9th February 2017
2016 has passed and with it the death of many notables. It looks like a busy year for HMRC in terms of inheritance tax. I am told that the list for last year of lost stars is no more or less than the years preceding it however, because I am getting older the loss resonates more with me as the celebrities have earned their place in my own life memories. Who could forget Alan Rickman in ‘Die Hard’, Prince with ‘Purple Rain’, Carrie Fisher and her legacy of ‘Star Wars’ or George Michael with ‘Careless Whisper’. But because I am getting older these deaths, particularly the more unexpected ones, make me consider my own mortality and how abruptly it can come to an end.
We all will die, that is as certain as night follows day, yet not all of us think, or don’t like to think, what will happen once we are gone or what stress we may cause to the people we leave behind. Simple steps taken during lifetime may temper or even reduce the amount of problems caused.
We have all read news stories of families squabbling over estates. Indeed I recall a surge in claims on estates I was administering around the time of the 2008 crash. At the time people, faced with an uncertain financial future and austerity, considered all their potential sources of income. Compromise soon flies out of the window where hardship may be a real possibility.
Similarly we all know of families where a large amount of Inheritance tax was paid, sometimes unnecessarily. Isn’t it therefore a logical step to spend some time talking to a Solicitor to make sure you and your estate doesn’t become one of those anecdotes?
So have you made a Will?
Making a Will seems such an obvious thing to advise but still much of the UK population does not have one in place either because they think they don’t have anything worth leaving, they haven’t got round to it or they make assumptions as to how the estate will pass.
By taking the time to make a Will you can:
This last couple of points are not guaranteed just by making a Will, but making a Will in conjunction with legal advice. Do you have business interests? Do you have children from a previous relationship? Have you adopted or have step-children? Why not take the time now to make sure you take appropriate steps make sure everyone you want to benefits from your estate, you minimise the tax payable as a result of those wishes and at the same time maximise how much will pass to your nearest and dearest.
Probate and Beyond
When the time does come and a loved one dies, sometimes grief is rudely forced aside whilst the administration of the estate is dealt with.
This is, of course, the red tape associated with a person dying; drawing a line under their paper and digital life, gathering in assets, settling debts and distributing the remaining estate in accordance with the Will or statutory rules of Intestacy (where there is no Will).
An executor is appointed under the Will; an Administrator under Intestacy (where there is no Will), (together they are Personal Representatives or PR’s). Normally these are family member(s) or close friend(s), occasionally it may be a bank, solicitor or other professional.
In addition to dealing with asset providers the PR’s may also need to report to HMRC (Income Tax and Inheritance Tax) and apply to the Court for Probate (the Court order recognising who has the legal authority to deal with the estate).
Dependent on the size and complexity of the Estate this can become an onerous task and comes at the worst possible time when trying to cope with loss. Reverting to a Solicitor to assist can relieve the day to day burden leaving you to make the important decisions and sign documents.
Too often we have seen PR’s try to rush the process. We, of course, recognise that they want to move on following the bereavement but they often end up falling foul of HMRC and can risk potential litigation by disappointed beneficiaries as the result of financial loss to the estate.
Binding obligations set out in the Will are ignored, Nil Rate Band (NRB) or Life Interest trusts setup as part of tax or care home planning (usually on the death of a first spouse) are incorrectly dealt with, if at all, and can often lead to additional tax on the death of the surviving spouse, penalties, interest and massive delay.
Everyone is different, not everyone wants Solicitors to deal with the administration of their estates. However recognising when professional advice is required is half the battle. If there is a legal document, such as a Will, which has plenty of jargon; why not take an hour to speak to a Solicitor so you understand the implications rather than taking a chance? It could save you more time, money and stress in the long run.
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