Category Archives: Estate Planning

Business in a Will

Why, as a business owner, you need a solicitor to write your Will…

When you own a business, not using a professional lawyer to draw up your Will is almost always a mistake.

Failing to cover all your assets and not considering issues around inheritance tax, executors and trusts are two common mistakes made with a DIY Will. But even the smallest of mistakes could render a Will invalid – such as if it’s witnessed by the wrong people or number of people; if it’s not signed or dated in the right place.

Having a valid Will in place is essential if you want the final say in what happens to your business and other assets after you die.

If you die without a Will, or if it’s invalid, everything you own – including business and non-business assets – will be distributed under the laws of intestacy. Which means that you or your loved ones will have no say as to who inherits. To avoid your assets being dealt with under the rules of intestacy, your Will should detail what will happen to your business shares.

Business assets

When you die, any shares or interest you own in a business become an asset of your estate. Without a Will, these shares could be sold, the company could be broken up, or it could run into trouble without the correct day-to-day management in place.

For example, you might know who you want to inherit your business after you die, but what happens if there’s a tragedy and these people don’t survive? A professional solicitor will know what questions to ask to make sure that your Will covers all situations.

Take a look at the package “Business Wealth Protection” which we’ve put together specifically for business owners. We will look at all eventualities and the Will we draft for you will include a trust and letter of wishes to ensure that inheritance tax is handled in the most cost-efficient way.

In some cases, you might already have a partnership agreement or company papers in place that set out what will happen to the business after you die. These types of contracts are usually put in place if more than one person owns a business and you want the company to continue after your death. You should also consider whether you need a business lasting power of attorney. We’ll help you decide what legal documents you need to draw up in order to carry out your wishes and best protect your business and your loved ones.

It is always important when drawing up a Will that it is done correctly, and for business owners this is more complex. We can help guide you through the process. Just speak to one of our expert team by calling legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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Professional Will writing

5 good reasons for having your Will drawn up by a Solicitor…

There are many reasons for having your Will drawn up by a Solicitor. Here are 5 of our top reasons.

  1. Top of our list, making your Will is one of the most important things you’ll ever do.

Without a Will, how will you get to say who inherits your assets? For instance, without a Will, and where there are no known heirs, your estate will be passed to the Government. This could include property, money and personal possessions. Where there are relatives, under the UK’s inheritance laws (Rules of Intestacy), people who are blood relatives could be entitled to a share of your estate. Even distant relations could be in for a windfall. And partners may not recognised if you were not married or in a civil partnership. Neither are stepchildren.

  1. The need for clarity

So you’ve sensibly decided to draw up your Will. But if you’re thinking of creating a handwritten Will, then think very carefully about it. There are various legal requirements for a handwritten Will (also known as a ‘holograph’ Will).

For instance, it must be signed by the Testator (the person making the Will) in the presence of two witnesses. These witnesses must also sign the Will in the presence of the Testator. Furthermore, the Testator must understand that in doing this, they are creating a Will. So it needs to be a clear and final expression of intention about where assets should go upon your death.

That’s not always as easy as it sounds…

  1. Mind your language

For the Will to be legal, the correct language and terminology needs to be used. What might seem obvious to you might not be evident in the eyes of the law. And if you do it yourself, you’ll not know that until it’s too late, when the Will gets read, after your death.

Which leads us on to…

  1. Avoiding Disputed Wills

You don’t want your Will to be disputed after you die. But there are some common instances that lead to a Will being challenged:

  • Changing family structures which often include unmarried couples living together and second families
  • An ageing population and the increased risk of mental health and dementia
  • Rising property values resulting in a growing number of estates worth contesting
  • An increase in the number of people leaving money to charities.

A Will can be overruled following a challenge. Whether it is or it is not overturned, such disagreements about inheritance are usually devastating for those left behind, and often very expensive to resolve.

A carefully drafted Will would avoid this heartache…

  1. And finally, that most hated penalty, Inheritance tax

When you make a Will you’ll want to make sure that your beneficiaries don’t pay any more Inheritance Tax than they have to.

There are many ways to limit your liability, but unless you are an expert in this area, your beneficiaries could end up paying the taxman far more than is necessary.

Advice on how to distribute your assets in your Will can make the most of allowances and protect any vulnerable beneficiaries…

Talk to us about your Will. We are experts and can help you through the process. Call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Are you a Homeowner? Concerned about Inheritance Tax? Read on…

Holding your properties as tenants in common is a simple change to the way your property or properties are held which can save you thousands of pounds.

But what does this mean? This article aims to explain the legal terminology of tenants in common in plain English and how it could benefit you.

How tenants in common works
Most couples own their homes as joint tenants, meaning they both own the whole home. Holding the property as tenants in common means that each owns a share of the property, either a percentage or half each. This protects the agreed share for couples who have put unequal deposits into a property. If parents are gifting deposits to their children, it is also a way of easing fears in case of a break-up or death.

In the case of tenants in common, one partner can leave their share of the property on death whilst allowing the other partner to continue living there, passing the remaining share on death. It can also prevent your home being sold in the event you need to go into long term care.

Tax implications
There is no Inheritance Tax (IHT) for assets left in a Will to their spouse – in other words the surviving partner doesn’t have to pay IHT. After the remaining partner dies, the beneficiaries of their estate, usually the children, do have to pay IHT.

The rising cost of houses means that one property alone can put the estate over the IHT threshold. If the house is owned as joint tenants, both own the whole property. If one partner dies, the other automatically becomes the sole owner of the home. In the case of tenants in common each person owns a share of the house, usually split half and half.

Joint owners can split their home in two, therefore benefiting from tenants in common. By doing so, the half belonging to the person who passes away first, would be inherited by the beneficiaries immediately.

Provided the half is worth less than £325,000 – the current IHT threshold, no tax will be due. When the remaining partner dies, their half, inherited by the same children, could be under the threshold which again would mean no IHT is due.

Making it happen
You’ll need to inform Land Registry of the split and also write to each other to specify your intentions of the split.

As providers of Wills, Lasting Powers of Attorney and Trusts we can take care of all of this on your behalf. For further information or to arrange an appointment please call one of our expert team at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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Back To School…

Whether you sent your pride and joy to school for the first time this September, or they’re into their second, third or fourth year, most parents feel a flutter of apprehension when letting go of their hand on the first day.

Doing everything to protect your child comes naturally. From planning a safe route for your kids to get to or from school and ensuring they know the green cross code to protecting them from bullying.

Protection comes in many shapes and forms. At this time of year, once they are safely in school, now is the time to make sure they are protected should something happen to you.

24,000 children a year experience the death of a parent according to charity Winston’s Wish.
Did you know that if both of a child’s parents die and there’s no valid Will and therefore no appointed guardian, children could be put in foster care until the courts decide who they should live with?

Added to which, most of us don’t live in the nuclear family of the past which adds additional complications.

Making a Will allows you to:

  • Decide who will take care of your children should something happen to you
  • Make it known how, and where, your children should be educated
  • Ensure that there won’t be any family disputes or court battles over who takes care of your children
  • Plus, any other wishes you have from what they eat to what they should receive as pocket money….

As parents, we all want the best for our children, and this is probably one of the easiest ways of protecting them. Making a Will also costs less than you may think. To discuss writing a Will speak to one of our expert team at legalmatters by calling 01243 216900 or email us at info@legalmatters.co.uk.

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Cryptocurrency and your Will

How will cryptocurrencies affect inheritances?

Cryptocurrency is, in the most basic terms, an alternative digital currency to traditional government-issued currency. A recent survey by Dalia revealed that 5% of the UK are planning to buy cryptocurrency in the next six months, with 9% already owning cryptocurrency. Experts even predict that 33% of millennials will own some form of cryptocurrency by the end of this year.

The question is – with more people investing in cryptocurrency, how will it affect inheritance when these people die?

Firstly, it’s important to learn which types of cryptocurrencies are currently the most popular. Here are some of the most common forms of cryptocurrency and their codes:

  • Bitcoin (BTC)
  • Litecoin (LTC)
  • Ripple (XRP)
  • Ethereum (ETH)
  • Zcash (EC)
  • Monero (XMR)

Make sure you provide wallet keys in your Will
It’s essential to tell you future beneficiaries you have invested in cryptocurrency and to list the details of your cryptocurrency wallet in your Will. This is because it’s purchased under a pseudonym and can be very hard to trace if your beneficiaries don’t have the wallet details. By providing your public and private keys in your Will, you’re making it much easier for your beneficiaries to access the wallet. Some cryptocurrency providers have policies in place to transfer any cryptocurrency to beneficiaries or next of kin, though at the moment they are hesitant to have these crucial conversations for fear of fraudster activity.

Cryptocurrency is an intangible asset and eligible for Inheritance Tax
HMRC now treats cryptocurrencies as any other currency – so it’s not exempt from Inheritance Tax and should be listed on your Will. Cryptocurrency is one of the fastest growing currencies in value, so it’s important to keep track of how much your cryptocurrency fluctuates over time. The current standard exemption threshold for Inheritance Tax is £325,000. For example, if you have £100,000 in Bitcoin in 2018, it may grow to £400,000 by the time you die. If this is the case, your beneficiaries will need to pay a 40% Inheritance Tax rate on the £75,000 that exceeds the threshold.

For help with this, or on any aspect of Will writing, please give us a call at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk for further details.

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Aretha Franklin

‘The Franklin trap’

Aretha Franklin died last week, and it has come to light that she did not have a Will, despite having an estimated fortune of over $80 million.

So, here’s a song title challenge for you – see how many you can spot!

Dying without a valid Will is no joke so I would say a little prayer for Aretha’s family and don’t keep daydreaming on that freeway of love, and do the responsible thing and think about getting a Will in place.  Dying without a Will ain’t no way to respect your family, making them look like a ship of fools.  Would they be willing to forgive you if your Will isn’t in place and rock steady.

So call me, Lucy at legalmatters on 01243 216900, to get your Will sorted in these ever changing times.

Remember, have R-E-S-P-E-C-T, and come and make your Will with me!

civil partnerships and estate planning

6 ways civil partnerships affect estate planning…

Civil partnerships were reserved for same sex couples only. However, in recent years, opposite sex couples have been campaigning for civil partnerships for heterosexual couples. The Supreme Court of England and Wales ruled in favour of civil partnerships for all, as the Civil Partnership Act 2004 was seen as an infringement of the European Convention of Human Rights. The legislation will be changed, though this is thought to take some time.

So how does a civil partnership affect estate planning? Firstly, it’s important to determine what ‘estate planning’ actually is. Your estate covers everything you own including property, finances, material possessions and even your social media accounts. An estate plan is how you wish to distribute your assets and possessions among your loved ones.

Here are six ways a civil partnership changes estate planning for all couples:

  1. If you die without making a will your partner will still inherit your assets

If you’re in a civil partnership and you die intestate (without making a Will) then your partner will automatically inherit a portion, or all, of your property. For example. if you and your partner own and live in a house together, they will stand to automatically inherit it after you die  – unless there are special circumstances.

  1. If you die having made a valid will your wishes will be carried out

If you or your partner dies after making a valid Will, then all wishes will be carried out as they would be for a Will from a marriage. For example, if you want to pass down your home to your partner and your holiday home to your children then the wishes will be carried out as specified.

  1. Civil partners are exempt from Inheritance Tax

Neither you nor your partner will pay Inheritance Tax if the value of your entire estate is below £325,000. You will also be exempt from Inheritance Tax if you leave all your estate to your civil partner, community sports club or a charity.

  1. The Inheritance Tax increases to £450,000 if children are the heirs

If you want to leave your property to your birth children, the Inheritance Tax exemption threshold increases to £450,000. This also extends to foster, adopted and stepchildren.

  1. You can add surplus Inheritance Tax threshold to your partner’s threshold

If your estate is under the threshold, the ‘unused’ threshold can be added to your partner’s threshold when they pass away. This pushes the maximum Inheritance Tax threshold to £900,000.

  1. You can pay a reduced Inheritance Tax rate in some circumstances

The standard rate for Inheritance Tax is 40% but you can reduce it to 36% if at least 10% of your net assets are left to charity in the Will. If you and your partner owned farmland or woodland you may be eligible for Agricultural Relief on your Inheritance Tax bill.

Estate planning can look complicated. If you’d like some help in writing your Will, contact one of the team at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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Understanding Inheritance Tax

Most over 50s don’t understand Inheritance Tax…

According to the latest research, the majority of over-50s don’t understand essential Inheritance Tax terminology. Furthermore, this lack of financial education could result in them passing on less than they expect.

The research, from Alan Boswell Group, found that of the over-50s surveyed:

  • Fewer than 30% understood key Inheritance Tax terminology
  • Only 27% were able to correctly identify that ‘nil-rate band’ referred to the threshold at which an estate became liable to Inheritance Tax and that this threshold is set at £325,000
  • Only 44% were aware that the current rate of Inheritance Tax was 40%.

With the Government announcing record Inheritance Tax receipts of over £5bn in 2017/18 (that’s an increase of over 50% since 2014), there are fears that people could be failing to minimise their tax liability correctly.

Rising property prices are impacting Inheritance Tax liability

An increase in property prices across the UK has meant that more and more people are now liable for Inheritance Tax.

Since 2009, the tax has been set at 40% on all assets over the £325,000 threshold; despite the fact that house prices have rocketed over the past ten years. What this means is that Inheritance Tax now hits an increasing number of estates. Before 2009, the threshold was set each year to reflect inflation and rises in overall asset prices.

As such, it’s perhaps no surprise that forecasts from the Office for Budget Responsibility (OBR) show that the number of estates on which Inheritance Tax is paid has more than quadrupled over the last seven years.

It’s also important to note the introduction of the residence nil-rate band (RNRB) last year, providing an additional inheritance tax allowance for individuals who leave their main residence to lineal descendants.

The additional allowance is to be brought in gradually, increasing by £25,000 on an annual basis. The amount began at £100,000 in 2017/18 and eventually grow to £175,000 in 2020/21.

In total, as this is on top of the current threshold, this amounts to an allowance of £1 million for a couple.

The problem facing the over-50s

With Inheritance Tax affecting more people than ever before, it is vital that the over-50s are fully informed about this topic. Worryingly, however, the latest research shows that this is not the case. As a result, it is likely that families will lose out while the Government benefits.

But there are ways to reduce a person’s Inheritance Tax liability (e.g. by using ISAs, a deed of variation, discretionary will trusts, etc.). So, it is vital that careful and professional estate planning is carried out to ensure assets are left to family members rather than the taxman.

To find out how you can pass on your estate in a tax-efficient way, speak to one of our expert team at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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Lovely testimonial

Lovely testimonial…

We all love to receive affirmation of our kindnesses. With some people it really isn’t hard to be nice. Take this lady – Jean – who we helped with a recent legal matter. She sent us the most lovely letter, thanking us for the advice and support we’d given her in the last few weeks. She added:

“It made me feel secure and cared for.”

And that’s what we aim to do. Give good advice in a supportive and caring manner. And we hope Jean will join us soon for a cup of tea and a piece of cake.

Pitfalls of DIY Wills

The pitfalls of DIY Wills…

Latest figures reveal only 59% of the UK have written a Will. Of those people, 6% have written a DIY Will. While there are some advantages to create-your-own Wills, there are even more pitfalls. Here, we explore some of the reasons why DIY Wills may not be the answer…

Whilst most of us have come across DIY Will kits or online Will creation websites, have you ever asked yourself “are DIY Wills legal?” The short answer is yes, although they must still meet all requirements of a professionally written Will.

A DIY Will kit doesn’t provide sufficient help and guidance for the more complex circumstances in your life. This includes, for example, if you aren’t married to your partner, have children from a previous relationship or hold an inheritance in a trust until a child’s 18th birthday. Using the services of a Will writing professional means you have access to all the assistance you need, greatly reducing the risk of mistakes in your Will.

Although a DIY Will may cut costs initially, it could cost you in the long-term. All Wills must be written using the correct terms and language, as well as ‘witnessed’ by the right people. If this isn’t done properly, then the Will is invalid and could cost your heirs their estate, or money intended for them. Hiring a Will writing professional helps you to avoid this pitfall; a well-written Will is more robust when faced with any potential objections.

Even if your Will is still valid, there’s a bigger chance that distributing assets to your heirs could take a lot longer than usual. This can come with additional fees and, in some cases, unnecessary tax. According to the Co-operative Legal Services (CLS), 38,000 families a year experience prolonged probate ordeals for poorly written DIY Wills.

What’s more, up to 10% of your estate could be subjected to unnecessary fees if your Will is ineffective. The average value of a person’s estate in the UK is currently £160,000 – so this could incur costs of up to £16,000, a cost which could be avoided if a Will writing professional was used.

It’s also worth thinking about what could happen if your circumstances change during your lifetime. For example, if you get married, have children or grandchildren, someone named in your Will passes away or if your financial situation changes then your Will also needs to be altered. Significant changes to your Will means you’ll need a new one, whereas smaller changes call for a codicil (a document that allows you to make minor adjustments to your Will).

It can be daunting to make these changes, especially if you’re already going through a stressful time due to a death in the family, a divorce or financial issues. Calling on the help of a Will writer can greatly reduce stress and the worry of whether or not your Will has been rewritten correctly.

For help and advice on the potential pitfalls of DIY Wills, speak to one of the team at legalmatters today. Call us on 01243 216900 or email us at info@legalmatters.co.uk.

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