Later Life Planning from The Last Resort Ltd
If you are reading this, the chances are you haven't made a Will nor do you have a Lasting Power of Attorney in place. Don't worry, you're not alone!
No one likes to think too much about dying, so it's hardly surprising that an estimated 67% of adults in the UK (that's 36.7 million of us) don't have a Will in place.
Yet a valid Will and A Lasting Power of Attorney is one of the most important financial arrangements you can make during your lifetime and could save you and your family a great deal of hassle and heartache should you become incapacitated or die.
Why Make a Will?
Well, the reality is If you don't make a Will, all of your possessions go into probate and the government then tries to guess where you would have wanted to leave your assets. This is a lengthy and time consuming process. Dying Intestate can cause untold expense and misery at a very difficult time.
In addition you have the power to prevent the Court of Protection getting involved by allowing your partner/family member or business partner to access your finances should you become incapacitated, so a Lasting Power of Attorney should be seriously considered.
A Lasting Power of Attorney falls into Three categories:
Financial/Property (Personal), Financial/Property (Business), and Health & Welfare. These are crucial. See this short video. It Shows what can happen if you don't have an LPA attached to your Will. A Will in isolation is not sufficient.
Less than 1% of the UK population have an LPA in place. The Treasury make a fortune by you not having one. The government do recommend you have one put in place, but rely on your lethargy and ignorance, because they know you can't be bothered, and think "It's something we can do later". The time to make that decision is NOW, while you can still make that decision.
And as if you needed any more reasons....Last year the Treasury gained £73m from people who died without a will. The year before that was a staggering £86m! In addition to this you can add the £3.26 Billion taken in property from the elderly in an attempt to off set the growing cost of care home fees!
So what are you waiting for?
Make an appointment with one of our specialists to visit you in the privacy of your own home. It's free and there is no obligation to proceed if you don't want to!
Inheritance Tax Explained: Thresholds, Rates And Who Pays.
Inheritance tax is no longer just a tax for the wealthy.
Inheritance tax (IHT) is a tax on money or possessions you leave behind when you die, and on some gifts you make during your lifetime.
However, a certain amount can be passed on tax-free, which we call the 'tax-free allowance'. This is also known as the 'nil rate band'.
Everyone in the 2015-2016 tax year has a tax-free inheritance tax allowance of £325,000. The allowance has remained the same since 2010-11, and will stay frozen until at least 2017.
There are also a number of gifts that you can make during your lifetime or in your Will that are also tax free and these are covered later.
If you need more help with your inheritance tax questions, please contact us at The Last Resort on 0800 009 6769.
Inheritance tax thresholds and rates
If you are single and die during the tax year 2015-2016 with an estate worth more than £325,000 (including money, property and investments, but after deducting debts and expenses such as funeral costs), 40% tax will become due on anything above £325,000.
For example, if you leave behind an estate worth £500,000 the tax bill will be £70,000 (40% on £175,000 – the difference between £500,000 and £325,000).
However, if you are married or in a civil partnership, you may be able to leave more than this before paying tax.
Inheritance tax rules for married couples and civil partners
Married couples and civil partners are allowed to pass their possessions and assets to each other tax-free and, since October 2007, the surviving partner is now allowed to use both tax-free allowances (providing one wasn’t used at the first death).
At the extreme, this effectively doubles the amount the surviving partner can leave behind tax-free without the need for special tax planning.
However, some people whose partner died before 21 March 1972 will be caught by a loophole which means they don't get a 'double allowance'.
Making a gift
As well as on your estate at death, inheritance tax may also be payable on gifts you make during your lifetime, especially if you die within seven years of making the gift. Gifts fall into four basic categories:
• Always tax-free irrespective of when you make them.
• Potentially tax-free (known as potentially exempt transfers or PETs)
• Taxable, but no tax due at the time the gift is made.
• Taxable, and tax is paid at the time the gift is made.
Who pays the inheritance tax bill?
Inheritance tax that becomes due on money or possessions passed on when you die is usually paid from your estate. Basically your estate is made up of everything you own, minus debts such as your mortgage and expenses such as funeral expenses.
However, if the tax is due on gifts you made during the last seven years before your death, the people who received the gifts must pay the tax due. If they cannot or will not pay, the amount due then comes out of your estate.
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Freephone: 0800 009 6769