2016 will long be remembered as a year which saw a number of historically significant events take place, many of which will have long lasting implications both at home and abroad. While we will have to wait and see the full consequences of Brexit and the US Presidential race, there may also have been changes to your life which could immediately impact on the validity of your Will and any other estate planning documents that you have already created.
You should review your Will regularly to make sure it still reflects your wishes, such as adding or removing beneficiaries if you change your mind regarding who you wish to inherit your estate. You will also need to update your Will if you get married, enter a civil-partnership or get divorced as a Will is automatically cancelled by these events.
If you haven’t already written a Will, then you’re not alone; it is estimated that two-thirds of the British public haven’t prepared one. However, what you might not realise is that without one you have no say in what happens to your estate when you die.
Regardless of your age or health, it is important to plan ahead particularly if you own a property or have savings, investments, insurance policies or own a business. There are also numerous other benefits, from ensuring you leave an inheritance to family and friends, to potentially reducing the amount of Inheritance Tax that may be payable on your estate.
If you die without having made a Will, the rules of intestacy apply to your estate. These legal regulations will divide your estate in a pre-determined way and, regardless of whether you are married, in a civil-partnership or have step-children, could result in your assets being distributed to family members that you would not have chosen to inherit from your estate.
Planning for the future means looking after your loved ones after you’ve gone and ensuring they get the full benefit of your legacy. The UK’s older generation has seen their wealth grow by 45%* in the last decade, resulting in more money being passed on as inheritance to the younger generation than ever before. However, this increased wealth means executors are left dealing with complex financial circumstances and legal paperwork. This could see a large chunk of your estate going on professional fees, leaving less money for your loved ones. But it doesn’t have to be this way explains Christopher Jones, Sales & Marketing Director of Kings Court Trust.
“Kings Court Trust offers a modern, affordable alternative to the traditional approach, which translates into direct savings, often tens of thousands of pounds. We offer fixed fees and specialist help in supporting executors, every step of the way. Our fee is agreed at the start of the process and that doesn’t change, no matter what happens. We understand that dealing with a late relative or friend’s affairs is never easy, but the added stress of tax, spiralling fees and ensuring all the beneficiaries get what’s left to them can be a daunting task. At Kings Court Trust we focus on reaching a fast, satisfactory conclusion for everyone that ensures more money goes to the beneficiaries rather than being tied up in costly legal fees.”
Rising property prices means property is expected to account for over 70%* of the wealth transferred in the coming years. However, this increase in wealth will also see more families liable for Inheritance Tax (IHT). Currently, families can be liable for IHT on estates worth more than £325,000 (or £650,000 between spouses. £325,000 plus the transferable allowance). The good news is, from April 2017 the government introduced the Transferable Main Residence Allowance (TMRA), allowing families to pass on more of their property wealth tax-free.
Of course you can take steps now to minimise the amount of IHT tax your loved ones have to pay after you are gone. Legally, you can give away up to £3,000 ever tax year without it being liable for IHT, or larger amounts should the individual survive for 7 years or more after the gift has been given. In addition, you could make smaller financial gifts of up to £250 to as many people as you want, but each gift has to go to a different person to be IHT-free.
It’s not just beneficiaries who have to worry about IHT, as executors of a Will are responsible for a person’s legal and tax affairs after they’ve died. Whilst around 6 million people have experience of acting as the executor of a will, just 4% realise that they are legally responsible for the accurate distribution of the estate that is entrusted to them.
Many people don’t realise that as an executor of a Will they are responsible for administering the estate and they are accountable to HMRC and the beneficiaries. The process can lead to a daunting level of legal paperwork, tax calculations and tasks, including cancelling accounts, dealing with utilities and even re-homing pets. On top of possibly losing someone close to them, the executor may have to deal with all the assets and liabilities, but you don’t have to leave them to deal with all this stress alone
Christopher adds, “Kings Court Trust takes care of everything on behalf of the executor, ensuring your legacy is distributed as quickly as possible. We will look after all aspects of your estate, from dealing with your will and assets, to redirecting post and dealing with the tax or closing bank accounts and paying debts.
“Many people don’t realise that executors are personally liable for any mistakes made during the process, which is why professional support is so vital. Crucially, Kings Court Trust takes on the risk, so your executor and beneficiaries don’t have to worry and you know they won’t have any added stress at an already difficult time.”
*Source Kings Court Trust report conducted by The Centre for Economics and Business Research 2017
The Court of Protection decided an application made by the Office of the Public Guardian relating to 17 Lasting Power of Attorney applications.
Here are the main issues raised by the judgement:
1. A donor making a Lasting Power of Attorney can give any instruction saying when the appointment of their attorney will end. These are in addition to the existing events when an appointment ends that are: when an attorney dies, loses mental capacity, disclaims, becomes bankrupt or subject to a debt relief order and after a decree of divorce, dissolution or nullity (without an instruction to continue) when an attorney is the the donors spouse or civil partner.
2. A donor making a Lasting Power of Attorney can now give an instruction to specify the maintenance of: the donor's child of under 18 or their disabled child of any age, a child of the donors family under 18 or a disabled child of the donors family of any age.
3. A donor making a Lasting Power of Attorney can give any preference they wish provided that preference is not illegal. Any other preference is allowed as preferences are not enforceable.
4. A mistake or error which causes a confliction in the way an attorney is appointed to act means the Lasting Power of Attorney is not in the prescribed form and is invalid. These can be accidental or intentional errors, such as appointing attorneys to act by majority (majority rules basis) or where one attorney has the final say (lead basis).
5. A mistake or error on the life sustaining treatment page means the Lasting Power of Attorney for Health and Welfare is not in the prescribed form and is invalid. This page is treated very seriously by the Court as it can be used in life or death situations.
These points highlight the importance of using a power of attorney specialist when making a Lasting Power of Attorney.
More than 12 months after the death of the iconic musician Prince, his sister and five half-siblings have been declared his legal heirs by a District Judge in Minnesota.
Prince died at his home in April 2016, but he had not made a Will before his death. The singer was twice divorced and had no children or surviving parents.
His assets included properties and the rights to his music. Court filings estimate the estate to be worth approximately $200m (£153m), although half of that value is expected to be absorbed by taxes.
Following his death, more than 45 people filed claims to estate. Last July, a judge rejected claims by 29 people who argued that they were related to the musician and ordered genetic tests to be carried out on others. Similar tests had already been carried out to rule out the claim of a man in jail in Colorado who said he was Prince’s son.
Last week, it was ruled that Prince’s siblings will inherit his estate, however the judge also stated that those people denied the status of heirs must have time to appeal against the ruling. As a result, Prince's sister and five half-siblings must wait another year to get their share of the millions.
While the value of most estates will not reach into the hundreds of millions, it is important that people understand the benefits of planning ahead, regardless of age or health. It is hugely important to think about how you want your estate to be distributed should the worse happen as it could be the difference between it being shared amongst your loved ones in line with your wishes, or a potentially divisive and ugly family argument
Startling figures have revealed the attitudes of the over 55 age group towards writing a Will. The figures indicate a widespread ignorance of the importance of writing a Will and the risks of dying intestate.
Out of those who have not written a Will:
• 12% have children in their household
• 16% are separated or divorced
• 48% admit they 'haven't got round' to writing one
• 18% feel that they don't have anything of value to leave behind
• 34% were unaware that unmarried partners (regardless of length of relationship) are not entitled to anything in the event of a partner’s death
• 21% were unaware that if a person is separated from their spouse, but not divorced, they are still entitled to most (if not all) of the estate
• 60% were unaware that recipients of an intestate estate may have to pay more Inheritance Tax than if a Will was in place
• 88% believe that their assets would not be left to the right person under intestacy rules
These figures reveal that many people are unaware of the consequences of not writing a Will. If someone dies without a valid Will in place, intestacy rules dictate how their money, property or possessions should be distributed.
These legal regulations will divide the estate in a pre-determined way and, even if the person is married, in a civil-partnership or have step-children, assets may not automatically be distributed to the family members that expect to inherit them. If there are no surviving relatives who can inherit under the rules of intestacy, the estate passes to the Crown.
Estate administration specialists, Kings Court Trust, have commissioned an independent report which investigates the public’s attitude towards Wills and offers new and insightful findings about the Will writing industry in the UK.
Visit https://willwriting.kctrust.co.uk/ and download your free copy of the research report today.