Latest news with #Weightmans
Western Telegraph
19-05-2025
- General
- Western Telegraph
What happens to your estate if you die without a will?
The National Wills Report shows that approximately 47% of UK adults, over 32 million people, do not have a will. 'Do I need a Will' searches in the UK have risen 23% in the last quarter, with 140K searches a month. Louise Miller at Weightmans says: 'No one relishes the thought of writing a will, especially at a young age. However, having a will in place will give you the peace of mind and comfort that everything is in order, that you have done everything that you can for your loved ones. A will can help to mitigate potential disputes and ensure that your wishes are respected. "If you are considering writing a will but are unsure where to begin, it is advisable to seek professional legal guidance. Doing so will ensure your wishes are clearly set out and that your loved ones are protected in the future.' Here's a quick guide to the main questions people ask when writing their will. 1. What happens if I don't have a will? If you die without a will, the distribution of your estate (your personal possessions, money, and property) will be dealt with under the rules of intestacy (a set of legal rules which dictate who will benefit). Beware though, the intestacy rules are rigid and may not reflect your wishes. for example, they make no provision for unmarried partners. The intestacy rules also govern who is entitled to deal with the administration of your estate. In the case surrounding Liam Payne, it is reported that his former partner and the mother of his son, Cheryl Tweedy, has been appointed administrator, alongside top music lawyer Richard Bray, to manage his £24 million estate. This legally grants her access to his property, finances, and personal possessions. It is likely that the assets and funds will be held in a trust for his son until he is of adult age. Due to British laws of intestacy, which govern the affairs of those who die without a will, a deceased person's estate is usually passed on to their lawful spouse or their nearest blood relative. 2. Will my estate automatically pass to my spouse or partner? Even if you are married, your spouse is not necessarily entitled to benefit from your whole estate on your death. The intestacy rules are constantly subject to change, and the outcomes of dying without a Will can be surprising and often unjust. Making a Will is the only way to ensure your loved ones are provided for in accordance with your wishes. In Scotland, where there is no will or the estate is only partly disposed of by will then the rules of intestacy apply. From 2024 the spouse or civil partner is entitled to the whole estate if the deceased is not survived by children or grandchildren. If there are children then they will be entitled to the residue of the estate after payment of any prior and legal rights to the spouse or civil partner. There's more information on that here. The rules are slightly different in England, Wales and Northern Ireland. But wherever you live, making a will is the only way to ensure your estate passes to your chosen beneficiaries. It also enables you to choose your executors, appoint guardians for young children, include cash gifts or gifts of specific items, and detail your funeral wishes. It may be appropriate to include a trust structure in your will to offer a degree of protection for your chosen beneficiaries or to allow flexibility for future generations to use the trusts for their own wealth/tax planning. Liam's partner at the time of his death, Kate Cassidy, may receive none of his fortune. Without a valid will, she has no legal entitlement to any part of his estate. 3. Who are the executors of my will? Your will allows you to choose who will act as your executor(s), the individuals responsible for administering your estate and ensuring that your wishes are followed. Selecting capable and trustworthy executors is essential to help streamline the probate process and reduce the risk of disputes among beneficiaries. Acting as an executor is an important and often time-consuming role, carrying personal liability for any errors or losses during the administration of the estate. Some people choose to appoint a professional executor to ensure that their estate is managed efficiently and in full compliance with legal requirements, but there are fees for doing this. Recommended reading: 4. How often should I review my will? As your personal and/or financial circumstances change, you should consider updating your Will. Examples include: Marriage will automatically revoke any Will you had in place previously. Change in family circumstances, for example, having children or grandchildren. Divorce Significant changes in your financial situation It's recommended you look over your will every three years to assess whether there have been any changes to the law or tax allowances which could affect your will.
Yahoo
15-05-2025
- Business
- Yahoo
How to give away a home to avoid inheritance tax
For most families, their home is their biggest asset. So it is no surprise that parents are increasingly giving property as gifts in order to avoid inheritance tax. Land Registry data shows that about 130,000 properties are given away each year. This rose to 152,000 in 2023 and was forecast to reach around 220,000 in 2024, according to figures obtained by estate agent Hamptons via a Freedom of Information request. This comes after Rachel Reeves launched a £2bn inheritance tax raid in her October Budget. The Chancellor announced a range of measures, including freezing tax-free allowances until 2030 and making pensions liable for the 40pc charge from 2027. These reforms will drag thousands more families into the inheritance tax net over the coming years, as house price growth pushes up estate values. Richard Bate, of law firm Weightmans, said: 'Many estates that wouldn't traditionally face this tax are now being caught out, leaving families with unexpected and often significant tax bills.' Inheritance tax is due on the portion of an estate worth more than £325,000. Homeowners can pass on an extra £175,000 to direct descendants, thanks to the residence nil-rate band, and couples can share their allowances, giving them up to £1m in total tax-free. Given property can account for a large proportion of your estate's value, gifting your home to the children during your lifetime could be one way to reduce your inheritance tax exposure. However, there are strict rules around gifting property – so homeowners must be aware of the pitfalls to avoid their heirs incurring a huge bill. You can give your house to your children, but you need to be careful about how you do it. A couple with a £1.3m estate, including a £300,000 property, could eliminate a potential £120,000 tax bill if they give their home away in the correct way. Generally, large gifts pass out of your estate for inheritance tax purposes after seven years have passed. If you die within the seven years, then so-called taper relief applies on a sliding scale. This is only the case if the total value of gifts in that period added up to more than £325,000 – this is because the lifetime transfers use up the nil-rate band before the rest of the estate. It means inheritance tax is charged at 32pc in year three, 24pc in year four and so on. This is why it can make sense to start giving wealth away earlier. Rob Morgan, of wealth manager Charles Stanley, said: 'The younger you are when you start gifting your wealth through these 'potentially exempt transfers' or PETs, the more likely you are to live for a further seven years.' You can continue living in the property after giving it away, but again there are strict rules if you want to avoid a tax bill. If the homeowner continues to benefit from the property they've given away, then the taxman considers it a 'gift with reservation of benefit', and inheritance tax will be due on the transfer at death. Mr Morgan said: 'Examples would be gifting a rental property, but continuing to receive the rental income, or gifting your home and continuing to live in it.' So, if the donor wants to keep living in the property after giving it to their children, they must pay the new owners the full market rate rent. James Ward, of law firm Kingsley Napley, said: 'If you do not, then you will be reserving a benefit and the seven-year clock will be reset, and it will take another seven years of paying rent and surviving to get it out of your estate. 'Therefore, it is crucial to keep paying market rent unless you move out of the property and no longer reserve a benefit.' HM Revenue and Customs has strict rules to prevent people making gifts with strings attached. According to its inheritance tax manuals, social visits to the gifted property are allowed – but staying over virtually every weekend could put you at risk of a tax bill. Borrowing books from the property could also pose an issue for inheritance tax purposes, with rules stating that you should not consult or borrow from a 'library of books' in the gifted house more than five times a year. If the property you want to give away is your main home, then it will be eligible for principal residence relief, meaning there will be no capital gains tax to pay. But this is not the case for second homes and buy-to-lets. Mr Ward said: 'A gift is a deemed disposal for capital gains tax purposes, so if you are making a gift of property you will need to calculate whether there has been a capital gains tax charge. 'If there has been a tax charge, then for residential property you must pay the tax liability within 60 days of the gift.' Capital gains tax is due on profits made over the annual exemption of £3,000. This is unlikely – if you are arranging long-term care, then making a large gift could increase your care costs. This is because it could be considered 'deprivation of assets'. The local council will carry out a financial assessment to determine how much you should pay towards your care fees and whether you qualify for state funding. If the council decides you have deliberately given away property in order to pass the test, then it could include the house in its assessment regardless, meaning you may face higher care fees. When making its decision, the council will consider the likelihood of whether you knew you would have to pay for care at the time you gifted the property. If the mortgage has already been paid off, this will make giving away the property simpler. Otherwise, the lender will need to approve the transaction. This can present difficulties for children who may struggle to pass the bank's affordability checks. There may also be stamp duty land tax charged on the value of the debt transferred. Giving away a property will normally require you to draft a deed of gift – a legal document formalising the transfer – and update the ownership records with the Land Registry. Mr Ward said: 'It is possible to make a gift of the beneficial interest of a property and not change the legal title. However this needs to be properly documented and will still create a tax trigger point. 'It is possible for minor children to have a beneficial interest in property, but they cannot be legal owners.'
