Wills and estate planning

Making a Will that's right for you

Keep it in the family: pension death benefits

We all hope to enjoy the fruits of our labour in retirement having spent our working lives paying into the pension pot.

Few of us take any action to protect our family nest egg from the clutches of the taxman should we pass away prematurely.

This is partly because no-one likes to think they might die before their time or considers the implications this may have for the loved-ones left behind. In addition, most people think their pension plans “belong“ to them. But for tax and estate planning purposes they don’t - they are owned by trustees.

Death-in-Service Nominations

A company death-in-service scheme may provide you with valuable life insurance cover at no cost, or you may have to pay the premium yourself (usually at a cheap group rate), and you may have the option to top-up the cover to meet personal/family needs beyond the minimum provided by the company.

Home Loan ‘Double Trust’ Schemes - double trouble ahead?

In the 1990s a number of Inheritance Tax schemes emerged as property prices soared, designed to allow house owners to give the family home to the children, but carry on living there without offending the ‘gift with reservation’ rules. POAT (pre-owned asset tax) was announced in 2003 to discourage such schemes by imposing a new income tax charge on the value of the benefit from 6 April 2005.

Do you need to sort out your IHT & Succession Planning?

Many of our clients ask a little vaguely about “sorting out Wills/Inheritance Tax”. In some cases this simply means reviewing an existing Will or making a new one. However, more often than not the exercise turns out to include reviewing life policies and pension plans, and Inheritance Tax (IHT) planning as well. In fact trying to make a Will without integrating life policy and pension death benefits, and understanding the IHT implications, can lead to some unfortunate tax consequences.

Give your holiday home to the children and save IHT?

Many parents pass their holiday home on to the children as they get older, either directly or via a Trust. This can be a good long term Inheritance Tax (IHT) planning ploy, but has serious “gift with reservation” risks to be managed if the parents want to carry on using it. There can be Capital Gains Tax (CGT) problems as well.

The overall tax position can be even more complex where the property is also offered as a Furnished Holiday Let, although on the whole this will make the IHT planning safer. This requires keeping accurate accounts and care with your tax returns.

Keeping your affairs in order. Have you left adequate instructions for your Executors?

Even if you do review your Will regularly, have you worked out a way of leaving adequate instructions for your Executors, particularly if they are not immediate family but friends or professionals? If not we suggest you should, as the cost of sorting things out could be significantly increased. Why not contact us for guidance?

While your heirs may not have the same taste in music as you, inability to access records kept on computer can be a problem.

Inheritance tax relief on gifts to charity

With effect from April 2012 there will be a new Inheritance Tax (IHT) relief to encourage gifts to charity. The proposal, introduced by the 2011 budget, is intended to reduce the rate of IHT payable on estates from 40% to 36% if 10% of the taxable estate passes to charity. The relief will only apply on death – not on lifetime gifts.

Charities who are seeking to attract legacies should be alerting donors to the new rules now, in the hope of boosting philanthropy, as is the intention, without greatly reducing the family’s inheritance.

Protecting Personal Data

The DPA provides that certain conditions must be met before personal can be held, used or disclosed, or dealt with in any way.  The easiest and safest way to meet these conditions is to obtain consent.  But consent must be “freely given, specific and informed”, and it cannot be inferred from a failure to respond to a general communication.  In some cases the consent must be expressly given, eg in relation to sensitive personal data or transfer to a non-EEA country.  In any event the consequences of not consenting have always to be clear.

Next of Kin & Human Rights

The phrase ‘next of kin’ crops up in daily life in two contexts. One is medical – hospitals want to know (I suppose in case they kill you) - and the other legal, when identifying your heirs and successors if you do die under the knife, or from neglect in a busy hospital ward. So what does the phrase mean and what is the difference (if any) in these medical and legal contexts?

Less obviously, what might your human rights as a European have to do with it?


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