Digital currency such as bitcoins are relatively new. However, they still form part of your estate when you die. They’re classed as “digital assets” similar to frequent flyer points or gaming credits. They might have dipped in value recently, but they are still worth money so you want to make sure they’re included in your will.
There are two key things to consider about this digital legacy.
The first thing relates to bitcoins being properly defined in your Will. If you already have a Will in place, you should check this. If they’re not covered, then you need to make an amendment. If you’re writing a new Will, then a professional Will-writer will be able to advise you on this from the start.
The other important factor to consider is how your beneficiaries are going to access your bitcoins. Passing on digital currency is more complex than passing on money stored in a traditional way such as a bank or savings account.
Bitcoins are stored in an encrypted electronic wallet which can be accessed only by an electronic key or password. Unlike banks and building societies, cryptocurrencies do not store names and addresses against the electronic wallets, so aside from the electronic key there is no way to identify who a wallet belongs to.
It’s vital then to make sure that you keep a secure copy of the key for your executors. Without it, it will be virtually impossible for them to access the wallet and the money will be lost.
You could consider entrusting the key with a secure storage service, in a safety deposit box or with your executor or a trusted family member. The main thing here is that it needs to be someone you trust as you are handing them access to your money.
For help with this or any aspect of Will writing, please give us a call at legalmatters on 01243 216900 or email us at firstname.lastname@example.org for further details.
There are some fairly obvious legal words used when writing a Will but here’s a definition of some of those which might otherwise be misunderstood.
Administrator (sometimes administratix for a woman) – the person appointed by law to settle the affairs of someone who dies without a Will, so usually their next of kin.
Beneficiaries – this is anyone – a person, organisation or charity – left an inheritance (legacy, gift, trust) in a Will, or if there is no Will, under the intestacy rules.
Substitutional beneficiary – if a beneficiary dies before the person making the Will, a substitutional beneficiary will receive a gift in their place.
Bereaved – those surviving the deceased.
Crown or Treasury – this refers to the Government. If you don’t have a Will and have no next of kin, the Crown receives your estate.
Deceased – the person who has died.
Dependents – anyone who is cared for by the person making the Will. It normally includes children, spouse or elderly/sick relatives.
Executor (sometimes executrix for a woman) – the person or people you choose to make sure the instructions in your Will are carried out. You can choose a family member, a friend or a probate professional. An executor may also be a beneficiary of the Will.
Guardian – someone named in a Will who is appointed to take parental responsibility for any children aged under 18 at the time of the person making the Will’s death. They are known as a testamentary guardian.
Issue – this refers to a person’s lineal descendants. So their children, grandchildren and great-grandchildren. It does not include step-children.
Personal Representative – a general term for anyone in charge of administering a deceased person’s estate. It could refer to an executor or administrator of the Will.
Power of Attorney – a Power of Attorney may be given by executors and administrators to probate professionals to allow them to sort the Will without having to ask the executors to sign everything.
Trustee – a person or a Trust corporation (such as a bank) appointed to administer any Trusts created by a Will or arising under the rules of intestacy (so when there is no Will).
Testator (sometimes testatrix for a woman) – the person making the Will.
Child of the testator – in law this refers to children of the testator and includes legitimate, illegitimate, adopted and some surrogate children, but not automatically step-children.
Wards of Court – orphaned children with no appointed guardians are made wards of court. The court then decides what happens to them.
Witness – you must have two witnesses to see you sign your Will. You must watch them sign it and they must also watch each other sign it. You can’t choose a beneficiary (or their spouse) to witness your Will.
It’s important to be clear when drawing up legal documents. Legalmatters can help, we’re always happy to discuss your needs or answer your questions. Call us today on 01243 216900 or email us at email@example.com for further details.
What happens to your pets on your death
The UK is famously a nation of dog lovers. If you were to head out to any of our parks, woodlands or beaches on a crisp autumn afternoon you would encounter more canine friends than you could shake a stick at (which they would love). With over 8.5 million (just over 24%) of households owning a veritable smorgasbord of breeds, our four-legged friends are as much a part of the family as our own flesh and blood.
But what happens to our furry babies when we die? Rather callously, the Administration of Estates Act 1925 defines domestic animals as ‘personal chattels’ and can be gifted in your Will in the same manner as a toaster, or the family grandfather clock. In the eyes of the law, your pet may be considered as tangible personal property but as a living, breathing and much-loved addition to your family it is important to give proper consideration when setting out what happens to them. So what should you consider?
Who gets Rex?
Whilst many family members would be happy to accommodate your pooch for a weekend, asking them to take full ownership may well be a different story. Ensure that you speak with potential friends or family members to be certain that they are happy with having your pet(s) on a permanent basis.
As with any gifts in Wills, it is always helpful to consider a plan B should you first choice no longer be in a position to take on the responsibility of your pet. A substitute beneficiary can be drafted to step in. Alternatively, charities such as the RSPCA’s Home for Life and The Cinnamon Trust run rehoming schemes and provide long term care for pets whose owners have died, if there are no other individuals who you are able to draft in.
What about costs of care?
Maintaining an animal can be an expensive business. Food, insurance and general health costs (flea/worming treatment/annual vaccinations) all add up. Leaving an additional cash legacy to the beneficiary tasked with taking on your pets in a great way of ensuring that your pet is looked after without any financial detriment to the beneficiary. In addition, it may be more of an incentive for the individual to agree to having your pet if they do not have any financial pressure to meet bills from their own pocket.
How to put this into practice
The correct wording of a legacy (whether canine or otherwise) is essential to ensure that a gift is properly dealt with. It is ALWAYS advisable to consult with a solicitor to ensure you wishes are adequately put in place. The proper, legal, drafting is necessary as any incorrect provision may fail. Your pet cannot individually receive a legacy (as they cannot provide a legal receipt) and as such any clause stating eg “£5,000 to Rover” just won’t work.
Legalmatters is always happy to discuss your needs for your dogs (or cats, or indeed any other animal) and help get the correct provisions in place. Whether your best friends are diamonds or dogs, we can help you with your arrangements by drafting the necessary claws (never one to pass up the op-paw-tunity for a pun).
Last Friday, news broke of the sad death of Sir Bruce Forsyth. The former Strictly Come Dancing host and all round National Treasure passed away at the age of 89, following a lengthy battle with illness.
Reports in various national papers have since detailed the star’s alleged estate planning which, according to ‘a friend’, was done in an effort to “avoid it being gobbled up by the taxman”. By all accounts, Sir Bruce has left all of his £17million estate (didn’t he do well?) to his wife outright where it has then been widely reported that his widow Wilnelia will then “be able to transfer up to £650,000 to each relative tax free to avoid inheritance tax”.
Whilst is it true that legacies to spouses are free from inheritance tax by virtue of the spousal exemption, legalmatters shakes its head at the level of misinformation reported. Quite frankly it doesn’t even know where to start with dissecting what a flawed and short-sighted piece of alleged tax planning this represents, but here goes.
So what is the actual position (if indeed these were his wishes) and why might it be regarded as a potentially reckless and ineffective idea?
First of all, the tabloid press have been quoting the figure of £650,000 supposedly available for Wilnelia to generously distribute ‘to each relative’ once Sir Bruce’s legacy has been transferred. Each relative!?! If this was the case, then the majority of estate planners would be out of a job and considered, surplus to requirements.
It would appear that the press have confused the level of transferrable nil rate band available to the surviving spouse on death with what an individual is able to give away tax free during their lifetime. Whilst Wilnelia would indeed be able to benefit from her late husband’s inherited nil rate band of £325,000 to combine with her own on her death, her late husband’s nil rate band is not something that she would be free to make use of during her lifetime. The articles also totally disregard the newly established ‘residential nil rate band’ that this tax year alone would have increased the late entertainer’s tax free allowance by an additional £100,000 (but latterly would allow a combined nil rate band of £1,000,000 if left to lineal descendants).
Any legacy left to a spouse is free of tax by virtue of the spousal exemption. Wilnelia is, of course, free to make gifts to whoever she likes during her lifetime. As long as she were to live another 7 years following such gifts (of any monetary value) these would also be inheritance tax ‘free’. Quite honestly, she could gift the full £17 million equally amongst his 6 children (or whoever she so wishes) as soon as she had received the monies from probate, should she be so inclined, but therein lies the issue.
If indeed this is the arrangement, there is NOTHING obliging Wilnelia to carry out the ‘wishes’ of her late husband. Outright gifts by their very nature, leave the recipient free to do whatever they like with the legacy. Despite ‘wishes’ or ‘instructions’ from the deceased, there is nothing legally binding to see that these are fulfilled. The deceased is simply requesting the recipient to make distributions and is hoping that this will be carried out. Whilst this level of trust is admirable, the private client practitioner knows more than most that trusting your relatives to ‘do the right thing’ on your death is a dangerous assumption.
Let us assume that, despite having no legal obligations to do so, the recipient of the legacy has every honourable intention of making these posthumous gifts. They themselves would need to survive another 7 years which is always a risky proposition. What instead, if they were to lose mental capacity and unable to make such transfers? Michael Schumacher’s tragic accident and resultant circumstances have shown that age, wealth and level of fitness have nothing to do with a lack of mental capacity and inability to manage your own affairs. How can we be sure that Wilnelia shall live a long and untroubled life, free of illness and incapacity? Her ability to make gifts from her late husband’s fortune and to therefore share the wealth and to reduce her own liabilities to inheritance tax is dependent on her being mentally fit and well; certainly, any attorneys that she may have appointed won’t be able to undertake such tax planning ventures without court authority (another common misconception).
So what might Sir Bruce have done to make provision for his children and grandchildren (and indeed he could well have done, because we are commenting on the reporting, not on actual events)?
Lifetime gifting would have been the best starting point. If carried out wisely and cautiously, after careful advice and taking all needs of the parties into due consideration, then lifetime gifting is an excellent way of reducing your tax bill.
And what about the use of trusts? Despite trusts having their own particular tax regimes, they are immensely useful structures to protect and preserve assets against unknown circumstances. Tax shouldn’t necessarily always be the driver, particularly where significant wealth is concerned.
Finally, any charitable giving would have the double benefit of not only being exempt from IHT for the legacy itself, but it could also have reduced his IHT rate to 36% if he had left 10% or more of his total estate to charity. A Brucie bonus if you will.
For the papers to glibly report that Sir Bruce has ‘in one fell swoop’ cannily avoided inheritance tax and at the same time ensured that his wealth lands where he would wish is, in our humble opinion, grossly underestimating the risks and potential issues at hand and is in any event based on apparent mis-reporting of the facts.
Make sure that your wishes are adequately enshrined in the correct, binding, legal documents as the road to court is paved with good intentions. Nice to sue you, to sue you, nice. Speak to a member of the team at legalmatters on 01243 216900 or email us at firstname.lastname@example.org to find out more.
Having to sell the home of a loved one, especially if it’s somewhere you have happy memories, can be poignant. Lucy Thomas shares a few pointers on how to make the process less painful…
The lion’s share of a person’s estate is normally their home, but at a time when family and friends are grieving, preparing the property for sale is often the last thing they feel up to. It’s a tough one because, unless you’re a millionaire, with the best will in the world that property needs selling – utilities and council tax bills have to be paid even though the house is unoccupied and then there’s the question of maintenance. Pipes burst and gardens become overgrown in empty properties.
My advice to clients in this situation is to speak to a few local estate agents (at least three) early on, to form an idea of the market – this has to be done anyway, to value the owner’s estate and assess whether inheritance tax should be paid. Then take a look at furniture and other household items – a rough lump sum of their worth will suffice for probate purposes but it’s probably a good idea to get any pieces priced at around the £500 mark professionally valued.
Undertaking that, admittedly often painful process, actually provides a good time to clear the house of any unwanted items too. In fact, some of my clients find selling or giving away a loved one’s things to a new home quite life-affirming.
As for the locks, change them. It’s unlikely the keys have been handed out to every Tom, Dick and Harry in the village but better safe than sorry.
Unless you’re a massive fan of Kirstie and Phil – when it comes to the question of updating a house pre-sale you may judge that you simply do not have the appetite for this. Yes, properties sell for less when the decor is old-fashioned but they often sell fast too, as buyers appreciate a home they can put their stamp on. It’s amazing how much more polished a house looks after a good, deep clean – often that’s enough.
If you do decide to take your time selling the property and don’t live nearby, it can be wise to find an agent to manage it. Also, you’ll have to look at insurance – most insurers will not pay out on a property that has been left unoccupied for over 60 (and in even more extreme cases 30) days.
To discuss this, or any of the other issues around selling probate property, call us now on 01243 216900 or email us on email@example.com – we’re your local experts in will writing and probate. And remember that your loved one’s home is going to a good home – a new owner who will love, cherish and build their own lifetime of memories there.