man and woman standing on grave with flower on tombstone

Do you know what would happen if you died without making a Will?

September 22, 2023November 22, 2023Leave a comment

If you are married or in a civil partnership, do you assume that everything would automatically pass to your spouse if you died without making a Will?

Well, that isn’t always the case – it completely depends on the value of the assets you are leaving as to where everything goes.

The amount that automatically passes to a spouse (where there are no children) increased in July of this year. It went up from £270,000 to £322,000. If you don’t have children your spouse would inherit everything, no matter what the value – but if you have children it would work like this:

The spouse would inherit £322,000 plus all personal possessions.

Whatever is left would be split – 50% would be divided equally between children and the other 50% would go to the spouse.

It could also cause an Inheritance Tax issue as only the amount passing to the spouse would be tax free at that stage. If the money going to children was over the Inheritance Tax threshold there would be tax to pay!

If you die without a Will and you don’t have a spouse, then everything would go to your children – and that may be what you would want, but it’s always easier to deal with an estate where there is a Will in place.

If you have no children and there are no grandchildren/great grandchildren, but a parent is still alive, everything would go up the line to them, but that could mean it gets taxed twice – once when it passes to them and once when they die as well (if both estates are above the tax-free threshold).

If your parents have already passed away, there are other relatives who could inherit. It
goes in this order –

siblings, and if any have passed – their children (nieces and nephews)
any half siblings, and if any have passed – their children
grandparents
aunts and uncles, and if any have passed – their children (cousins)
half aunts and uncles, and if any have passed – their children

If there are NO living relatives everything would go to the crown.

The bottom line is that it is always easiest for your family if you have set out your wishes in a legally valid Will. Make sure your assets don’t end up with family members you haven’t seen for years. You may prefer everything to go to charity if you have no close family/friends to leave everything to, but you can only do that if you specify it in a Will.

If you would like some help setting out your wishes in a Will, please contact us at A R K Lasting Powers & Wills – we’d be happy to help!

Email info@arkpowers.com or call 01438 746977

selective focus photo of terms and conditions written on a paper

‘Free’ Wills may not turn out to be free at all!

June 5, 2023June 5, 2023

When we see this offer advertised, our hearts sink (unless there is a charitable reason).

Will writing is our core business, we are specialists in the field and hold the relevant insurances and a Society of Trust and Estate Practitioners (STEP) qualification. Our fees are not extortionate, but they do cover a lot of work:

setting up an appointment
sometimes travelling to an appointment and the associated travel costs/time
carrying out the appointment (usually appointments last around an hour) and
offering advice and answering questions
sending follow up emails where appointments have been held remotely
drafting Wills and sending them to clients
liaising with clients regarding draft Wills and sending gentle reminders where
necessary
making amendments and then preparing final Wills and posting them/hand-
delivering them to clients
checking the way Wills are signed
sometimes placing them into storage

How long do you think that whole process takes? On average it is around 4 – 5 hours.

So why would any company doing the job properly give away all that time for free? They probably make shortcuts, and it will probably be a less personal service, and that is just the start…there must be something in it for that company to be offering something for free. The saying ‘If it seems too good to be true, it probably is’ springs to mind!

Is the person who is conducting the work qualified? Will you end up with a legally valid Will document if someone with no qualifications and/or little experience drafts your Will for you?

What is the core business of the company who are offering ‘free’ Wills? Are they Financial Advisors, Mortgage Consultants or Protection specialists – are they looking for Will clients who they can talk to about all their other services in the hope that they can make money that way? You may be fine with that, but be prepared to possibly be ‘sold to’ about other services etc.

Are they a company who offer ‘Probate Services’ and may try to persuade you to appoint them as executors of your Will? This may not be the best solution – often it is better (and much cheaper) for family members who have been appointed as executors to choose who they use if they need professional help when the time comes.

The terms and conditions when a ‘free’ Will is offered will no doubt say that the free Will would only be a basic one. It may be that some aspects like appointing more than one executor, appointing guardians, or making gifts won’t be treated as a basic Will, so fees will be incurred that way – you may end up paying more for your ‘free’ Will than you would have if you had paid the standard fees of another firm. Our Will fee covers most aspects apart from business clauses and any Trusts (apart from those for minors which are covered by our standard fee). There are no nasty surprises if you make a Will with us!

As mentioned at the outset, an exception to this is where free Wills are offered in exchange for a donation to charity. It is clear, that in this case, the company are offering the ‘free’ Will for a valid reason and will use their experienced, qualified staff to prepare a certain number of Wills for free – usually over a one week or one month period. They will have a suggested amount that should be donated to the charity in return. This is commendable of course we have no issue with this and have participated in Free Wills week/month several times ourselves.

You might deem the free Will offered in return for a charitable donation not to be free at all – and you’d be right (unless you decide not to donate of course).

So, the bottom-line is make sure you check out the company offering a ‘free’ Will. Look at their reviews, check their qualifications and insurances and ask questions about what a ‘basic’ Will consists of and what you might have to pay for. Ask yourself why they might be offering this as a free service. It is likely that the ‘free’ Will won’t actually turn out to be free at all!

For more information about this, or about making a Will in general, contact us today – Tel: 01438 746977 or email info@arkpowers.com.

Why should you use a member of The Society of Will Writers?

February 6, 2019April 10, 2019Leave a comment

Why should you use a member of The Society of Will Writers rather than a solicitor to draft your Will and Lasting Power of Attorney documents?

A member of the Society of Will Writers is a fully qualified and regulated professional Will and Lasting Power of Attorney writer, who must undertake vigorous training to qualify for membership and then undergo continuous training and assessment.

Members continue to train on a yearly basis doing a minimum of 24 hours.
All members hold Professional Indemnity insurance with a minimal level cover of £2 million.
All members adhere to the Society of Will Writers Code of Practice and complaints procedure.
Members are only admitted after a stringent and robust application process.
Members are entitled to technical support to ensure they offer the best service to their clients.
Members offer a statutory cooling off period of 14 days in accordance with the Consumer Contract Regulations.

Cost – This is a big consideration as a solicitor could charge around £300 or more for a simple will. At A R K a straightforward single Will costs £125 and for couples, Mirror Wills cost £225. Lasting Powers of Attorney can be round £400 each with most solicitors. We charge £175 for one document or £300 for two at A R K.

A R K offers a personal, bespoke service and will hold appointments in the comfort of your own home. We find that our clients prefer this option, rather than attending the formal office setting for appointments, which is preferred by most solicitors.

Service – A fully qualified solicitor is unlikely to draft your Will in person. This is likely to be done by a legal clerk with far less qualifications than a qualified Will Writer with the Society of Will Writers.

Society of Will Writers members are Will-Writing specialists – not legal ‘general practitioners.’ Solicitors are not averse to people making their own Wills as they make more money out of sorting out the mess which many DIY Wills leave behind. Members of the Society of Will Writers don’t have this conflict of interest.

Specialist Advice – A Will Writer deals almost exclusively with one area of law – succession planning – and as such, we are best placed to offer specialist advice, which ensures you receive the advice which is best for you.

At A R K we offer free advice and do not charge an hourly rate like many solicitors do. We pride ourselves on a simple and transparent pricing policy that is clearly displayed on our website. We feel this is important, as you can be confident that you know in advance the exact cost. Many solicitors charge an hourly rate for advice, as well as a Will drafting fee. This, from our experience, can be around £100 per hour or more.

It is a misconception that a Will Writer cannot arrange storage of Wills. At A R K we use a safe central storage company, and recommend you register your Will on the Certainty Register as this will tell your relatives where your Will is stored when the time comes.

Contact us at A R K on 01438 746977 to get more information and help regarding making your Will or Lasting Power of Attorney.

What are your New Year’s Resolutions for 2019?

December 30, 2018September 24, 2021Leave a comment

Every year most of us make New Year’s Resolutions. Maybe yours are often the same – to go to the gym more, lose that weight you’ve put on over Christmas, eat more healthily and so on.

This year how about adding a new one?

‘I want to give myself and my family total peace of mind’

You can do that by making a Will, Lasting Powers of Attorney (LPAs), and/or by purchasing a pre-paid Funeral Plan.

Are you certain that if something happened to you, for example you had a serious accident, all your affairs would be in order – even if you lost mental capacity? Wouldn’t you like to be sure that your family would be able to access your bank accounts and deal with all your financial affairs without having to deal with any costly and lengthy court proceedings?

The only way to do that is to make a Financial LPA. People often don’t realise that even joint accounts would be frozen if mental capacity is lost, and partners would have no access to accounts unless there is an LPA in place. If you don’t have an LPA, then the only way of accessing money or selling property etc. is via the court. This takes months and ultimately could cost thousands of pounds. A simple LPA can save a lot of money, and perhaps more importantly, anguish for your loved ones.

What about health? The Finance LPA obviously covers all your financial affairs, but who would be able to speak on your behalf about health-related matters? Having an LPA for health in place means that if you weren’t well enough, your nominated Attorneys could speak to doctors and all other health care professionals on your behalf, as if they were you. They can also have the final say regarding life-sustaining treatment. You and your family can then be sure that your wishes would be respected.

What about a Will? Of course, everyone should have a Will, however it is particularly important in the following circumstances:

If you have children who are under 18. You need to appoint guardians in your Will, otherwise a court would decide who looks after your children should anything happen to you while they are young.
If you have a partner that you are not married to, then without a Will they are not going to inherit anything.
In these days of blended families with children and stepchildren, many people are not aware that stepchildren do not inherit anything unless there is a valid Will specifying that they should inherit. The only way to be certain that the people you would want to inherit your estate, actually do so, is to make a Will.
If you are separated but not divorced, your estranged husband or wife is still your next of kin in the eyes of the law, and therefore they could end up with everything unless you’ve made your wishes known by making a Will.

A Funeral Plan is the ultimate peace of mind for your family. There has been a lot of publicity recently about families ending up in debt because they can’t afford to pay for a loved one’s funeral. If you purchase a Funeral Plan now then whenever you die your funeral is paid for in full, and your wishes are also documented. A client of ours whose mum passed away recently said ‘I can’t believe how easy and stress-free everything was.’

One call to the Funeral Plan Company and everything is taken care of for your family. Anyone of any age can buy a Funeral Plan and prices start at £2,795. Our Dignity Plans currently have an offer of up to £340 discount on every plan. This great offer is running until April 2019. We also offer Safe Hands Funeral plans if you would prefer a Funeral Director who isn’t part of the Dignity Group. Your Funeral Plan Consultant will help you decide which plan would be best for you.

Don’t put off giving your loved ones peace of mind any longer! We understand that you may not be able to afford everything at once, so at A R K we can help you decide what is the priority for you. Make 2019 the year you get organised!

Remember we offer a clear and transparent pricing policy, and we’ll give you as much free advice as you need to help you take the worry out of those ‘what if’ situations.

Contact A R K now on 01438 746977 or email us at info@arkpowers.com to action one of your New Year’s Resolution. Probably one of the easier ones to achieve…

*An additional fee of £82 has to be paid to The Office of the Public Guardian in order to register an LPA for use.

Inheritance Tax: Christmas Gift Guide

December 5, 2018December 30, 2018Leave a comment

Happy Christmas to you all!!

Did you realise that you could use this time of year to make gifts which will reduce your liability to Inheritance Tax? We thought we’d prepare a little guide about what you can give away whilst still keeping the taxman happy…

A lot of people don’t realise that Inheritance Tax may have to be paid on their estate when they pass away. This can be 40% of everything over the tax-free threshold (currently set at £325,000). Given that the average price of a property in Hertfordshire is over £500,000 it’s easy to exceed those limits!

However there’s a simple way to reduce this liability, and help your family have an extra special Christmas at the same time.

Did you realise that you can give away £3,000 worth of gifts to your family and friends each tax year – this amount is immediately removed from the value of your estate?
You can also give as many small gifts of up to £250 to as many people as you want (as long as they haven’t also received part or all of the £3,000 mentioned above).
Additionally you can give gifts out of your income. For example, Christmas and Birthday presents – but you must be able to maintain your standard of living after making the gifts.
If any of your family or friends are getting married soon, don’t forget you can give a cash gift which immediately reduces the value of your estate for Inheritance Tax purposes. You can give your child up to £5,000, your grandchild up to £2,500 and you can gift anyone else who is getting married up to £1,000.
There are certain people and organisations you can make unlimited gifts to without paying Inheritance Tax. These include:
- Your husband, wife or civil partner provided they live in the UK.
- Charities registered in the UK.
- Some national organisations like universities, museums and the National Trust.

Please note that new rules and thresholds regarding passing your property to your children were introduced in April 2016. If you would like more information regarding gifts or Inheritance Tax thresholds then visit www.gov.uk.

We hope that’s given you some food for thought…

If you can’t spend it yourself, the next best thing to do is to give away what you can to reduce the likely Inheritance tax bill on your estate. Why don’t you use this Christmas to help your family, friends and your favourite charities and reduce your Inheritance Tax liability at the same time?

You can of course make bigger gifts but then you have to live a certain period before the gift is treated as not belonging to you in it’s entirety (commonly known as the 7 year rule).

At A R K we specialise in offering free advice on anything related to Wills, Lasting Powers of Attorney, Funeral Plans and Probate. Do ring us on 01438 746977 or email us at info@arkpowers.com for more information.

How do I protect my property for the future?

October 11, 2018December 30, 2018Leave a comment

No one knows what their future holds; and in today’s world of blended families and ever-increasing care costs, it’s important to consider how you might protect your property after your death.

A simple Will stating what you want is not always enough to protect property inheritances for your family.

Most people who co-own their home with another person do so as joint owners. This means they both own the whole property. On the death of one of the joint owners, the home AUTOMATICALLY becomes the property of the survivor – they can then do what they want with it. This can, however, cause problems.

What if the survivor then re-marries? It is possible that the whole of the house will then pass to the new spouse on their death, thus disinheriting children of the first marriage. There are many recent examples of this happening where wealthy celebrities have died – the estates of both Paul Daniels and Bruce Forsyth received lots of publicity.

Another scenario is, what if the survivor has to go into a care home? As the property just has one owner, the Local Authority has the power to charge the cost of care against the value of the whole house – meaning that there would be nothing left for children to inherit.

What precautions can be taken to avoid this happening?

There is an answer to this problem. It is to change the way the home is owned whilst both owners are alive – from joint owners to Tenants in Common. This is a straightforward process that does not involve the mortgage company, even if the property is mortgaged. As Tenants in Common, each owner owns a share of the property (often a half share) and by using a Will Trust (a Life Interest Trust, also sometimes known as a Protective Property Trust), they can do whatever they wish with their share of the property on their death.

The idea of a Life Interest Trust is that you wouldn’t leave your share of your property to your partner – but you would leave them the right to live there until their death (or whatever date you specify). The survivor would not then own the whole property, just their half. This protects the 50% of the property owned by the person who has died, from possible care home fees or the new relationship scenario.

The survivor could only leave 50% of the property to their new partner. The 50% of the property belonging to the person who had died would be transferred into Trust, often for the benefit of children. The Trustees would then look after the 50% share of the person who had died, making sure the property is maintained and insured properly. If the survivor decides they would like to move out, they can do so as long as the Trustee agrees. If any monies are freed up by downsizing 50% belongs to the survivor, and they can also have access to the money belonging to the Trust fund if the Trustees agree.

There is also another simpler form of Trust that some people choose. It’s called a Right to Occupy Trust and these are commonly used where adult children live with their parents. This type of Trust gives the child still living at home the right to stay in the property after both parents die, without actually owning it. When the parents die he whole property is placed in Trust, often for all the children of the deceased – so when the Trust period ends the property can be sold, with the proceeds being shared between all the siblings.

Do be wary though, of taking any drastic action to avoid care costs. People sometimes think they can sell a house to a relative for a nominal fee, or even give it away, in order to transfer legal ownership. However, this could be seen as ‘deliberate deprivation’ and the sale could be reversed. Local authorities have the power to claim care costs from the person the assets were transferred to!

The local authority will ask about any previously owned assets, and take into account any reasons you’ve had to hand over assets or property to other people. They’ll consider timing, alongside any motive or intention, and also the fee.

As you can see, by making a few simple changes; sending a form to Land Registry (no fee applies for this) to change the ownership terms of your property and putting a Trust into your Will, you can protect your share of your property for your family.

Call A R K Lasting Powers & Wills now and take that ‘What if?’ scenario away.

Financing your funeral in advance – why is this a good idea?

August 19, 2018December 30, 2018Leave a comment

It’s ALWAYS a good idea to arrange a pre-paid Funeral Plan, but in some circumstances it’s a REALLY good idea.

There are many circumstances that make it especially important to have a pre-paid Funeral Plan in place. For example:

• You may have children with specialist needs who would find it very difficult to cope with making your funeral arrangements.
• If you have very few or no living relatives then it will give you the peace of mind of knowing you’ll have the funeral you want. Plus, you avoid burdening your friends with your funeral costs and the second-guessing of your wishes.
• Maybe money is tight and you are concerned about your – or your spouse’s/partner’s – funeral would be paid for when one of you passes away? With both our Dignity and Safe Hands Funeral Plans you can pay for one plan and use it for the funeral of whoever passes away first. You can always take out a second plan later when you can afford it.

How Funeral Plans Can Help
We recently sold a Funeral Plan to a lady in her early forties. She owns a small business locally and is a single mum of a teenage daughter. Her own mum had sadly passed away a few months earlier, and she was very worried about how her young daughter would cope with all the arrangements, as well as the grief, if anything happened to her.

We were able to reassure her that if she arranged a pre-paid Funeral Plan then a single phone call would be the single action needed to arrange the funeral. It means that all her funeral wishes are now documented, and the funeral is paid for in full. She now has peace of mind that everything will be taken care of and her daughter will have one less thing to worry about. Hopefully it will be a very long time before the plan is needed, but that’s the best thing about having a pre-paid Funeral Plan – even if our client lives another 40 years her funeral will still be paid for in full. There’ll be no extra costs for her family, no matter how much the funeral costs will have increased by then.

A Sensitive, Friendly and Professional Approach
A R K specialises in dealing with more challenging situations. Our friendly approach and home visits are timed to suit you. Even if someone is unwell or has specialist needs then we can help them – whether this is with a Funeral Plan, a Will or a Lasting Power of Attorney.

Sometimes, a terminally ill person wants a Funeral Plan. This is obviously a very difficult situation for the person concerned and for their family. Recently, we helped a client who had been diagnosed with terminal cancer. They had been told that they only had a very short time to live. By handling the situation in a sensitive manner and visiting at times when client felt well enough to talk to us, we could get everything arranged and finalised very quickly; so the client and his family had peace of mind and one less thing to worry about.

To give our customers more choice we now offer Dignity Funeral Plans alongside our existing Safe Hands plans. They are similar prices and you can choose from a range of options. Your A R K consultant will help you select the provider and plan that best suits your needs.

We carry out appointments in the privacy of your own home, or by telephone if you prefer. We can then offer you that same peace of mind that our existing clients have.

Please visit our Funeral Plan page for more detailed information or contact us on 01438 746977 or email info@arkpowers.com to discuss your requirements. We you offer our expert advice for free – with absolutely no pressure to buy.

The Business Case for a Lasting Power of Attorney (LPA)

May 30, 2018December 30, 2018Leave a comment

All business owners should consider a Lasting Power of Attorney (LPA) as the final piece of the business protection jigsaw puzzle.

Have you considered what might happen to your business if you:

• lost your mental capacity through illness or injury?
• were stranded abroad because of delay or extreme weather conditions?

Who would take over the running of the business on your behalf to:
• sign contracts?
• pay salaries and suppliers?
• write cheque?
• make the important day-to-day decisions to keep the business going?

Even if your bank account is held jointly with your spouse, it can be frozen until a Deputyship Order is produced by the Court. Business accounts can also be frozen, even where these are held jointly in the names of business partners or directors. How would your business cope with no funds? Many businesses in these circumstances fail.

If you suddenly lose mental capacity and haven’t made a Business LPA, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive, and there’s no guarantee that the Court of Protection will choose someone who you would have chosen. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.

The Business LPA and lack of capacity…

Most businesses have a Key Person Insurance Policy and crisis management plans in place, but the issue of lack of capacity is often overlooked. You might think the options are obvious, but there is no automatic legal right to deal with another person’s financial affairs. Don’t assume that a family member or a business colleague will gain the authority to make these decisions on your behalf – this assumption could leave your business exposed to risk.

To protect your interests, and those of your business, you should consider making a Business LPA.

Having a Business LPA in place allows someone that you trust – someone who understands your business – to take over the day-to-day affairs as soon as they are needed. Your attorney might be given the power to pay suppliers and staff, access and manage bank accounts, invest assets, handle tax matters and enter into contracts. Of course, you can limit your attorney’s power, but you need to ensure that the company can continue to operate with any limits in place.

The aim of all business owners is to make their business a success and to provide for their families and their loved ones. You work very hard, commit time and money to your business and have employees and suppliers who are depending on you. You have families who need your financial support and security.

It is natural to hope you will never need a Lasting Power of Attorney but why take the chance?

Business continuity…

A Business LPA should be an essential element of your business continuity plan, and the cost of setting one up is a small price to pay for the continuing success of the business you have worked so hard to build. It’s a one-off cost as well (as long as you don’t change your mind about who you have appointed as your attorney).

A Business LPA is a type of ‘insurance’ that all business owners should have, and it truly is the final piece of the business protection jigsaw puzzle!

Next steps…

Our fee to arrange a Business LPA for you (including registration of the document with the Office of the Public Guardian – so that is ready to be used immediately should it be necessary) is £175 (no VAT to pay). It’s a tax-deductible expense for your company, and the only additional fee to pay will be £82 to cover the Office of the Public Guardian fee.

Contact A.R.K. Lasting Powers & Wills today for a chat about how easy it is for us to assist you with making this document that could be vital for your business. It can be arranged at a face to face meeting, or by phone/email if you prefer. Call us on 01438 746977 or email info@arkpowers.com.

The law regarding Inheritance Tax and making gifts

October 17, 2017December 30, 2018Leave a comment

Believe it or not, you are actually allowed to make some gifts without your heirs having to pay any tax at all. Understanding where these boundaries lie however, is generally an area many of us can find confusing. With this in mind, I’ve pulled together a breakdown that whilst comprehensive should be easily digestible!

The law –

You are allowed to make tax free gifts as follows:

Gifts to ‘exempt beneficiaries’:

You can give as much money as you like to certain people and organisations without paying Inheritance Tax (this applies whether you give money whilst living or after you death, via your will). Exempt beneficiaries include:

Your husband, wife or civil partner, provided they live permanently in the UK
Charities registered in the UK – to check which charities qualify, visit the HMRC website
Some national organisations like universities, museums and the National Trust

NOTE that gifts to unmarried partners or unregistered civil partners are not exempt from Inheritance Tax.

Your Annual Exemption:

You are allowed to give away a total of £3,000 each year, without any tax implications after your death. Bear in mind that this is the total annual amount that you can give away, NOT a total amount you can give to each beneficiary, each year.

It is also worth noting that your Annual Exemption can be carried forward for one year if it has not been used. In other words, if you did not make any gifts of money during last year, you can give away a total of £6,000 this year. Equally, if you gave away £1,500 last year, you’ll be able to give away a total of £4,500 this year.

The Annual Exemption cannot be carried forward by more than one year.

Giving small cash gifts:

In addition to the exemptions above, you can give away small gifts – not more than £250 – to as many people as you like in one tax year. However, some points to remember include:

You can’t make a gift of more than £250, and claim exemption on the first £250 (larger gifts are treated differently)
You can’t combine the small gifts exemption with another exemption when giving money to one person. In other words, you can’t give one person £3,250 and claim exemption based on a combination of the small gifts and ‘Annual’ exemption.

Wedding gifts:

Provided that you give or promise to give a cash gift on, or shortly before, the ceremony you can make quite large cash gifts as wedding or civil partnership presents, without being liable for Inheritance Tax. The limits on such gifts depend on your relationship with the recipient:

If you are a parent you can give up to £5,000 tax free
Grandparents can give up to £2,500
Anyone else can give up to £1,000

Remember, however, that if the wedding or civil partnership is called off and you still give the gift, it will NOT be exempt from Inheritance Tax.

Regular gifts or payments:

Any gifts that are part of your normal expenditure are exempt – provided they are made from your net, ie. after tax income (not your savings); and that you have enough money left over to maintain your lifestyle. These exempt payments include:

Maintenance for your husband, wife, civil partner
Maintenance for your ex-husband, ex-wife or former civil partner
Maintenance for relatives who depend on you
Maintenance for your children, adopted children or step-children, as long as they are under 18 or in full-time education
Monthly or regular payments to anyone
Regular gifts for Christmas, birthdays or wedding/civil partnership anniversaries
Premiums on life insurance policies

What if I want to make other/larger gifts? – The ‘Seven Year’ rule

Any gifts you make that do not fall under the scope of those mentioned above will be treated as your asset in decreasing percentages for some time after you have made that gift.
Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

We’d all rather our loved ones benefitted from the full inheritance we want to leave them, let’s not line the taxman’s pockets with more than we have to. Contact A.R.K on 01438 746977 or email info@arkpowers.com for more information.

What does that mean?… Will and Probate related terms

September 9, 2017December 30, 2018Leave a comment

There are few things in life that are likely to be more traumatic than dealing with the death of a loved one. It is, however, an unfortunate and painful reality that we will probably all have to face at some point.

Thankfully there are safeguards we can put in place to ensure that when faced with these situations, we can allow ourselves to deal with the emotional turmoil such events bring, knowing that the practicalities of dealing with finance, insurance companies and assets have all been taken care of in advance.

There are many considerations when it comes to Wills and Probate, and the process of the tying up of a loved ones’ affairs. You may be aware of some of the more well-known elements; such as the Will itself and what it means to be a Beneficiary. However, for many, knowing what it means to be ‘Intestate’ and understanding the legal requirements of the ‘Trust Minutes’ is an unknown entity. With this in mind, I’ve compiled a list of terms and their definitions, to remove the potential cloak of confusion surrounding an area we all need to have a clearer understanding of.

Will

The legal document allowing you to leave your ‘estate’ the way you would like to leave it. A Will must be in writing, it must be signed and dated in the presence of two witnesses, who must then sign to confirm they are witnessing it.

Estate

The total value of your assets when you die, after deducting any debts and funeral expenses.

Intestate

If you die ‘intestate’ you die without leaving a Will. Your estate will then be distributed to your family in accordance with the laws of intestacy. Only if you have no family at all will your estate pass to the government.

Executor

The person or people appointed to look after your estate. Responsibilities include:

Arranging the funeral
Notifying any relevant companies/organisations regarding death
Calculating the value of an estate to establish whether Inheritance Tax is due to be paid.
Establishing whether a ‘Grant of Probate’ is needed and if so applying to the court for this document.
Calling in assets and paying any debts
Distributing the estate in accordance with a Will or the laws of intestacy.
Running any Trusts that are created (if separate Trustees are not appointed)

Power of Attorney

The document you will need to sign, in front of a witness, to give a solicitor or other professional authority to act as executors on your behalf.

Trustee

A person appointed to run any Trusts that are created following a death. Often this is the same person/people who are appointed as executors, but sometimes separate Trustees are appointed.

Trust fund

The value of assets placed in Trust for children or others following a death.

Trust minutes

These are required by law. All Trustees are obliged to meet at least annually and to minute that meeting to ensure that the Trust is being run correctly.

Guardian(s)

The person or people appointed to look after any child under the age of 18 when parents are not able to look after the child themselves.

Beneficiary

Someone who benefits from a Will i.e. inherits something in a Will.

Legacy

The ‘gift’ you are left in a Will.

Probate

This is often the general term used to describe the process of administering an estate after someone has died.

Grant of Probate/Representation

This is the document that is often needed to call in assets (obtain funds from banks etc that are holding money belonging to the deceased’s estate), or to sell property. An application to court has to be made and a fee is payable. Individuals applying will have to attend court or a solicitor’s office personally to swear oath, whereas professional executors do not have to do this.

Letters of Administration

The Scottish equivalent of a Grant of Probate.

Assets

Any item of value owned by the deceased.

Liabilities

Any debts the deceased had at the time of their death, plus costs which occur whilst the estate is being finalised e.g. funeral costs/professional fees and disbursements.

Residuary estate

This is the net estate available to be distributed to beneficiaries after all liabilities have been paid and specific gifts have been made.

Deed of Variation

A legal document which allows a beneficiary to vary the terms of someone’s Will up to two years after they have died. This is useful where a beneficiary does not want to inherit something as it may have an impact on Inheritance Tax that would be due on their death. They can vary a Will so that their inheritance will pass straight to their child/children.

Right to occupy/Life interest

If a Will specifies that you have been given a ‘right to occupy’ or a ‘Life Interest’ in a property it means that you will be allowed to live in the property for a defined period, but you will not actually own the share of the property that was owned by the deceased. This share will be held in Trust.

Inheritance Tax (IHT)

The tax that can be payable on death (and on some gifts made prior to this). There is an annual exemption each year (currently £325,000) and if the estate is valued above this level Inheritance Tax will be payable at 40% on the excess. In the case of a married couple the allowance which is unused by the first person to die can be transferred to the surviving spouse, meaning that, based on current rates, up to £650,000 can be treated as being exempt from Inheritance Tax.

Residence Nil Rate Band

A new Inheritance Tax ‘allowance’ that was introduced in April 2017. If you
have a property that you are ultimately leaving to children you can currently
leave an additional £100,000 without IHT being due. For a couple this can be
transferred to a spouse, meaning that the couples’ allowance is increased
from £650,000 to £850,000 in the 2017-18 tax year. By 6th April 2020 a
couple leaving a property to children or step-children will be able to leave up
to £1 million without IHT being due on their combined estates.

Distribution (final or interim)

This the act of making a payment to a beneficiary, and also the term used
to describe the payment. A distribution can be ‘interim’ if funds are paid to a
beneficiary prior to the estate being wound up, or it can be ‘final’ if all
calculations have been completed and the estate is being finalised.

Many of us spend years debating the drafting of our Wills and never actually get around to writing them. This can be because people are uncomfortable having discussions with their loved ones on the seemingly cold and callous topic of how the estate will be split, who will be entitled to what, how and when. At A.R.K. we understand how difficult this process can be, and are here to help you every step of the way with expert, jargon-free advice; ensuring you and your family are protected from the worst.

If you feel the time is right for you to put pen to paper, and ensure that your loved ones aren’t left with anything other than peace of mind for the future, call us today on 01438 746977 or email info@arkpowers.com.