Wills, Trusts & IHT Planning
Making a Will
Making a Will is the only way you can be sure that your wishes will be followed after you die. If you do not make one, all or part of your Estate may go to people who you never intended to benefit. Not only that, inheritance tax legislation means that, if you don’t prepare properly, a substantial part of what you leave behind may be payable in taxes.
Wills are not solely about passing on your assets. You can also include specific funeral arrangements. For instance, burial, cremation or the use of your body for medical research can be specified in your Will. You may also want to appoint legal guardians to care for your minor children if you and your partner should both die before they are eighteen. Another important consideration is the appointment of Executors. These are the people who will deal with your Estate in the event of your death. Ideally these should be business minded family or friends, or professional advisers. It is possible to appoint more than one Executor, for example, a family member and a professional who can act jointly.
If you have business or farming assets it is essential that you take professional advice and ensure that these are dealt with in the most tax efficient manner. Inheritance tax is a tax that is paid on your Estate when you die as well as on some assets that you may have given away during your lifetime. Under current legislation, if the Estate you leave behind is less than the “nil rate band”, your beneficiaries will not have to pay inheritance tax.
However, if your Estate is worth more than this threshold inheritance tax may be payable.
Further details of the current tax threshold are available on the HM Revenue & Customs website, There is an exemption for assets left to UK charities or those within the European Union. Spouses and civil partners also benefit from transferable nil rate bands so that if all your assets pass to your surviving spouse or civil partner on your death then on their death an amount up to twice the available nil rate band at that date may be available. However, these do not apply to couples who are simply living together.
Inheritance tax is a complex subject and if you have a potentially large Estate you should seek professional advice from your solicitor or specialist tax adviser. It is important to review your Will regularly – ideally at least once every five years. You should also review your Will after any major change in your family circumstances (such as death, divorce or bankruptcy) or any publicised change to tax legislation.
Decisions to Make Before You Write a Will
One of the first decisions to make when writing a Will is choosing the Executors. These are the people who will be responsible for carrying out the instructions in your Will after you die.
It’s important to choose someone who will be able to handle the pressure because the role of an Executor can be demanding. It is advisable to name a second or substitute Executor especially if your primary Executor is your partner or spouse.
You should also consider who would be Guardian to any children under 18 years old. If you are setting up a Trust as part of your Will, you will need to name the Trustees who will manage the money or property until it passes to the beneficiaries.
When it comes to your possessions you can list specific legacies in your Will. For example if you want to leave a piece of jewellery or a family heirloom to a family member, these legacies can be written into your Will; along with any money you would like to donate to charity.
Steps to making a Will
- Prepare a list of assets and liabilities (including any jointly held assets) so that your solicitor can estimate the value of your Estate and advise you on any tax saving steps which you can take.
- Write down the full names and addresses of those who you would like to be Executors of your Will and guardians of your minor children.
- Make a note of how you wish to divide up your Estate and ensure that you have made proper provision for your family and friends first. Make a list of their full names and addresses for your solicitor.
A trust is commonly used to help minimise tax payments, control your assets, protect your legacy and look after your loved ones.
There are many different types of trusts, but the general principle is that through the creation of a trust, the trustees look after assets on behalf of beneficiaries.
At Stewarts Solicitors we can help arrange your trust in a manner that best suits you and your wishes.
Through a trust you can:
- Protect any compensation payouts
- Make a gift of your family home
- Ensure your heirs have timely access to your Estate
- Administer your Estate privately (rather than through probate which becomes a matter of public record)
- Specify the terms of the trust. Controlling when and to whom assets should be distributed. This can be particularly useful where there are complex family situations such as children from multiple marriages
- Help protect your assets from your beneficiaries creditors
- Protect death benefits from being considered part of your Estate for tax purposes
- Choose your trustees
- Protect vulnerable or disabled beneficiaries
- Protect your legacy