Using a deed of variation to alter distribution of an estate

Posted by Rachel Conroy Dec 2nd, 2011, in Wills, Probate and Trusts

A Deed of Variation (sometimes called a Deed of Family Arrangement) enables the beneficiaries of a deceased person’s estate to alter the distribution of the estate.

A Deed of Variation (DOV) can be used by one beneficiary to redirect their share of the estate or by all of the beneficiaries jointly to alter the distribution of the entire estate.

The DOV must be completed within two years of the date of death and all of the beneficiaries who wish to vary the distribution of their gifts must be over the age of eighteen years and of sound mind.

If any of the beneficiaries are aged under the age of eighteen years it may still be possible to complete a DOV but an application will have to be made to the court for consent. (more…)

Tips for reducing inheritance tax

Posted by Rachel Conroy Jul 26th, 2011, in Wills, Probate and Trusts

Inheritance tax is a tax on the value of a person’s estate on death and on certain gifts made during their lifetime.

Inheritance tax is currently payable at a rate of 40 per cent if a person has assets worth over £325,000 at the date of their death. Here are our five top tips to reducing inheritance tax:

Review your will

Your solicitor will be able to advise you of the most tax efficient way to write your will.  This will ensure you make the most of any inheritance tax reliefs which are available in your particular circumstances.

Marry your partner

There are a number of inheritance tax reliefs that are available to gifts made on death to a spouse or civil partner. These exemptions are not available where you merely live together, regardless of how long you have lived together. (more…)

Changes to Inheritance Tax rates when making charity bequeaths

Posted by Rachel Conroy May 2nd, 2011, in Wills, Probate and Trusts

While there were no sweeping changes to Inheritance Tax announced in this year’s Budget, Chancellor George Osborne did reveal that from April 2012 the Inheritance tax rate would be cut from 40 per cent to 36 per cent where an individual leaves at least 10 per cent of their estate to charity.

This allowance is in addition to the exemption that already exists that means any gift to a charity is free of Inheritance Tax.

To give you an example of how this works in practice, consider the following example: (more…)

Why you shouldn’t take shortcuts with LPAs

Posted by Claire McCraith Apr 14th, 2011, in Wills, Probate and Trusts

While reading a recent issue of the Which? magazine I was intrigued to read an article on Lasting Powers of Attorney (LPA).

The article set out various advantages of making a LPA and encouraged the reader to make an LPA.

An LPA is a legal document which allows you to appoint a person, or people you trust, to look after your affairs should you ever be incapable, either physically or mentally, of doing so.  It can be restricted to your business affairs or it can include your personal affairs too.

While I fully agree with the many advantages of making an LPA the article discussed, I was concerned when it was suggested that forms could be downloaded from the internet for completion without professional advice. (more…)

Inheritance Tax: Transferable Nil Rate Bands explained

Posted by Rachel Conroy Mar 9th, 2011, in Wills, Probate and Trusts

Everyone has an allowance which they can leave free of Inheritance Tax on their deaths. This amount is referred to as the Nil Rate Band and is currently £325,000. Further, no tax is payable when an Estate is left to a spouse or civil partner.

The transferrable Nil Rate Band was introduced in the Finance Act 2008 and is available where someone has died on or after 9 October 2007, even if their spouse or civil partner died before this date.

Where a married couple leave everything to each other in their Wills it is now, not only exempt from Inheritance Tax but it means they have not used their own Nil Rate Band and it can be transferred to their surviving spouse or civil partner. Where there have been gifts to other family members or friends on the first death, which are below the Nil Rate Band, it is possible to transfer the unused part of the Nil Rate Band to surviving spouse or civil partner. (more…)

Current Inheritance Tax position

Posted by Claire McCraith Jun 17th, 2010, in Wills, Probate and Trusts

Alistair Darling’s last budget in April froze the Inheritance Tax Allowance (IHT) of £325,000 until 2015.  So should there be any inflation and/or should people’s estates increase in size, this will mean that more tax will be payable to the government.

Currently 40 per cent IHT is paid on an estate over £325,000. However, there is no tax payable when an estate is left to a spouse or civil partner and on the death of the surviving spouse or civil partner any unused IHT allowance can be claimed.  Therefore, for a married couple or registered civil partners the allowance is £650,000 before 40 per cent tax becomes payable.

For example, if we look at Mr & Mrs Smith.  Mr Smith dies and his estate consists of the following assets:

- Interest in house £200,000
- Bank accounts and investments £50,000
- Ferrari £120,000 
- Total estate passing to Mrs Smith is £370,000. 

There is no tax payable because his estate is passing to his spouse.

Mrs Smith dies a few years later and her estate is valued at £645,000. There will be no IHT payable.

Prior to the election the conservatives were saying that they would raise the IHT threshold to one million pounds, but the new coalition Government has indicated that Chancellor George Osborne will be leaving it as it is in his emergency budget on June 22^.

Why should you make a Lasting Power of Attorney

Posted by Communications Director May 4th, 2010, in Wills, Probate and Trusts

A Lasting Power of Attorney (LPA) is a legal document which allows you to appoint a person or people you trust to look after your affairs.  There are two types of LPA.  A Property and Affairs LPA allows you to appoint someone to look after your money and property and a Health and Welfare LPA allows you to choose someone to look after your health and welfare decisions. 

Both documents need to be made whilst you are still mentally capable.  A Property and Affairs LPA can be used by your attorney(s) whether you have mental capacity or not but a Health and Welfare LPA can only be used when you are not mentally capable of making your own decisions. 

Why everybody should make a Lasting Power of Attorney: 

- It allows you to choose who you want to look after your affairs if you can’t do so for yourself.  If you don’t make an LPA and you become unable to manage your affairs anyone can apply to take over. This person may not be who you would have chosen and the application is very expensive 

- A Property and Financial Affairs LPA can be used by your Attorneys to help you on a temporary or permanent basis whether you are physically or mentally unable to do something for yourself 

- It makes things easy for your chosen attorneys to help you to look after your money or to make the right decisions about your welfare needs 

- An LPA is good preparation for the future

Trust rate of income tax increases

Posted by Communications Director Apr 1st, 2010, in Wills, Probate and Trusts

Rachel Conroy, a Harrison Drury trusts’ expert, outlines the new trust rate of income tax that comes into place 6th April 2010.

From 6 April 2010 the trust rate of income tax increases by 10% to 42.5% for dividends and 50% for all other income.  

Trustees should consider:

1. Their investment policy – is income necessary or would investments producing capital growth rather than income be appropriate?  Capital Gains Tax would be charged on the increase in value when the investment was sold.  Capital Gains Tax is currently charged at a relatively low rate of 18% so this could result in a tax saving. (If this is to be considered appropriate investment advice should always be taken).

2. Which of the beneficiaries they choose to appoint income to.  If the trustees appoint income in favour of beneficiaries who pay no tax or pay tax at the lower rate the beneficiaries may then be able to reclaim some of the tax paid by the Trustees from HM Revenue & Customs.

3. Whether the trust is still necessary.  In some cases it may be appropriate to wind up the trust and appoint all of the funds to one or more of the beneficiaries. 

Please get in touch on 01772 258321 if you have any queries.

The Peter Sellers’ Trap

Posted by Claire McCraith Mar 15th, 2010, in Wills, Probate and Trusts

Don’t let what happened to Peter Sellers’ estate happen to your estate.
Peter Sellers died in 1980 aged 54.  A recent article in the Daily Telegraph stated that a newly discovered legal document suggested that Peter Sellers and his estranged wife Lynne Frederick (who had only been married for 2 years), had entered into a “marital settlement agreement” in which Lynne Frederick was only to have received £370,000 plus their Los Angeles home but, because Peter Sellers died prior to the Decree Absolute being granted and because he hadn’t altered his Will, Lynne Frederick inherited his entire estate of £4.5 million.  Peter Sellers’ three children from previous marriages received only £750 each.
Lynne Frederick died in 1994 and her estate (which largely consisted of Peter Sellers’ estate), went to her daughter who was not born until 4 years after Peter Sellers’ death.
So to avoid your estate ending up in a similar ‘Trap’ don’t delay in making alterations to your Will should your circumstances have changed.

When someone dies – What happens next?

Posted by Claire McCraith Aug 10th, 2009, in Wills, Probate and Trusts

I thought that it might be useful to outline briefly what happens when someone close to you has died.  The first question I am often asked is, “What happens next?” “What needs to be done?” (more…)