People tend to see making a Will as something to leave until later in life, or tend to put it off because they think the process of making a will is an expensive one. Today there is no reason for writing a Will to be time consuming or costly and your family will thank you for doing it. People often assume that their husband or wife or civil partner will automatically inherit all of their estate. That is not the case. If you die without a Will, complex Legal Rules apply and your respective spouse or civil partner may not inherit all of your estate. Furthermore, Wills and Trusts can save you money too - the more you plan now the less inheritance tax that will be payable on your death.
A Will provides both your family and the court with clear instructions on how to distribute your estate upon your death.
If you do not make a Will, the courts will dispose of your estate via Intestacy Laws. This means that:
• Your husband or wife or civil partner may not inherit all of your estate if a will does not leave it to them.
• Your family will have no say as to what happens to your assets.
• There will be no choice as to who will administer your estate.
• Someone you do not wish to may benefit form your estate. For example, an estranged husband or wife could inherit all or part of your estate if you are separated but not divorced. Intestacy Rules do not provide for friends or even for a partner who may have lived with you for may years - they will inherit nothing.
• There will be no say over who will look after your children; as the courts will make the decision. This could mean that siblings are split up. Your step-children are not counted as your children and will inherit nothing - even if their own parents have already died.
By making a Will you can appoint people of your choice to act as the personal representatives (the Executors) and you can decide exactly who should benefit following your death (the Beneficiaries). In addition, you could save the Beneficiaries form paying unnecessary tax, appoint guardians if you have young children, and express wishes about the arrangements for your funeral.
• Married persons or civil partners with assets they wish to leave to their respective spouse or civil partner or family.
• Divorced couples and dissolved civil partners.
• Unmarried and same sex couples living together.
• Parents who wish to appoint a guardian to care for their children, in the event of their death.
• Individuals who may want to leave gifts to friends, charities or others outside their family.
• Anyone who wants to express wishes about their funeral arrangements, about organ donation or medical research.
Consider the value of the things you do own: your home or other property, your possessions, shares and savings accounts. The value of an average sized home is likely to get close to the inheritance tax threshold.
Wills are important legal documents and should be professionally drawn up. If you prepare your own Will and it has not been completed properly, any problems with it will only be discovered after you die. The result could be that your wishes will be overruled and your affairs dealt with in a way you never wanted.
We can help you clarify your ideas. Your will needs to cater for different eventualities that may not have been considered. In addition there may be Inheritance Tax implications which may affect your decisions about your Will.
Our experts can advise about potential problems, thus helping to prevent your Will being challenged after your death. We can also ensure that your Will is written in clear and precise language to avoid any misinterpretation.
If you have already made a Will it is important to review it regularly as your circumstances may change with the passage of time. If you have divorced or re-married for example, your Will may no longer be valid. We can help to make small alterations or a codicil to an existing Will.
We will need to know whom you wish to appoint as executors of your Will.
They will have responsibility for ensuring that the terms of your Will are carried out. Often members of the family or a close friend will be appointed. You can make alternative appointments later if the passage of time means an executor is unable to act for you. The partners in CMG Cunningham Dickey Solicitors can be appointed as executors or joint executors if you wish. We can also help someone who is appointed as an executor to carry out their duties.
Whom do you wish to benefit under the terms of your will?
You can make gifts in your Will of sums of money, personal items, or particular assets. In addition a gift of residue is required. The residue is all of your money or property which remains after all your debts and taxes have been paid and any other gifts listed in the Will have been dealt with.
If young children are beneficiaries of a Will, a trust will arise so that any funds are managed for them until they reach a specified age, such as 18 or 21. Funds can however be used for the benefit of the child before he or she reaches the set age if necessary.
You should consider the appointment of guardians to look after young children.
What is Inheritance Tax?
Inheritance Tax (IHT) is a tax that may be payable on an individual's estate upon death. The payment of IHT is dependent on a number of factors including the size of the estate and the types of transfers made. IHT may also be payable on gifts made during a persons lifetime. It is payable on any 'chargeable transfers' made either during your lifetime or upon death.
For IHT purposes, when a person dies, they are deemed to have made a transfer of all of their property on the date of their death. However, some people may also be liable for IHT for gifts made during their lifetime.
What is a Chargeable Transfer?
All Transfers of Value are chargeable to IHT. Any gift made that reduces the value of your estate is considered to be a Transfer of Value. All transfers of value are considered to be 'chargeable transfers' unless legislation specifically exempts them. The value of the transfer is the reduction in the value of the estate and this is normally the value of the estate being transferred. The transfer of value can be made during lifetime or death.
Who pays Inheritance Tax?
IHT is payable by people domiciled in the United Kingdom. If the UK is your permanent home, all of your assets, with some exceptions, will be subject to IHT. If your are not domiciled in the UK, any assets held within the UK will be subject to IHT.
What is the rate of Inheritance Tax?
The rate of tax on death is 40% and the rate of tax chargeable on any lifetime chargeable transfers is 20%. However, IHT will only becomes payable once the chargeable transfers exceed the Nil Rate Band on the date of death. This rate can vary each year. The current Nil Rate Band is £312,000 per person.
The government has recently introduced new rules relating to the Nil Rate Band. It is now possible for spouses and civil partners to transfer any part of the unused Nil Rate Band when the first spouse/civil partner dies to the surviving spouse/civil partner's Nil Rate Band.
Therefore upon the death of the surviving spouse/partner, their Nil Rate Band will be increased by the proportion of the unused Nil Rate band of their partner.
Complex legal issues affect older people, their families and their carers. These issues are becoming increasingly predominant and complicated. It is important therefore to seek early specialist legal advice which will mitigate or avoid the problems which can arise later.
CMG Cunningham Dickey Solicitors are experienced in dealing with issues in relation to older client issues and are sensitive on matters such as the management and protection of assets, Powers of attorney, Controllership orders made by the High Court and effective planning for long term care.
Our services for elderly clients include:
General Powers of Attorney deal with a relatives affairs for a short time while they are perhaps abroad or in hospital. A general power could be drawn up to facilitate access to bank accounts to pay bills until a time when it is no longer necessary. It can only be made while the person making the power, namely the donor, has mental capacity.
As you get older, you tend to slow down and there is a very real risk that you may become physically or mentally infirm so that you are not capable of acting for yourself or giving instructions regarding your property and affairs. If you are not able to manage your own affairs, your family or friends may be left with the difficulty of not being able to look after you properly and, in order to do so, they may have to apply to Court under a very expensive process called a "Controller Application" to request the Court to appoint a Controller to look after your affairs.
It is possible, when you have capacity, and are fit to make your own decisions, to choose who you would wish to look after your affairs in the event that you were to become incapable of doing so yourself. You do this by completing an Enduring Power of Attorney in which you appoint your choice of person or persons to act for you, in the event that you become incapable.
For example, if you had a stroke, early onset dementia, Alzheimer's disease or some other medical difficulty making you unable to issue instructions to manage your affairs, your relatives may be left in a situation where they have to access to your bank account to pay nursing care or other costs or they may have to sell your house or deal with other property. If you are not capable of issuing instructions and signing documents, they cannot do that. They must either apply to the Court for an expensive Controller Order which is a cumbersome and time consuming process, or they can register in Court an Enduring Power of Attorney made by you when you were able to make your own decisions and choices about who you want to become involved in your affairs during a period of illness.
• While the person who made the Enduring Power of Attorney still has capacity, but starts to need help to deal with their financial affairs.
• Once the donor or person making the Enduring Power of Attorney has lost mental capacity, the attorneys must register the Enduring Power of Attorney in the Office of Care and Protection in the High Court in Belfast to ensure the donor is protected. Once registered it is the duty of the attorneys to ensure that all of the financial matters are dealt with by them. they are supervised by the court to ensure that they act totally in the interest of the donor.
Although they are not legally binding, living wills can provide a useful guide as to your wishes for future care and how you envisage you would be treated in the event that you could no longer make your own wishes known. While you are mentally capable it is important to give consideration to any wishes that you have and to make those known. These can be incorporated into a living will which can then be given to family members and your general practitioner to keep with your medical records so that they can be accessed in the case of an emergency or need.
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Brian H Speers