Monthly Archives: June 2017

Retirees Seek Advice After Brexit

When the UK made the decision to depart the European Union last year, the actual departure seemed a long way off. Although the thought of leaving loomed, the process of exiting was thought of as distant – simply another thing for politicians to worry about.

As we begin to enter the negotiations, however, it seems that the ‘keep calm and carry on’ attitude is faltering, especially among retirees.

According to recent research, 14% of those who have retired are worried about the impact of Brexit on their pension, with 19% saying they are now much more likely to seek financial advice.

Although market volatility was almost certain in the initial aftermath of the referendum, most believed that the markets would calm after the storm. However, retirees believe that the clouds haven’t cleared just yet; over one in four predict that any negative impact on their pension will be for the long-term.

It’s obvious that people are worried about the consequences of leaving the EU, but some have gone further than just expressing their concern. Due to Brexit anxieties, just over one in ten of those who had made plans to retire in 2017 have actively postponed their retirement, with 6% even changing the country that they planned on retiring to.

Having looked at these figures, you might be under the impression that just about everyone is worried about the impact of Brexit on their pension. It is though important to balance the numbers of those who are concerned, against those who are less so. In fact, the figures show the majority of people (67%) felt their retirement plans had not been affected by Brexit at all. One in eight even thought that leaving the EU would impact their pensions in a positive way.

Retirement expert at Prudential, Kirsty Anderson, commented on the concerns of retirees, as well as the importance of seeking advice:

“As you would expect, for many people who have been planning and saving for their retirement for most of their working lives, even the biggest of political upheavals won’t make a difference to their long-term plans. But with one in three new retirees telling us that their retirement plans have been affected by the referendum result, it is clear that uncertainty is having an impact for some.”

Although worrying is a natural reaction to being unsure about something, it’s rarely helpful. Rather than providing an answer, it just allows the concern to escalate and often causes us to worry even more. It might be impossible to know how Brexit will affect you exactly, but adequate planning will at least make your financial future a little more certain.

As well as guiding you through the process, talking to an expert at legalmatters can help clear up any concerns you may have. Be more certain about your future by speaking to one of our professional team today – call us on 01243 216900 or email us at info@legalmatters.co.uk.

Problems With The RNRB

The new Residence Nil Rate Band (RNRB) that has now come into effect is good news for many. However, not for everyone.

In summary, the new rates effectively add another allowance in addition to the inheritance tax (IHT) threshold of £325,000 for a single person.  This additional allowance is £100,000 per person, rising to £175,000 in 2020. These rates double for a married couple or civil partnership. There are, however, a few complications that may mean you won’t qualify and it’s important to understand these, as they may affect how you structure your Will.

First of all, the RNRB only applies to a property that the deceased has lived in and a qualifying share of it must be passed on to direct descendants.

If you have no direct descendants i.e. no children or step-children, fostered or adopted children, or children you have become legal guardian for, it doesn’t apply. You can still leave your property to siblings or nephews and nieces, but they won’t benefit from the RNRB and their inheritance tax bill may be greater because of it.

The property needs to form part of your estate when you die or to have given it away but reserved a benefit in it.

If you have more than one property, the RNRB can only apply to one of them. Your descendants can choose which one is to gain the benefit. If you have a couple of low value properties, your estate may benefit from a smaller amount of RNRB than if you had one larger property.

At the other end of the scale, if your estate exceeds £2 million, the RNRB tapers away by £1 for every £2 over this threshold. The threshold this year is £2.2 million. Estates above this level will not benefit from RNRB.

It’s possible to reduce the value of your estate by making certain gifts. As mentioned previously, you need to be careful when doing this as it could have adverse consequences. Alternatively, you could set up trusts to bring down the overall value of the estate. It may be worth considering leaving your property in trust to your partner to avoid the threshold being exceeded upon their death.

However, if you plan to leave any property in trust to your descendants, then aside from some exceptions, the RNRB again will not apply.  It does depend though on the types of trust and so specialist advice is needed.

It sounds quite complicated, but a good solicitor, can talk you through your options to structure your Will to take advantage of the tax benefits available to you.

For advice on preparing a Will and the RNRB please call us on 01243 216900 or email info@legalmatters.co.uk.