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Wills, Trusts & Probate

Nearly half of adults have not had the “difficult conversation” about finances on death

Nearly half of adults have not had the “difficult conversation” about finances on death

Almost half of Brits who have a parent, guardian or partner have not had the “difficult conversation” about finances on death, a major study has revealed.

The finding – which forms part of new inheritance whitepaper, Wills and financial planning – it’s time to talk – suggests that millions of families could be left vulnerable to the laws of intestacy or lengthy probate battles in the event of an unexpected accident or illness.

Published by investment firm Ampla Finance, the survey of 2,165 adults reveals that almost one in two (44 per cent) Brits have not tackled the “difficult conversation” with family members around financial arrangements following their death.

In addition, almost nine in 10 (89 per cent) adults say they know nothing about their parents’ wider financial situation – such as if they have credit card debt or outstanding loans.

The research also reveals that just one in 10 (11 per cent) Brits “have enough understanding” about the probate process to complete it, despite just 14 per cent of families having appointed a solicitor.

Furthermore, just 12 per cent of respondents said they were encouraged to review their Will or funeral arrangements as a result of the coronavirus pandemic.

The study comes as the significance of family inheritance shifts. While a gift left in a Will used to be considered a “windfall” or “bonus”, almost three in five (57 per cent) adults now see inheritance as a “key financial pillar” and will use it to pay bills, clear personal debt or help fund a house deposit.

Commenting on the paper, Steve Gauke, Director of Business Development at Ampla Finance, said the survey “highlights a widespread lack of awareness around family finances and the probate process”.

“The UK probate system is notoriously complicated and increasingly slow moving,” he said.

“The lack of knowledge around its workings evidenced in this white paper shows this can catch many people out. Unforeseen delays can badly impact a family’s financial planning, so we need greater education around probate.

“We need to encourage a frank conversation on family finances, even though we know it’s difficult.”

Donna Smy, a Department Director with Palmers who specialises in Wills and trusts, said: “Having an open and frank conversation with your family and intended beneficiaries is not only extremely important but can actually provide peace of mind as it takes away a great deal of uncertainty, providing reassurance that potential money worries have been properly considered.

“There are a number of tax efficient steps that can be taken, providing that plans are put in place in good time; including trusts which can help protect your legacy and ensure your loved ones are financially taken care of.”

To find out more about trusts or to discuss making a Will, please get in touch with us.

Own a home or business interests in the EU? Now is the time to review your Will

Own a home or business interests in the EU? Now is the time to review your Will

As post-Brexit changes continue to touch upon many areas of our lives, one area which has seen relatively little impact has been Wills and Probate.

The status quo continues to exist because the UK did not sign-up for the Brussels IV Regulation in 2012, which was designed to unify succession processes throughout the bloc.

However, the existing rules only apply to ‘moveable assets’ – typically money and investments held in the EU.

Laura Stock, a Senior Associate with Palmers who specialises in Wills, said: “Whilst a UK Will can apply to movable assets in the EU and indeed around the world, any immoveable assets held overseas – such as homes and businesses – will not normally be covered by a UK Will.

“This is one point where Brexit has had some impact – previously, Brussels IV allowed for England jurisdictional law to be specified in an English law clause in their Will.

“Now, local succession laws will apply and they can be significantly different from the UK’s. France’s succession laws, for example, contain the concept of ‘forced heirship’, which requires part of the estate to be passed to a person’s children, even if they are survived by their spouse.

“In situations where UK nationals own immoveable assets, for example an interest in an EU company or a holiday home abroad, it is sensible to take expert legal advice. Depending on the country concerned, it may be a prudent for a local Will to be set up too.”

For advice on Wills including a review of your international assets, please get in touch with us.

Thinking of leaving a gift to charity in your Will? Here’s what you need to know

Thinking of leaving a gift to charity in your Will? Here’s what you need to know

More people than ever are giving to charity in their Will to mitigate their Inheritance Tax bill, a major study has revealed.

The research, published by a national legal services firm, shows that there has been a 61 per cent increase in charitable bequests, with almost one in three Will writers now leaving a gift in their final wishes.

But why are more people donating to charity in their Will? Here, Helen Jago, a Department Director with Palmers Solicitors who specialises in Wills and Probate, explains:

What are Charitable Legacies?

Charitable legacies are a donation to a charity in your Will. The gift can range from cash to property and investments or a percentage or share of the balance of your estate once all other payments have been made.

While many charities rely on legacy giving, there is still a large proportion of the nation that does not know that a gift can be left to charity in a Will.

Why are Charitable Legacies increasing?

The coronavirus pandemic, combined with rising house prices and the threat of large Inheritance Tax bills, have forced many to think about later life planning.

The latest statistics reveal that average house prices in the UK increased by 8.6 per cent in the year to February 2021 – tipping many estates into the IHT “danger zone”. And over the next five years, thousands more estates could fall into the tax-paying bracket.

What are the benefits of charitable giving in your Will?

While supporting a meaningful cause, legacy giving also helps families mitigate Inheritance Tax.

Charitable legacies are currently free of Inheritance tax so your chosen Charity can benefit from a tax free lump sum reducing your overall inheritance tax bill.

If a minimum proportion of your estate is left to Charity- normally 10% of the estate (although the calculation can be complex) – the rate on which Inheritance Tax is paid on your taxable estate will reduce from 40% to 36%.

How can I leave a gift to charity in my Will?

Our expert team can help you leave a gift to charity in your Will. For support and advice, please contact us.

Life Interest Trusts – why you should consider setting one up when making a Will

Life Interest Trusts – why you should consider setting one up when making a Will

When making a Will, people typically think about how they can ensure their hard earned assets are passed on to loved ones to provide them with financial security.

However, you may be unaware that there is a way of setting up a Will which protects your assets for the ultimate benefit of your children, whilst taking care of the immediate needs of your surviving spouse.

Here, Helen Jago, a Director with Palmers Solicitors, explains how including a Life Interest Trust in your Will can be beneficial:

 What is a Life Interest Trust?                       

This type of trust allows the person making the Will – known as the ‘testator’ – to grant someone a right to benefit from a certain asset, or their whole estate, for life. The benefit might take the form of rent free occupation of a property or income from invested capital. When the individual named in the Life Interest Trust dies, the assets ultimately pass to another person or people named in the original testator’s Will.

Here is an example which demonstrates how this type of trust works:

John has children from a previous relationship and is keen to ensure that they are financially provided for in the future. He marries Mary. John sets up a Life Interest Trust within his Will.

This makes provision, after John dies, for Mary to live in their house rent-free for the rest of her life. She will carry on paying the bills and outgoings.  She can move if she wants to and obtain the rental income if it is rented out. 

If Mary becomes frail and needs to go into residential care, the estate’s assets are ring-fenced. Ultimately, when Mary dies the house will pass to John’s children.

There are a number of benefits to setting up a Life Interest Trust, including:

  • To protect against a spouse remarrying and disinheriting the Testator’s children
  • To protect the inheritance intended for children from previous relationships
  • To protect against the first spouse to die’s share of the assets being used for the survivor’s care fees
  • To protect against the possible bankruptcy of the survivor

However, a Life Interest Trust isn’t an option for everyone. There can be a number of potential complications including where there is a mortgage over the property and insufficient funds in the estate to pay off the mortgage

In summary, Life Interest Trusts can be an extremely useful way of safeguarding assets for your children. They can also provide protection against bankruptcy, and protect against the surviving spouse’s potential care fees.

However, careful consideration needs to be given to your individual circumstances to ensure that a Life Interest Trust is right for you.

To find out more about Life Interest Trusts or to discuss making a Will, please get in touch with us.

High Court rules father’s DIY Will is invalid

High Court rules father’s DIY Will is invalid

A High Court judge has ruled that a father’s ‘DIY’ deathbed Will that disinherited his daughter was invalid, handing her the entire estate.

Three days after William Tibbles died aged 75 three years ago, a DIY Will on a piece of paper “torn from a notebook” was handed to his solicitors, leaving his estate to his daughters Kelly, Susan and Cindy and Son, Paul.

A Will drafted a year earlier had left the entire estate to Mr Tibbles’ other daughter, Terri, with a letter of wishes attached describing Kelly, Susan and Cindy as being a “disappointment” and Paul as being financially secure and not in need of an inheritance.

While Paul Tibbles – the executor of the disputed DIY Will – claimed his father had signed the Will five days before he died, Judge Matthew Marsh found in favour of his sister who claimed a DIY Will would have been “uncharacteristic” given her father had previously used solicitors to draft his Wills.

According to the judge, evidence from a handwriting specialist that there was “moderate to strong evidence to show that Mr Tibbles was not responsible for signing the 2018 Will”, had proven crucial.

He said evidence was lacking as to “who wrote the Will and whether it was written at Mr Tibbles’ dictation, who was present when that occurred and what his state of mind was at the time”.

He said: “There’s no real explanation for his change of mind and no evidence about him signing it.”

The judge ruled that the previous Will should stand, leaving the £300,000 estate to Terri.

Erin Duffy, an Associate with Palmers Solicitors who specialises in Will disputes, said: “Making a Will is not particularly time-consuming but it can be more complicated than some people may imagine.

“That’s why it is important to seek professional legal advice rather than leaving it to chance or making a ‘home-made’ Will.

“Ensuring that you have a valid and up to date Will is essential to avoid any issues further down the line and to give you peace of mind that your inheritance will be passed to your chosen beneficiaries.”

For help and advice on matters relating to Wills, inheritance and estate planning, please contact our expert team.

Are you up to speed with the seven-year Inheritance Tax rule?

Are you up to speed with the seven-year Inheritance Tax rule?

Inheritance Tax is a complicated subject and gifts are a particular source of confusion.

Whether it’s for Christmas, a wedding, or any other special occasion, small gifts are commonly exchanged throughout a person’s life.

But few people are aware that large gifts could attract tax should the benefactor die within seven years of the date the gift was made.

Here, Laura Stock, a Senior Associate with Palmers Solicitors, who specialises in Inheritance Tax matters, explains why it is important to understand how the seven year rule could affect your estate:

“Under the “annual exemption” rule, you can give away up to £3,000 worth of gifts each tax year (spanning 06 April to 05 April) without them being added to the total value of your estate. Any unused annual exemption can be carried forward, but for one year only,” said Tim.

“In addition, you can gift a wedding present of up to £1,000 per person (£2,500 for a grandchild or great-grandchild or £5,000 for a child) without attracting tax, as well as make tax-free traditional gifts, such as Christmas or birthday presents, out of your income, providing you can still maintain your standard of living.

“You can also give as many gifts of up to £250 per person per tax year, providing you have not used another exemption on the same person. Any gifts outside of these rules fall under the “seven-year rule”.

“This means that any gifts that do not qualify for relief, exceed your personal threshold, or are made within seven years of your death attract Inheritance Tax on a sliding scale known as taper relief.

“For example, if death occurs less than three years after a gift was made, Inheritance Tax is payable at a rate of 40%. At the other end of the scale, if the gift was made six years prior to death, a reduced rate of only 8% is due.”

Tim added: “It is also worth bearing in mind that some gifts to certain trusts, companies and close companies may be considered “chargeable lifetime gifts”.

“This means 20 per cent is payable immediately, with an extra 20 per cent payable if you die within seven years of making the gift.”

For help and advice with related matters, please get in touch with our expert later life planning team.