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0800 612 6105


Alternatively local rate:

020 8150 2010

The Residence Nil Rate Band – Is Your Will Up To Date?

It was back on 6th April 2017 that an additional inheritance tax relief – the Residence Nil Rate Band – was introduced. The RNRB has reduced inheritance tax for a lot of people, but it isn’t just a case of paying less. There is more to it than that.

The RNRB comes into play when a property is left to someone’s direct descendants. It comes on top of the Nil Rate Band, which currently stands at £325,000. The RNRB adds an extra £100,000 to that sum, and it is set to rise each year in line with the consumer price index. By 2020-2021, it should have reached £175,000.

Any part of the RNRB that is not used can be transferred to the surviving spouse or partner – just like with the NRB. And that may even be the case if your partner died before 6th April 2017, although it is best to get in touch with the experts to find out exactly what your rate band is.

The RNRB will only apply to estates that are valued at under £2million.

What does this mean for your will? If you have already written one, then you will need to make sure that it makes use of the tax saving nature of RNRB. This is especially important if your will contains a trust. The trusts that the RNRB will be available on are a bare trust, a trust for a bereaved minor, an immediate post death interest trust, an 18-25 trust, and a disabled person’s trust.

Although seemingly simple, the RNRB is actually a complex provision, so it is important to speak to an expert if sure you are unsure of any aspect of it.

When Should You Hire A Probate Specialist?

Probate can range between being quick and relatively easy to being incredibly difficult, lasting many months or even years. Sometimes probate isn’t required at all. It can be impossible to tell how long the probate for your loved one’s estate is going to take; even if it seems as though the estate is a simple one, there can be complications. It is often much better for people to hire probate specialists to take core of the entire job for them. There are specific times when this is essential.

One of these times is if inheritance tax is due. Inheritance tax has to be paid on any amount over the current £325,000 threshold, and the rate is at 40 percent. This can definitely complicate probate, and therefore is it best to have an expert help you with it; mistakes can be very costly.

Another reason for hiring an expert is if the deceased died intestate (without a will) and the estate is a complicated one to administer. You may also need a specialist if there is a will but there are doubts as to its validity. These things will need to be checked and double checked, and this can take time.

Sometimes people deliberately leave their family members out of their will. If this happens and children are left out of the will, they may have a claim, which is when specialists will be required to step in and take over the probate claim.

Trusts can also make probate complicated, and if there are assets in trust then you may not be able to deal with them easily. Bankruptcy also complicates matters, as debtors may need to be paid first despite the arrangements within the will.

Whenever a foreign country is involved, a probate specialist should be brought in. It could be that the deceased owned property or other assets abroad, or perhaps they lived outside of the UK at the time of their death. Either way, this can add time and complications to any probate application.

If you are confused by any aspect of probate, get in touch today. We can help.

How Can You Make Sure That Your Will Is Not Contested In Court?

Many people think that once they have written their will, that is it. There is nothing more to be said. It’s done. And while that may be the case for the majority of people, it isn’t always what happens; sometimes will can be challenged and contested in court. How can you stop that from happening?

Know The Value Of Your Estate

When it comes to writing your will, it is best to make sure that it is as accurate as possible. If you own your own property, for example, and you bought it some years ago, or you think that by the time you pass away it will be worth more than you paid for it, it will be worth getting a valuation. If you would rather not have someone come to value your home, then look around at the other houses that are for sale in your area, and compare those prices. It can come as rather a surprise to discover just how much your property really is worth. Once you know the value of your estate (not just the property, but everything else you own added together), as well as any life insurances, you will have all the information needed to decide how to distribute your estate. Make sure there is a lot of information written in the will as it is a lack of information and misunderstandings that often lead to a will being contested.

Tell People What Your Will Says

If you let people know what to expect from your will before you die, they will be prepared, even if they don’t agree with it. Hopefully they will have plenty of time to get used to the idea. Surprise can lead people to contest a will if they don’t get what they were expecting from the estate.

Update Your Will

An out of date will is a big reason for it to be contested. Life changes a lot, and it is likely that it will change from the time you wrote your will initially until the time it will need to be executed. Therefore, when these changes occur (births, deaths, marriages, additional income and property, loss of those things, business deals and so on) you must update your will to reflect the new status. You can either create a brand new will, or you can add a small change via a codicil.

How Much Time Do You Have To File A Will?

Everything can seem rather a rush after someone has died. There is so much to do, so many loose ends to tie up, and filing the will just seems like one more job to do that has to be done right now.

The good news is, there are no time limits when it comes to applying for probate. Bear in mind, though, that until you have the grant of probate, you won’t be able to divide the estate as per the instructions in the will, so although there is no particular time frame that needs to be taken into account, you might want to make applying for probate a priority in order to execute the will successfully.

There are, however, time limits for inheritance tax payments, so if the estate you are dealing with is worth more than £325,000 (or £650,000 if it was passed to the surviving spouse who then passed away) then 40 percent of anything over than amount will need to be paid to the Treasury within one year.

Although applying for probate is probably going to be the last thing you feel like doing when a loved one passes away, the longer you leave it, the longer the estate will be ‘in limbo’. It’s true that you will need time to grieve, and to arrange the funeral and secure any empty properties, but it is important to organise the distribution of the estate as well. Without probate, you won’t have the legal authority to handle any of the affairs of the diseased. Also, if things take too long, you may find that the beneficiaries become impatient, and request that you let someone else be executor.

Debts From The Dead

It is a myth to believe that your debts are wiped out when you die. Some of the smaller ones might be written off, but anything owed to a council will need to be paid by the estate, as councils have a legal duty to collect money owed to them (since it is used to benefit the public in most cases).

A recent survey showed that in Nottingham almost £260,000 is owed from the deceased, amounting to around £600 for each of the 430 estates.

It is difficult both in terms of time and because of the sensitive nature of dealing with the estates of the deceased, which is why Nottingham City Council has chosen to outsource the work; they now use a specialist company to collect the money for them. And it appears to be working. The company was tasked with collecting an initial amount of £72,074, and has so far brought in £46,608.

The council pays for the service, but feels they are still getting a good deal, as they are gathering in money they would otherwise possibly have struggled to recoup.

So it’s good news for the debt collectors, and it’s good news for the council. But what about the families of those who have passed away and now need to pay council tax arrears? Some are finding it a bitter pill to swallow, whereas other are more accepting of the bill.

What do you think? Is it right for a council to collect council tax after someone has died? And if so, is it right for them to use a specialist company to do it?

What Should The Executor Do Once Probate Has Been Granted?

The first important job that an executor will need to do is to apply for probate, assuming that it is required. Once probate has been granted, they will have a number of other duties that need to be carried out before they can step down as executor and return to their everyday lives.

One of the most important things to do is to arrange for the burial or cremation of the deceased. If the executor is not a family member, then they will need to speak to those left behind regarding the wishes of the deceased – and their own wishes too – to find out what needs to be done. It may be that the deceased left instructions in their will, or that they had a pre-paid funeral plan, and that would make the job easier for the executor.

The executor will also need to take control of all the deceased’s assets, and collect any debts that are owed to the estate. On the other side of that coin, they will need to pay any debts that are owed by the estate to other creditors.

Finally, the last job of the executor is to distribute the assets of the deceased’s estate to the beneficiaries named within the will.

What Happens If Probate Is Not Applied For?

If probate is needed when someone dies, and no one applies for it, then no one will legally be allowed to receive their inheritance. Instead of the executor passing everything along to those who have been named, the assets will be frozen until probate is achieved. Probate gives the executor the legal authority to deal with the deceased person’s possessions, and without it, it will be impossible to wind up their affairs, including closing down bank accounts, transferring (or selling) property, transferring pensions, and cashing in investments.

Not every estate will need probate; it will depend on the value of the assets, and how those assets were held as part of the estate. Probate is not normally required for estate that are worth less than £5,000, and sometimes the limit will be higher – it depends on the policies of the bank or financial institutions holding the money as to whether they will want to see probate or not before releasing the funds.

If the property or bank account is in a joint name, then the surviving owner will become the sole owner (unless something different was stipulated in the deceased’s will), and probate won’t be required for this.

If you are unsure whether probate is required, it’s best to speak to the experts who can give you the best advice.

What Is An Irrevocable Trust?

What is an irrevocable trust? Simply put, an irrevocable trust is one that cannot be changed once it has been agreed and signed. A revocable trust can become an irrevocable trust after the person making the trust dies – or after another specific date if that is put in writing.

This is what happens with most revocable trusts. In order to make probate easier, it will immediately become irrevocable on the death of the trust maker. It will also often split into separate irrevocable trusts, one for each of the people named within it. These can be lifetime trusts, if they are for dependents.

You may wish to write an irrevocable trust if you want to reduce your inheritance tax liability since anything in trust (such as your property) won’t be counted as part of your estate when you die, and therefore won’t be subject to inheritance tax.

An irrevocable trust can also be useful if you want to leave some of your estate to charity. You can leave part of the estate in trust, so that the charity receives exactly the amount that you chose.

Are Scottish Wills Different?

You will often notice that when anything is talked about in legal terms, including probate and will writing, that Scotland is kept separate from England and Wales. This is because there are different laws governing the country. However, even if the laws are different, there will still be some cases wherein people have properties in both Scotland and England or Wales – and this is where confusion can lie.

The type of will you write should depend on where you are living. So if you live in Scotland, it is best to write one in line with the Scottish rules. If in England and Wales, choose to work on the English and Welsh rules. This is the case even if you have property in another country – the will you write should be connected to where you are living. Probate will be different too.

Scottish wills are different

There are some big differences between Scottish wills and English and Welsh wills. One of the biggest is that marriage does not invalidate a previous will in Scotland. Therefore, it is essential that you make a new will if you are living in Scotland and have re-married, otherwise your original will will still be valid and your ex-spouse may inherit everything when you die, even if you divorced many years ago.

In Scotland, the testator has to sign every page of the will, rather than only once at the end. And witnesses need to include their name, address, and occupation. However, unlike in the rest of the UK, it is possible for a will to be written and signed by the testator without any witnesses, or if the witnesses are also beneficiaries, using a special handwritten statement. If you choose to do this, then it is imperative that you have expert advice, as failing to adhere to the rules could make your will invalid.

The spouse and children have ‘prior rights’ under Scottish law so that they cannot be deliberately excluded from inheriting. The spouse would be entitled to the house to the value of £65,000, furnishings to £12,000 plus cash to £21,000 if there are children or £35,000 if there are no children.

Deed of Variation

Deed of Variation

After the death of a person, a deed of variation can be created to alter the distribution of that persons estate. There are several reasons why people would enter into a deed of variation not least to save inheritance tax, especially if a person passes away intestate.

If a person died intestate it is possible that because of the strict inheritance tax rules, their whole estate does not necessarily pass to a spouse who would be exempt from paying inheritance tax. If the adult children agree, they could sign a deed of variation to divert the whole estate back to the surviving spouse. This is just one example of why people would use a deed of variation. There are many others including of course using a deed of variation to change the terms of the persons will.

Deed of Variation form

There is no set form that can be used for a deed of variation, this is because the wording of nearly all deeds of variation is bespoke, deeds of variation are bespoke legal documents. This means they are written for a specific scenario.  There is especially no do it yourself deed of variation document available. We will explore the do it yourself deed later in this page.

HMRC deed of variation checklist

As with the above question with regards a deed of variation form there is no HMRC checklist for the deed of variation.  In most scenario’s when entering a into a deed of variation HMRC need not be involved.  The variation document would only be sent to HMRC if it affects the current tax position. Noting that the document may also be required if the person who was agrees to enter into the variation dies within seven years or perhaps 14 years if they had made use of other inheritance tax gifts.  Another reason HMRC would also need to see the deed of variation would be when any surviving spouse passes away. If do wish to ensure your deed would be accepted and you are worried that no checklist exists then contact us for further advice.

Deed of variation cost

As we previously outlined this type of document is bespoke thus the deed of variation cost can also be variable. The cost of a deed of variation, if it was quite simple is around £250 plus VAT however, deeds that transfer estates to a trust can vary on cost considerably.  If you are unhappy with the cost of a deed of variation that you have been quoted call us to see if we care able to offer a most cost effective approach.

Do it yourself deed of variation

The DIY market for legal documents is not really something we would advocate as such the do it yourself deed of variation is one example of a document that we would not be able to supply. If you `are looking to enter into a deed of variation it is likely that you are looking to alter the inheritance tax position of either the deceased estate or perhaps the beneficiaries of that persons estate. HMRC may well be interested in viewing the document, although they do not supply a checklist, they may wish to check the document conforms with the legal position.  A Do it yourself deed of variation could be a ticking time bomb, in other words you may not even know the do it yourself deed of variation is even invalid until many years later.  Considering, that if the deed of variation effects any tax position, it must be entered into within two years.  In other words, unlike some legal documents, it cannot be corrected years later.

Deed of Variation

Deed of Variation created to alter the distribution of an estate

Who signs a deed of variation

The person who signs a deed of variation is any person that is affected by the money that is going to be redirected. For example, if an estate is being left to five people and one of them does not wish to receive his or her inheritance then he or she would be the person who signs a deed of variation. The other beneficiaries need not sign the document and in fact not only do the others not sign the deed of variation they do not even have to know that the deed was effected.  Only the person or people affected by the deed of variation signs the deed.

Deed of variation letter template

If you are a Solicitor or other legal professional looking for a deed of variation letter template then although we would not supply a complete letter template we would be pleased to help you with some standard clauses. If you are a member of the public looking for the deed of variation letter template then although it is possible to sign a deed of variation in this way we would not advocate such a template letter, this is because HMRC may need to know that the beneficiaries signed a deed of variation form and without the correct advice and correct legal clauses it may not be valid and comply with HMRC deed of variation checklist.

Deed of variation example wording

We cannot supply the deed of variation example wording but are happy to supply basic example wording to any legal professional.  In our opinion this type of document should not be created on do it yourself deed of variation basis. Call us for a quote, we will be happy to let you know the deed of variation cost. We need not visit you at home to create the document, instead we can simple email you our basic instruction form to begin the process.

 

 

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020 8150 2010

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