Other Services
Heritage Will Writing has offices in Southampton and can provide the following services across Hampshire and the neighbouring counties. Heritage Will Writing offers appointments at your own home, online and also in hospitals and care homes when required.
New Forest Wealth Management / Financial Planning
This helps us create a “broad concept” of where you are now, and where you would like to be. This enables us to put together a range of solutions which highlight the options available to you, and the best way forward. Find out more and enquire here.
Inheritance Tax
If you would like to discuss your inheritance tax position or to obtain a free financial review of your potential liability on the estate, please contact us to arrange an appointment. We are pleased to be able to make recommendations on how to construct your Will to reduce the amount of inheritance tax payable. We can also refer you to our partnership company, New Forest Wealth Management Ltd, who will be able to make recommendations on how to reduce your inheritance tax liability during your lifetime.
Death duties have been with us for centuries, in the guide of Estate Duty and now inheritance tax (IHT). Irrespective of the name, the purpose has always been to raise revenue from the estates of citizens.
Inheritance tax no longer only affects the wealthy. While most people are aware of the existence of IHT, it is a subject that gives rise to dome distaste or lack or interest, and many would rather delay consideration of the matter entirely. The result is that so few people do anything about their potential IHT liability, HMRC collected over £5.3 billion pounds in the last tax year.
Inheritance tax is a tax on the transfer of assets on certain lifetime gifts and on death. As the name suggests, most charges on IHT arise:
- When transfers are made on death
- When Potentially Exempt Transfers (PETs) become chargeable because the donor has died within seven years of the PET (a failed PET)
- On Chargeable Lifetime Transfers (these arise from making gifts into some Trusts) at the time of the transfer and/or because the donor has died within seven years of the CLT
Current Rates of IHT
The current Nil Rate Band - NRB - that is available to every individual is set at £325,000. This means that you can give up to £325,000 on death without IHT becoming payable. In instances where transfers are made to a spouse or civil partner, spousal exemption applies and the NRB can be transferred to the surviving spouse or civil partner’s estate and used on second death. By way of example, if an estate is left entirely to a surviving spouse, on the surviving spouses death, there will be combined allowances providing £650,000 at 0% IHT.
The Residential Nil Rate Band - RNRB - was introduced in April 2017 as an additional IHT allowance, with the aim of allowing families to pass on up to £1m of their estate without IHT becoming payable. The RNRB allowance has been increasing by £25,000 each April, until reaching its maximum allowance claimable at £175,000 per person on the 6th April 2020.
Just like the NRB allowance, the RNRB is transferable on death between spouses and civil partners.
The RNRB is available when residential property is left to direct descendants (children). Direct descendants can also include adopted children, foster children and stepchildren, or linear descendants (grandchildren). If you do not have any direct descendants, this allowance cannot be claimed.
It is important however, to be aware that large estates may not see the benefit of the RNRB as the allowance is reduced by £1 for every £2 that is exceeding the £2m threshold.
Whether your estates are able to claim the RNRB allowance or not, ordinarily, for estates over the £650,000 or £1m threshold, Inheritance Tax - IHT - is payable at 40%.
*Alternative planning can be considered by way of leaving 10% or more of the net estate (after deducting IHT exemptions, reliefs and the NRB) to charity, which reduces the IHT rate from 40% to 36%.*
There are a range of exemptions and reliefs available to reduce the amount of IHT payable. A summary of the most commonly used are:
- Annual Gift Allowance - £3,000 per person per tax year (but not to the person who you made the small gift to)
- Small Gift Allowance – £350 to any one person each tax year (see note above about the restriction)
- Gifts out of surplus income – the transfer must be out of normal expenditure and after the gift the donor was left with sufficient income to maintain their usual standard of living
- Gifts in consideration of marriage - £5,000 if the donor is a parent to one of the parties to the marriage or civil partnership
- Business Property Relief – certain business assets may qualify for either 50% or 100% relief from IHT
- Agriculture Property Relief – certain agricultural assets may qualify for relief from IHT
For more information about Inheritance Tax, click here, and you can check out our Frequently Asked Questions here.
Long Term Care Planning
The good news is, we’re all living longer. The not so good news is that, according to Age UK, the gap between average Life Expectancy and Disabled Free Life Expectancy (DFLE) is growing faster than ever before.
This means that more of us are spending more time in later life with multiple long-term conditions, frailty, dementia and social care needs.
Add to this the fact that the fastest growing age bracket is the 85+ age group (grew 31.3% between 2005/06 and 2015/16), followed closely by the 65+ age group (grew by almost 21%). These age groups are predicted to grow at a frightening pace over the next two decades (113.9% and 48.9%, respectively).
Whilst in real terms, the government are spending more money on Long Term Care – and are committed to continue increasing that budget, it’s unlikely to keep pace with the frightening rate at which the demand for Long Term Care is set to grow.
And that has implications for all of us.
Given these facts, we’re impressing upon our clients the need to plan for the eventuality that they may well end up needing some form of Long Term Care.
For more information about Long Term Care Planning, click here, and you can check out our Frequently Asked Questions here.
Severance of Tenancy
Severance of Tenancy is the process in which property ownership is updated from joint ownership to tenants in common.
Joint ownership is the most common option when purchasing a house with another person. However, with all jointly owned assets, the asset would pass inline with the survivorship rules, meaning the property would automatically pass to the surviving co-owner rather than being distributed in line with the wishes in your Will.
Once the severance of tenancy has been completed, you will hold the property as tenants in common. Meaning rather than holding 100% of the property together, you will each have your own share and interest and can leave your share of the property to whoever you wish.
For more information about Severance of Tenancy, click here. You can also find information about costs, here.
Deed of Variation
A Deed of Variation is an instrument that changes the way an estate has been left, and essentially rewrites the Will of the deceased (or the rules of intestacy).
The change must be made by the effected beneficiary, as long as the beneficiary is over the age of 18 and have full mental capacity. However, for the Deed of Variation to be valid, the deed must be signed by all relevant parties.
The proposed variation must be entered into within two years of the date of death.
Why might a Deed of Variation be relevant?
- To take advantage of favourable tax planning opportunities
- To update an outdated Will
- To take into account a change of circumstances
- To settle a family dispute about the terms of the Will
- To make alternative arrangements when a beneficiary does not wish to take their inheritance
An individual can decide to vary a Will so that their share is transferred into a Discretionary Trust. The original beneficiary can continue to benefit from the Trust by having access to both the income and the capital.
A Discretionary Trust has a number of benefits, although they are not entitled to receive a specific amount of income and capital, but the Trustees can decide which of the beneficiaries receives what asset, and when.
The advantage is that the value of the Trust is not added to the taxable estate of any of the individual beneficiaries.
The Discretionary Trust also creates longer term tax planning opportunities for future generations as well as offering a level of asset protection from divorce, for example.
You can find information about costs, here.
Declaration of Trust
A Declaration of Trust is often used to demonstrate uneven ownership of a property and records the financial arrangements of all interested parties. Perhaps you contributed more towards the initial deposit or wish to relinquish your right to the income on a buy-to-let property and pass the income to a spouse making use of the tax allowances that are available.
In order to separate and define ownership of a property into percentages, a 60/40 split, for example, the Declaration of Trust would specify each of your share and interest in the property.
You can find information about costs, here.
Document Storage
We provide a safe custody storage facility for wills, deeds and other important documents.
You can find information about costs, here.
Seminars
More seminars/webinars coming soon. In the meantime, you can schedule a Free Personal Consultation here.
Other Services Menu
Please Note
The information provided here is intended to address the types of questions that people are often concerned about.
To see an outline of what we do and how we deliver services for our clients, please visit the Our Services page. You will find information on the key aspects of creating your will including:
Personal Reviews, Will Writing, Estate Planning & Tax Management, Lasting Power of Attorney, Discretionary Trusts, Special Provisions & Assurance (disabled beneficiaries), Severance of Tenancy, Secure Document Storage.
If you have a specific question, want more detailed information or want your will professionally prepared, then please just get in touch.