less than £500 and may save you £000’s in tax.

Powers of Attorney

A power of attorney is a legal way of giving someone else the power to manage your financial affairs when it is difficult for you to manage them yourself. If you choose to give an enduring power of attorney it can continue in force even if you become incapable of managing your affairs. You can give a blanket power to your “attorney” or you can put limits and restrictions on it  - it is up to you.

Probate

Probate is the word used to describe the process of obtaining the court’s authority to deal with someone’s estate. If a person dies without making a will (“intestate”) the administrators (those entitled to deal with the estate) cannot deal with an estate worth over £5,000 without first being granted “letters of administration” from the Probate Registry, which is part of the High Court (although applications are dealt with on paper and there is no need for anybody to appear in court). 

Where someone dies leaving a will and the value of their estate is over £5,000 the executors named in it have to apply to the Probate Registry for a grant of probate.

 Before applying for probate or letters of administration the executors or administrators have to make a reasonably accurate assessment of the value of the estate and fill in an inheritance tax form. After probate or letters of administration are granted the estate has to be “got in” – all the assets valued, sold, transferred as the case may be – and an estate account prepared. Only then can the estate be distributed – divided among the beneficiaries according to the will or the intestacy rules. Depending on the complexity of the estate, the process can take many months.

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