Private Client FAQs

Q
I'm single, so I don't need a Will, do I?

A
Under the Intestacy Rules those whom the law regards as your next of kin, in the order which the law prescribes, would inherit. This means, for example, that parents take before brothers or sisters. A Will gives you the opportunity to make your own decisions, for example choosing someone you trust to act as Executor and leaving legacies to friends or charity.

 

Q
Can I be certain that the family will honour my wishes?

A
It can be useful to appoint an independent person such as a solicitor to be a professional executor of your Will. We would ensure the terms of any Will are honoured and can be trusted to act impartially in the event of disputes between different factions in a family.

 

Q
My partner and I have just bought a house together. Would it be appropriate for us to make Wills?

A
Definitely! The Intestacy Rules only cover married couples or those in registered Civil Partnerships.

 

Q
My partner has died without leaving a Will. His family say that I must leave the house at once. Where do I stand?

A
You may well have a claim for financial provision that can be enforced through the courts, despite there being no Will.

 

Q
Should we be worried about Inheritance Tax?

A
If the combined worth (add together the values of, for example, house, savings, insurances, pensions and chattels) of a married couple exceeds £624,000 (£312,000 for a single person - which includes co-habitees) then the Chancellor will charge IHT at 40% on the excess.

 

Prior to October 2007 married couples were advised to make use of both their nil rate bands for IHT. This involved complicated nil rate band trusts. These however may no longer be needed as in October 2007 the Government introduced the transferable nil rate band. This can best be illustrated with an example: The husband died in 1998 having made no gifts in his lifetime and his will passed all his estate to his surviving spouse. When she dies in say 2012 the nil rate band for IHT has increased to £450,000. The surviving spouse can now leave £900,000 free of IHT.

The new arrangements are simple but existing wills should not be discarded without advice, as the flexibility of nil rate bands may have other benefits and can offer solutions to more complex arrangements.  

Q
I read that trusts had been killed off by the IHT changes; is this true?

A
Not entirely. New life interest trusts and trusts for children or grandchildren may face additional tax charges. But there are still many opportunities to transfer wealth in a more tax efficient manner.

 

Q
What about the trust that my mother set up for the grandchildren 8 years ago?

A
The new IHT regime will apply to many existing trusts after 5 April 2008. All current trusts should be reviewed before then by a Solicitor. We suggest you choose someone who is a member of the Society of Trust and Estate Practitioners (STEP), to ensure that they have suitable expertise.

 

Q
Is it a good idea for Mother to give me a share in her house?

A
House sharing arrangements can, if appropriately structured, avoid falling foul of the pitfalls associated with the IHT 'gift with reservation of benefit' regime or the Pre-Owned Asset income tax charge. Capital Gains Tax is a further consideration. These arrangements may sometimes reduce liability for Local Authority care costs.

 

Q
My mother has gone into a home. Do we need a Power of Attorney?

A
A Lasting Power of Attorney (LPA) is appropriate, but if Mother no longer has sufficient mental capacity it is too late for her to make one.

 

Q
If it's too late how can we deal with her finances?

A
By appointment of a Deputy through the Court of Protection. As this can be time-consuming, complex and expensive, it is preferable to set up an LPA in advance.

 

Q
I'm 32 so I don't need an LPA, do I?

A
At any age you may suffer an accident which impairs your mental capacity. If that happened, an LPA would allow your chosen relatives to deal effectively with your financial matters without the ongoing expense and aggravation of a Court of Protection receivership.

 

Q
Father is mentally sound at the moment but he has difficulty with things like signing cheques; can you help us?

A
An LPA can take effect immediately - it does not have to be delayed until the onset of mental incapacity. Father can ask his attorney to do things for him straight away.