Wills, Probate and Inheritance Q & A
Experienced London Private Client Solicitor, Neil Acheson-Gray,Head of Rollingsons Wills, Probate and Inheritance Department Answers Your Questions
Q I don't need a Will. My wife will get it all, won't she?
A Not so. Only if you make a Will leaving her everything will you wife be certain of taking it all. If there is no Will, a surviving spouse only receives the first £250,000, with the balance over that figure being shared with the children. If the estate is large, the size of the children's share may even attract Inheritance Tax.
Q We don't have any children so surely the wife gets it all?
A She will get the first £450,000 but again any balance will be shared, this time with any parents, or brothers and sisters or their children, opening the door to your mother-in-law inheriting which you may or may not want!
Q Well actually my estate is pretty modest so I don't really need a Will, do I?
A Even the smallest and simplest estate will usually benefit from having someone named as Executor from the outset as this avoids having to prove that you are the person entitled to arrange the funeral and apply to the bank for funds to pay for it.
Q But my family know what I want....
A .... yes, but how much more satisfactory to make a simple Will and name them as the Executors. It will save them a lot of trouble when the time comes and will give them the comfort of knowing that they are carrying out your wishes.
Q OK, so I'll make a simple Will just to keep my wife happy and to stop my mother-in-law getting a look in. What does that involve and how much am I going to have to pay?
A The simplest form of Will could just appoint your wife as Executor and leave her everything you own but I don't really recommend this. Why not include provision form the children and even their children in case you survive your wife. For a Will of this type Rollingsons' fees will not exceed £225 + VAT and may even be less than that if the matter proceeds swiftly and smoothly. This type of Will would also be appropriate for your wife and the cost for a pair would most likely not exceed £395 + VAT. We do charge a bit more where personal meetings are involved or if the content of the Will or the range of assets is not straightforward.
Q Now I think of it, I have some policies which will mature soon and expect to get a lump sum when I retire. This could mean that I might one day have some tax to pay. Is there anything I can do? I would much rather my children or grandchildren got the money and not the taxman.
A The basic principle being successful tax planning is to make yourself aware of the available reliefs and use them as a matter of routine. Over the years you can reduce your estate or at least stop it growing any larger in a way which doesn't involve substantial or life changing gifts. It is also essential to start this process early so that there is time for you to establish a pattern or to use the annual allowances to the full. We can advise you on making regular gifts out of income, setting up trusts for your grandchildren or just passing on assets to your children in your lifetime.
Q How early is early?
A As soon as you feel able to part with some of your wealth. For annual gifting, the sooner the better. For larger lump sums, the rule is that a gift made on or within seven years of your death is not treated as any part of your estate for Inheritance Tax purposes so logic dictates that you consider such gifts at the earliest possible opportunity.
Q Yes, but how do I know that this money won't be needed?
A There are some forms of investment bond which enable you to pass on the capital but continue to benefit from an income but these are exceptions and the general rule is that you cannot have your cake and eat it too and must genuinely parting with the money or the assets before the time starts to run in determining the date of the gift.
Q So, going back to the Will, is it right that Executors cannot be beneficiaries?
A The question is usually posed the other way around and it is a popular misconception that beneficiaries cannot be Executors. This is simply not correct and in fact beneficiaries make ideal Executors as they have an interest in doing the job properly and efficiently.
Q So what is the difference between an Executor and a beneficiary then?
A Executors are the people you entrust with carrying out your wishes as expressed in the Will by which they are appointed. They have the ability to obtain details of your assets and their value and have a duty then to consider if any IHT liability arises before they take steps t distribute the estate, At Rollingsons , we have experience of administering estates large and small and conducting negotiations with HM Revenue & Customs over value or whether or not the criteria for satisfying exemptions and reliefs have been satisfied , often with considerable savings in IHT.
Q What do you charge for this?
A In most cases we charge by reference to the time spent with an average estate attracting a fee between £3,500 + VAT and £5,000 + VAT. In cases of exception size and complexity, we are entitled to a fee reflecting these factors and will charge this as a percentage of the value of the gross estate but will always discuss and agree this with you in advance.
Q How long does it take?
A Solicitors are often blamed for delays when in reality we are waiting to receive a response from asset holders or even our own clients! It is rare for an administration to extend beyond the first anniversary of the death and many estates are wound up sooner than that.
Q Thinking of my mother-in-law, she is getting on a bit and my wife worries about the time when she can no longer look after herself. Is there anything we should be doing?
A The obvious first step is for her to sign a Lasting Power of Attorney. This is a privileged form of power which is intended to survive any subsequent incapacity provided it is drawn up and signed following all the prescribed formalities. Once registered , the attorney is empowered to deal with matters day to day such as paying bills and also with more major steps such as the sale of property and the need for additional care either at home or in a residential home.
Q We've got an old Power of Attorney and also an Enduring Power of Attorney. Won't they do the trick?
A The Enduring Power of Attorney was the forerunner to today's LPA. If executed before October 2007, it will remain valid and can be used once registered. I am afraid the ordinary Power of Attorney is likely to be invalid as soon as your mother-in-law displays any signs of incapacity. It was not intended to survive any such deterioration and it was this that gave rise to the privileged forms of Power which nowadays make it unusual for there to be any need to apply to the Court of Protection for the appointment of a Deputy.
Q These all seem such simple steps. How come everybody does not take them?
A It's a fact that at any given time well over half of the population have not made a valid Will. It is important to make a Will in any circumstances and absolutely essential if you have infant children for whom a support system needs to be in place if they are orphaned at a young age.
Q Well, you have certainly made out a case for making a Will and tackling the potential problems of gifts to the next generation and even looking after the mother-in-law when the time comes. Where shall we start?
Contact Neil Acheson-Gray at Rollingsons' London Wills, Probate and Inheritance Department
We can offer you an initial consultation at a reduced rate. To discuss your case please call 0800 011 6433 or contact Neil Acheson-Gray, Head of the Wills, Probate and Inheritance Department, electronically.