Wills, Inheritance Tax and Lasting Powers of Attorney

The private client team at W H Matthews & Co Solicitors assists individuals, families and professional clients with the preparation of Wills and subsequent administration of their estates. The team comprises lawyers who are affiliated to a variety of professional bodies including the Society of Trust and Estate Practitioners (STEP), Solicitors for the Elderly and the Law Society Private Client Section and we offer the most up-to-date knowledge of the latest tax reliefs, planning and methodologies available.

Wills
There are various benefits to drafting a Will. For some, it is a simple document to ensure that assets are passed upon death to those intended. For others, it is an effective tax planning tool available to them. Our team of specialist lawyers can help provide a Will that is both effective in realising your intentions and in mitigating the effects of inheritance tax.

1.    What happens if you die without leaving a Will?

Many people do not make a Will because they assume that their estate, which may include property, savings and personal belongings (amongst other assets), will automatically pass to those they consider to be the closest to them.

In the absence of a valid Will, your assets will be distributed according to the law (“rules of intestacy”). This sets out the categories of people to whom your estate will be distributed, depending on your personal circumstances. As a result, failing to make a valid Will means that you are not able to choose who should benefit from your estate, and this may not accord with your wishes.

2.    What are the benefits of making a valid Will?

There are a variety of benefits to making a valid Will which include:-

- Ensuring that your possessions and estate are distributed as you wish to your chosen beneficiaries.

- Appointing an Executor which allows you to decide who will oversee the distribution of your estate.

- Protecting your children’s inheritance.

- Appointing Guardians for minor children.

- Potentially reducing inheritance tax (and therefore providing more for those that you choose).

- Potentially protecting your estate from being contested, by making your wishes clearly known.

We are able to act as your executors, where you want us to and can also assist you in dealing with the administration and distribution of an estate. This includes obtaining the grant of probate and liaising with various third parties, such as HM Revenue & Customs, the Probate Registry, financial institutions and local authorities to obtain the necessary information and documents to deal with the administration and distribution of an estate.

Joint Assets

Cohabitating couples, spouses and civil partners often own assets, such as houses and bank accounts, in joint names. How you own such joint assets may determine the distribution of your assets at death, so it is important that you understand how you own such assets and how they will be treated in the event of your death.

1. Do you own your house as “joint tenants” or “tenants in common”?

A “joint tenancy” is where the joint owners are equally entitled to the property as a whole and not in distinct shares. When one of the owners die, their interest in the property passes automatically to the surviving owner irrespective of their will.

A “tenancy in common” is where the owners each own distinct shares of the property. When one of the owners die, their share of that property passes in accordance with the terms of their will or, if they have not made a valid will, under the rules of intestacy.

At W H Matthews & Co Solicitors, we can investigate how you own such joint assets and make the necessary arrangements to change the type of ownership in accordance with your wishes, if required.

Inheritance Tax

Inheritance Tax is a tax on your estate once you die. Each individual is entitled to an Inheritance Tax allowance known as the Nil Rate Band (“NRB”) which is currently £325,000. As a result, there is often no Inheritance Tax to pay if either:-

- The value of your estate (which may include gifts made in your lifetime and / or interests in trusts) is below the NRB allowance of £325,000; or

- You leave everything above the NRB allowance of £325,000 to exempt beneficiaries which include your spouse, civil partner or a charity (amongst others).

1.   What allowances are available to you?

In addition to the NRB allowance a Residence Nil Rate Band (“RNRB”) may be available if you wish to pass a property that was once your residence to your direct descendants i.e children or grandchildren, including step-children and their spouses/civil partners. At present, provided your estate is worth less than £2 million, your estate may be entitled to a RNRB allowance of £150,000. From 6^th April 2020, the RNRB allowance will increase to £175,000, meaning that if your estate is worth less than £2 million and your estate qualifies for a full RNRB total personal allowances will amount to £500,000. In addition to this, you may be entitled to claim your spouse’s or civil partner’s unused allowances. The RNRB does come with conditions attached so it may not be available in full to everyone. The private client team at W H Matthews & Co Solicitors can provide you with comprehensive advice on the availability of the allowance depending on your personal circumstances.

2.    How will Inheritance Tax be charged on your estate?

The standard Inheritance Tax rate is 40%. It is only charged on the part of your estate that is above the allowances.

3.   How can Inheritance Tax be mitigated on your estate?

There are various ways in which you may be able to mitigate Inheritance Tax on your estate which include:-

- Gifting assets while you are alive.

- Using reliefs such as Business Property Relief.

- Using financial products such as pensions and life insurance.

- Leaving 10% or more of the net value of your estate to charity in your Will.

We can advise you in relation to your personal circumstances and provide options as to which steps can be taken to mitigate Inheritance Tax on your estate.

We also work with a range of professionals including financial advisors, accountants, mortgage brokers, insurance brokers in dealing with the above and other related matters.

Lasting Powers of Attorney

A Lasting Power of Attorney (“LPA”) is a legal document that allows you to appoint one or more individuals (the attorneys) to help you make decisions on your behalf. This gives you more control over what happens to you if you have an accident or an illness and cannot make your own decisions.

There are two types of LPA:

- Property and Financial LPA.

- Health and Welfare LPA.

Our Private Client Team can provide advice and assistance in the creation and registration of a lasting Power of Attorney.

What happens if you do not make a LPA?

If you lack capacity to make a financial decision, then it may be necessary for an application to be made to the Court of Protection for an appropriate order, such as appointing another person (“a deputy”) to make decisions on your behalf. This is both costly and time consuming.

Other Services

In addition to the areas covered above, we are able to provide advice regarding contentious probate matters, Court of Protection matters, Deputyship Applications, deeds of variation / deeds of family arrangement and trusts.

If you require advice in relation to the above, or you have queries about any of the matters raised, please contact:-

Daniel Wilson, Partner at W H Matthews & Co Solicitors City office on 020 7251 4942 or by email at danielwilson@whmatthews.com for City, Staines and Kingston office enquiries.

Maggie Hughes, Partner at W H Matthews & Co Solicitors Sutton office on 020 8642 6677 or by email at maggiehughes@whmatthews.com for Sutton and Kingston office enquiries.

Kathryn McCarthy, Associate Solicitor at W H Matthews & Co Solicitors Sutton office on 020 8642 6677 or by email at kathrynmccarthy@whmatthews.com for Sutton and Kingston office enquiries.

Dated: 13^th August 2019