Can I get a refund on Inheritance Tax?
When applying for probate, inheritance tax is paid to HMRC based on the value of the asset at the date of death (this is the Probate value). Looking at properties specifically, we have seen in recent years and particularly since covid, that property prices have increased from the Probate value to when the property is sold (Realised value). This has often caused a capital gains tax liability.
However, recently and because of rising mortgage rates, house prices are falling from the probate value to the realised value.
In a taxable estate, if you or your solicitor has obtained a Grant of Probate and the property is later sold for less than the Probate value, the estate will be entitled to claim back the additional inheritance tax.
Overpaid inheritance tax would need to be claimed from HMRC within four years of a death.
Unfortunately, this is often overlooked, and big refunds could be due to an estate. If you are a Personal Representative of an estate, you are under a duty to be acting in the best interests of the estate and beneficiaries. As such, if you think this relief may be relevant to you, it is strongly advisable to seek legal advice.
Digital Assets and Lasting Powers of Attorney
Digital assets are in essence anything created that belongs by you and is in digital form. This could be from data stored electronically such as in the cloud or online accounts for amazon, social media, shopping, subscriptions etc. It also includes your banking, computer hardware, and website/domain names you may own.
Have you considered however, what would happen if you were to lose capacity and how these assets would then be accessed and managed.
The starting point is that a lasting power of attorney for your property and financial affairs is paramount. This legal document will ensure that you have appointed persons you trust (called attorneys) to look after your affairs on your behalf.
However, it is important to use a legal professional to draft your lasting power of attorney because for your attorneys to be able to access and manage digital assets, the lasting power of attorney requires additional clauses in the document to empower your attorneys to handle digital assets. This is because, digital assets, under their respective agreements, will not allow access to a third party without such express authority.
We would also advise that a memorandum of digital assets accompanies the lasting power of attorney with details of all your digital assets, username and passwords and encourage that this is regularly updated whilst you have capacity for your attorneys to have access to.
By giving the right authority in your lasting power of attorney for your attorneys to access your digital assets along with a memorandum stored securely, you will have peace of mind that your digital assets will continue to be in managed in your best interests.
Preventing A Will Being Contested
Safeguarding Your Legacy: How to Prevent Your Will from Being Contested
Estate planning can be a complex and emotional journey. A key document in the process is the Will, which serves as a roadmap for the distribution of your assets after your death. Unfortunately, it can sometimes be challenged by unhappy beneficiaries.
In this blog post, we will explore the steps you can take to minimise the chances of your Will being challenged, ensuring your wishes are respected and carried out as intended.
Engage an experienced estate planning solicitor:
The first and most crucial step is to consult a qualified estate planning solicitor. They can help you navigate the complexities of estate law and ensure your Will is drafted correctly. This will reduce the likelihood of your Will being challenged on technical grounds or due to errors in its preparation.
Ensure your will meets all legal requirements:
To ensure that your Will is legally valid, it must meet certain requirements. Generally, these include:
The testator (you) must be at least 18 years old and of sound mind.
The Will must be in writing, signed by the testator and witnessed by two independent witnesses.
Consult your solicitor to ensure your Will complies with all legal requirements.
Clearly communicate your intentions to your family:
Open and honest communication with your loved ones about your intentions can prevent misunderstandings and reduce the likelihood of your Will being challenged. Make sure your family members understand your wishes and the reasoning behind them.
Consider a statement supporting your Will:
A statement of your intentions setting out why you made the Will you have can help to keep any claims to a minimum.
Update your Will regularly:
Life circumstances change, and so do your relationships and assets. Regularly review and update your Will to ensure it remains relevant and accurately reflects your wishes. An up-to-date Will is less likely to be challenged on the grounds that it no longer represents your intentions.
Address potential challenges head-on:
If you anticipate a specific individual may challenge your Will, consider discussing your concerns with your solicitor. They can help you identify any weaknesses in your Will and suggest strategies to address these potential challenges.
Obtain a medical assessment:
If there are concerns that your mental capacity may be questioned, consider obtaining a medical assessment from a qualified professional. This assessment can be included as part of your Will as evidence of your mental capacity at the time of signing.
While it may be impossible to entirely prevent challenges to your Will, following these steps can significantly reduce the likelihood of a successful challenge. By engaging an experienced estate planning solicitor, ensuring your Will meets all legal requirements, and addressing potential challenges proactively, you can safeguard your legacy and ensure your wishes are honoured.
Secure Your Legacy for Free
The Benefits of Participating in Free Will Month
At Welland Valley Legal, we have been privileged to participate in Free Wills Month since our inception, supporting as many people as possible in protecting their loved ones after their passing. As we conclude this year’s Free Wills Month, we would like to offer an overview for those considering participating in the initiative during March 2024.
Free Will Month is an initiative that provides people aged 55 and over with the opportunity to have their Wills written or updated for free. While it may seem like a daunting task to think about writing a Will, taking part in Free Will Month can provide several benefits.
It is free
The most obvious benefit of Free Will Month is that it is completely free. Writing or updating a Will can often be an expensive process, so taking advantage of this initiative can save you a significant amount of money.
Peace of mind
Writing a Will can provide peace of mind, knowing that your assets will be distributed according to your wishes after you pass away. This can also provide reassurance to your loved ones, who may be worried about what will happen to your estate.
Participating in Free Will Month means that you will receive professional advice from a qualified solicitor. They can help you to navigate the process of writing a Will, answer any questions you may have, and ensure that your Will is legally binding.
Supporting a charity
While the service is free, Free Will Month encourages participants to consider leaving a gift to one of their partner charities in their Will. This can be a great way to support a cause that is important to you and leave a lasting legacy.
Writing a Will can be a time-consuming process, but participating in Free Will Month can save you time by providing you with access to a solicitor who can guide you through the process efficiently.
In summary, participating in Free Will Month can offer many benefits, such as saving money, obtaining peace of mind, receiving professional advice, supporting charity, and saving time. Writing a Will is essential to ensure your assets are distributed according to your wishes, and Free Will Month provides an excellent opportunity to do so without any cost.
Protecting Vulnerable Beneficiaries
How to Ensure Your Loved Ones are Taken Care of After Your Death with Wills and Trusts
When creating a Will or Trust, it’s important to consider how your assets will be distributed after your death. However, if you have a beneficiary who is underage, has special needs, or is otherwise vulnerable, it’s even more critical to ensure that they are protected and taken care of.
Here are some tips on how to protect your vulnerable beneficiaries with Wills and Trusts:
Set up a Trust: A Trust is a legal arrangement where a trustee holds and manages assets on behalf of a beneficiary. This can be an effective way to ensure that your vulnerable beneficiary’s needs are met, even if you’re no longer around to provide for them. A Trust can be tailored to the specific needs of your beneficiary, such as providing for their healthcare, education, or living expenses.
Name a Guardian: If you have a minor child, it’s important to name a Guardian in your Will. This person will be responsible for taking care of your child if you’re no longer around to do so. It’s essential to choose someone you trust and who is capable of providing for your child’s physical, emotional, and financial needs.
Consider a Disabled Trust : If your beneficiary has a disability or special needs, a Disabled Trust can be established to ensure that they are provided for without jeopardising their eligibility for government benefits. This type of Trust can be designed to provide for the beneficiary’s needs while still allowing them to receive government assistance.
Provide for a Trusted Caretaker: If your vulnerable beneficiary is an adult with special needs, it’s essential to ensure that they have a trusted caretaker who can provide for their needs. This could be a family member or a professional caregiver, depending on the circumstances. By providing for a trusted caretaker, you can ensure that your beneficiary’s needs are met even if you’re no longer around to do so.
Work with an Experienced Solicitor: Creating a Will or Trust can be complex, especially when dealing with vulnerable beneficiaries. It’s essential to work with an experienced solicitor who can guide you through the process and ensure that your wishes are carried out correctly.
Protecting vulnerable beneficiaries is crucial when creating a Will or Trust. By taking the time to consider their needs and providing for them in your estate plan, you can ensure that they are taken care of and have a bright future ahead of them.
Missing beneficiaries, what do I do?
The starting point is to ensure you have asked all friends and beneficiaries who may have a connection to the missing beneficiary.
If that method has been exhausted, it is recommended to place a statutory advertisement in the law gazette and local paper to where the deceased lived. It gives a beneficiary 2 months to come forward and make a claim on the estate. It could encourage a beneficiary to come forward.
The other common method to trace missing beneficiaries is through engaging a genealogist who will make detailed enquiries such as looking at family trees and historical records. Often such firms work on a fixed fee or contingency basis.
If a beneficiary cannot be found, then personal representatives should do one of the following:
- Take out missing beneficiary insurance
- Obtain indemnities from the known beneficiaries – this is an agreement between the personal representatives and known beneficiaries that they will reimburse the PRs if the missing beneficiary is later traced. It then allows the estate to be distributed.
- The personal representatives could hold back the money that is due to the missing beneficiary in case they come forward in the next 12 months
- Payment to court under section 63 Trustee Act 1925
Personal representatives can be held personally liable to beneficiaries if an estate is not distributed correctly so if there is a missing beneficiary it is advisable that personal representatives take legal advice to ensure they are taking the right steps.
How to deal with digital assets in a Will
Digital assets range from digital photos, social media accounts, graphics and artwork to cryptocurrencies and documents in an icloud account.
It is becoming more and more common for people to hold lots of their assets digitally and personal representatives need to have authority to deal with those assets when somebody dies.
Digital assets are intangible assets. This means that for these assets to pass in an estate to a beneficiary a specific gift is required in the Will.
It is also really important that your executors are given the power in your Will to deal with your digital assets too. This will allow them to access email accounts and delete emails or accounts.
For social media accounts, some will allow executors to close them down and others you must nominate someone to deal with them outside of the Will. This is always worth checking. For example, with your iPhone, it is essential that under your settings and passwords section that you nominate a ‘legacy contact’ so such person can access your photos and other information held on your phone. The same applies to Facebook – you can nominate a legacy person in the settings area.
With digital assets such as cryptocurrency, the executors will need to know the unique keys and log in details in order to access them and then arrange a transfer of the investments or encash them. If they have a monetary value, executors are required to inform HMRC for probate purposes.
It is recommended that an inventory of your digital assets and their passwords is provided and held with the Will to make it easier for executors to access them when you pass away. This along with the right clause in the Will for your executors to have the power to deal with them is very important.
Please give us a call to discuss further.
Can I include my pet in my Will?
Do you have a beloved dog or cat and are wondering what will happen to them if you pass away?
You can include them in your Will so that somebody is nominated to look after them and this is often accompanied with a small gift of money to assist with the costs of their care. You can also express, if you have no such person, a charity you would like to help to rehome them.
If you do not want to put such a clause in your Will, you can instead express any wishes you have in a letter of wishes. A letter of wishes accompanies your Will but is not legally binding. It is there to guide your executors who should try to carry out those wishes.
If you wish to discuss this further, please give Welland Valley Legal a call or complete our contact form.
Who would look after my children if I passed away
It is often assumed that family members or perhaps godparents will automatically look after your children should both Mum and Dad pass away.
This is wrong. You must appoint legal guardians in your Will to give them the legal right to look after your children. Without this, the court will step in and decide.
If you have just started a family or have older children who are still under the age of 18 it is highly recommended that you make a Will and appoint guardians so that you can have peace of mind that your children will be with the people you want them to be cared by.
Did you know charities rely hugely on legacies being left in Wills?
Around £3 billion a year is received by charities through people leaving legacies in Wills. Leaving monies to charities is a great way to give back and support many institutions doing extraordinary things for people, animals and worthy causes. If legacies were not left by generous people in their Wills, many charities simply could not function and provide the valuable services they do.
Notwithstanding this but there can be huge tax incentives to leave charities a legacy. If more than 10% of your estate is gifted to charity and your estate is subject to inheritance tax, then the tax rate applied is reduced from 40% to 36%.
Finally, it is worth noting that if you die without a Will and there are no relatives, your estate with pass to the Crown. It is therefore imperative to make a Will and if you do not know who to leave your estate to, then name a charity so that you have peace of mind your estate will be put to good causes.