A reflection on the importance of setting up your ‘Will’ correctly
On the 19th. September 2022 the country stood still whilst we all paid our respects to Her Majesty the Queen and said our final goodbye’s during her state funeral. Queen Elizabeth’s II reign was steadfast and for seventy years she was a beacon of light that many of us thought would never go out. But ‘ go out’ it did, just as all life must. That is the nature of our existence and is what makes life so precious. As parents and grandparents we know how precious our lives are but we regard the lives of our children and grandchildren on a totally higher plane. This is why we wanted to share some of our insight in to the intricacies of setting up a will that will help you and your loved ones.
Often clients come to us after they have started a discussion with their solicitor about updating their Will. It is equally as important to consider your Will after making investment decisions, particularly if you believe your Estate exceeds the current Nil rate band (s) for Inheritance Tax.
Firstly you must consider if your Estate will have sufficient cash to pay any Inheritance tax. We often find that, on second death of a couple, there is limited cash, with the majority of the Estate tied up in property values. The Executors must pay any Inheritance tax prior to receiving Grant of Probate. If the Estate includes a high value property then that cannot be sold until Grant of Probate is issued and they are stuck in a vicious circle, leading them to borrow in order to pay any tax liability. Consideration should be given to the potential liability during their lifetime.
Secondly if your Estate contains assets which qualify for Business or Agricultural relief then matters can be further complicated. Take the example of a client who leaves 50% of their Estate to their spouse, 40% to children and 10% to Charirty. If the Estate contains exempt assets, such as a parcel of agricultural land, then 50% of the value is being passed to the surviving spouse. On first death any transfer between spouses are exempt therefore the transfer of an exempt asset to an exempt spouse is a waste of the relief. It would be beneficial to pass the exempt asset to the children to ensure no Inheritance tax is paid on that value.
Another scenario which needs careful planning is where specific gifts are left in a Will. For example if a specific amount of cash if left to a named beneficiary and any balance if left proportionally to other beneficiaries, as cash is spent in retirement these gifts must be reconsidered. As an example an Estate has £50,000 with a legacy of £10,000 to a daughter and the balance spilt equally between 5 grandchildren. As a result of care home fees there on death there is only £15,000 cash. The legacy being left to the grandchildren is then considerably smaller than originally planned.
All these elements form part of our financial planning discussions with our clients and we would be happy to have a chat through this with you. We are also happy to join in conversations with your solicitor to ensure all angles have been considered.
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