COVID-19 pandemic has made more people think about just how crucial it is to make a Will
Since the outbreak of coronavirus (COVID-19), the number of people seeking to write new Wills has risen by over 30%, according to The Law Society. Understandably, the current situation is causing angst among people, particularly elderly and vulnerable clients who have been self-isolating. It’s estimated that more than half of British adults have not made a Will.
Are you worried about leaving an inheritance to your loved ones and then having them pay tax on your legacy? No one likes to think about a time when they won’t be here, but the reality is that unfortunately some people aren’t prepared financially.
Preserving your wealth and transferring it effectively
Estate planning is an important part of wealth management, no matter how much wealth you have built up. It’s the process of making a plan for how your assets will be distributed upon your death or incapacitation.
How to give away your wealth and keep some control
Trusts are not a one-size-fits-all solution, but they are incredibly useful for protecting and giving you control over your assets. Appropriate trusts can be used for minimising or mitigating Inheritance Tax estate taxes, and they can offer other benefits as part of an integrated and coordinated approach to managing wealth.
Allowing someone to make decisions for you, or acting on your behalf
A lasting power of attorney (LPA) enables individuals to take control of decisions that affect them, even in the event that they can’t make those decisions for themselves. Without them, loved ones could be forced to endure a costly and lengthy process to obtain authority to act for an individual who has lost mental capacity.
Passing on your assets effectively whilst you’re alive
Some people like to transfer some of their assets whilst they are alive – these are known as ‘lifetime transfers’. Whilst we are all free to do this whenever we want, it is important to be aware of the potential implications of such gifts with regard to Inheritance Tax. The two main types are potentially exempt transfers (PETs) and chargeable lifetime transfers (CLTs).
The Inheritance Tax residence nil-rate band (RNRB) came into effect on 6 April 2017. The
RNRB provides an additional nil-rate band where an individual dies on or after 6 April 2017, owning a residence which they leave to direct descendants. During the 2019/20 tax year, the maximum RNRB available is £150,000. This rises in £175,000 in 2020/21, after which it will be indexed in line with the Consumer Prices Index.
The 6 things you need to consider to help preserve your wealth
Whether you have earned your wealth, inherited it or made shrewd investments, you will want to ensure that as little of it as possible ends up in the hands of HM Revenue & Customs. With careful planning and professional financial advice, it is possible to take preventative action to either reduce or mitigate a person’s beneficiaries’ Inheritance Tax bill – or mitigate it altogether. These are some of the main areas to consider.
If a person wants to be sure their wishes will be met after they die, then it’s important to have a Will. A Will is the only way to make sure savings and possessions forming an estate go to the people and causes that the person cares about. Unmarried partners, including same-sex couples who don’t have a registered civil partnership, have no right to inherit if there is no Will. Another of the main reasons for drawing up a Will is to mitigate a potential Inheritance Tax liability.
How do you leave a legacy which serves your family’s best interests?
Will you be one of the thousands of households in Britain that will have to pay Inheritance Tax? What’s the best way to avoid it? If you’re administering an estate because someone has died, how do you obtain probate? Is it ever possible to retrospectively minimise an estate’s tax liabilities?
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