20th May 2021
Are you considering writing a Will? Do you have children and want to ensure their care? Do you have a business or assets that you wish to retain control of? We all want to leave our affairs in order so that our loved ones do not struggle to administer our estates while they are grieving.
The concern is often where to begin when you decide to have a Will drafted for you. What tax considerations there are? Who oversees the assets, receives them, pays taxes if the estate is taxable and distributes your estate?
If you die without a Will, your loved ones will not know your wishes. If your wishes are written down in a generic document, they can be disputed which could escalate to legal action. Family relationships may suffer as your loved ones are left trying to interpret what your intentions were.
What Is A Will?
A Will is a legal document which gives away a person’s estate after they pass away. To legally create a Will, you must be 18 years of age. It states who will benefit from your estate when creating a Will, it is essential to recognise that one’s spouse does not automatically inherit everything. In addition, unmarried partners are not legally recognised although they have a claim against the estate of the loved one that has died.
Your Will needs to be protected and safely stored. Only the original Will is a legal document. A copy can be admitted by the Probate Registry but you have to follow certain rules which makes it complicated and expensive.
Components Of A Will
When you are ready to give instructions for your Will to be drafted, it is essential that you understand the different elements that will make up the Will. Here are the four main features.
You will appoint an executor who will administer your estate when you pass away.
You choose who will benefit from your Will. Your Will must identify who receives which assets as well as the method of distribution. They can be outright or through a trust.
Legally the final document needs to be witnessed by two people who are not the beneficiaries. If a beneficiary is a witness, their gift under your Will will fail.
Do not make any amendments on the face of the Will because they will not be accepted by the Probate Registry. Make an appointment with your Solicitor and let them know what changes you would like made. They will produce a new Will for you to sign and make sure that it is valid.
Tax Planning When Writing A Will
When writing a Will, it is essential to see a Solicitor so that they can advise you whether your estate will be subject to inheritance tax.
Gifts given to your beneficiaries can be exempt from inheritance tax if you survive the gift by 7 years. Special 14 year rules apply in certain circumstances. Contact us for more information.
Consulting with a tax consultant will ensure that you obtain the best advice as to what exemptions are available to you.
Establishing a trust when writing your Will can save potential taxes that may be due to the estate. With a trust, ownership transfer occurs while still retaining some level of control. Trusts are a great way to leave assets to children and grandchildren.
Life Insurance and Pensions
Considerations when making a Will are life insurance and pensions. Speak to your pension Advisor or Financial Advisor so that they make sure that you have nominated beneficiaries who will benefit so that they pass outside your estate.
Donations to legitimate charities help to reduce the tax burden to your beneficiaries because they are exempt.
What Is Inheritance Tax?
Inheritance taxes are paid if a person’s estate is over the threshold.
When writing a Will, you also need to consider the tax consequences of your estate at the date of your death.
The tax deadline in the UK is six months after the end of the month when the person died.
How To Plan For Inheritance Tax
Potential exemptions can occur for gifts in the previous seven years before a person dies. Different periods may require a calculation based on a sliding scale.
Legal consultation can help determine if inheritance tax, capital gains taxes, or other taxes are due. Additionally, seek professional guidance on life insurance and pension funds. Donating to charity is free from inheritance tax in the UK as well as many other areas.
Creating a Trust can help reduce or eliminate the burden of inheritance tax. The amount of tax due could be a fraction of the tax burden without a trust.
It’s No Secret That You Need a Will
To ensure your estate is taken care of promptly, a Will or trust is the best course of action. Your loved ones will be able to handle your last wishes with ease when they are outlined clearly and tax preparations are accounted for.
Elizabeth Middleton Solicitors are at the ready with an excellent staff to assist you with your estate planning needs. Contact us for more information about assistance with your will, as well as your other legal needs for probate, lasting powers of attorney, equity release, and settlement agreements.