How much inheritance tax will I have to pay?
Currently, the first £325,000 of your estate, known as the ‘nil-rate band’ personal tax allowance, is not subject to inheritance tax. The threshold for the ‘nil-rate band’ is regularly revised by the Government and is announced in the budget each year. Any assets over and above this threshold are taxed at the rate of 40%. So, for example, if you have a total estate, including the family home, worth £500,000 then you will pay 40% tax on £175,000. This works out at a hefty tax bill of £70,000. However, there are a number of ways in which you can minimise the amount of inheritance tax you will need to pay. Among other things, these include:
If you own assets above the nil-rate band –and with the rise in house prices many people now do who wouldn’t consider themselves rich – then you should talk to your solicitor as soon as possible about the measures you could take now to save on inheritance tax.
Why should I ask a solicitor to help me make a will?
There are many ‘will writing’ products on the market and in theory you can make your own will. However, the rules for making a will are complicated and for a relatively modest fee a solicitor can ensure that:
Badly drafted wills are responsible for a number of damaging probate disputes each year – expensive litigation is the last thing you want to leave your loved ones.
I made a will some years ago so I don’t need to worry about this anymore, do I?
Even if you have already made a valid will, we would recommend that you review it regularly. Your life circumstances may change: perhaps you are getting married? Divorced? Perhaps you now earn considerably more than you did when you made your original will? Or have received an inheritance of your own? Any significant changes in your status or circumstances can affect your existing will, and may even make it invalid. If you marry or remarry, for example, your will is automatically rendered invalid unless it was made clear at the time that you were intending to marry and wanted the current will to remain in force afterwards.
I have two children: a seven-year-old and a twelve-year-old. I am currently thinking about making a will and would like to leave my property to my children. Are they too young to inherit directly?
Since both your children are under 18 then they won’t be able to inherit directly. But this doesn’t mean they can’t benefit under your will. Your solicitor will be able to help you arrange for their inheritance to be held in trust for them until they are older. Meanwhile, you can ensure that your children don’t lose out by allowing the trustees you nominate to use the income and/or capital for your children’s benefit, such as to pay school or university fees on their behalf.
Since my divorce, I’ve only been able to make ends meet with some support from my father. We had a big argument just before he died, and I now discover that he’s left us nothing. Is there anything I can do to challenge the will?
Since you were reliant on your father’s financial support, it may be possible for you to make a claim against his estate under the Inheritance (Provision for Family& Dependants) Act 1975. According to this, if you are the spouse or a child of the person who has died, you can apply to the court to ask for a lump sum payment from the estate. You will need to be able to demonstrate that the will or intestacy has left you without adequate means of support. There is also a time-limit for making a claim, which is 6 months from the Grant of Probate or Administration. You should talk to solicitor immediately about the options which are open to you.
I want to set up a Lasting Power of Attorney (LPA) but I want to nominate different people to take care of my welfare and business affairs. Is this possible?
Yes. Firstly, you will need to set up two separate LPAs: a personal welfare LPA and a property and affairs LPA. In the case of your personal welfare LPA you will need to choose one or more people over 18 years of age (up to a maximum of five people) to make decisions about your health, living conditions and other matters relating to your personal care. In the case of your property and affairs LPA you can either nominate up to five different people to look after your financial and business affairs, or you can opt to appoint a trust corporation. In each case, you will need to specify how you would like them to act: whether, for example, you want them to make joint decisions or expect different individuals to make decisions about particular things.
My partner and I live together but are not married. He has children from a previous relationship but has promised that I would inherit the house when he dies. I’m on the deeds of the house so is it really necessary for him to make a formal will?
You should definitely get a will drawn up as soon as possible. Whether or not you automatically inherit your partner’s share of the house depends on whether you own it as Joint Tenants or Tenants in Common. If your ownership is as Tenants in Common then your partner’s share of the property will pass to his children, as will his other possessions. If you were married then you would inherit the first £250,000 of your partner’s estate and receive a life interest in the remainder. You should talk to your solicitor about making a valid will and also about how you may be able to avoid paying unnecessary inheritance tax.
Our Wills and Probate Solicitors are backed by four decades of experience. Our legal practice and team of London Solicitors have a strong track record of achieving favourable client outcomes. For expert legal advice use our contact form or call us on 0800 437 0322 today.
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|Phone:||0800 437 0322|
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|Address:||Hodge Jones & Allen Solicitors 180 North Gower Street London NW1 2NB|