Wills, Inheritance Tax and Lasting Powers of Attorney a beginner's guide!

Transcription

1 Wills, Inheritance Tax and Lasting Powers of Attorney a beginner's guide! Harpenden Business Breakfast Club 15th April 2014

2 Recognised by the top legal directories:

3 Programme Wills (why bother?) Inheritance tax (the basics) Powers of Attorney (why are they useful?) Other practical concerns Questions

4 Wills Why bother?

5 Intestacy Rules (1) Who Survives: Estate Goes: Spouse & Children 1. First 250,000 to spouse 2. Remainder: Half to children outright Half to spouse in trust for life then to children outright

6 Intestacy Rules (2) Who Survives: Estate goes to: Spouse (but no children) and parents/siblings 1. First 450,000 to spouse 2. Remainder: Half to Spouse Half to parents/ siblings Spouse only (no children, parents/siblings Children (no spouse) All to Spouse All to Children

7 Intestacy Rules (3) Who Survives: No Spouse or children Estate Goes: 1. Parents 2. Siblings (whole blood) or their children 3. Siblings (half blood) or their children 4. Grandparents 5. Uncles/Aunts (whole blood) or their children 6. Uncles/Aunts (half blood) or their children No spouse, children or blood relative - All to Crown (NO PROVISION AT ALL FOR UNMARRIED PARTNERS!!)

8 Structure of a Will 1. Declaration and Revocation 2. Funeral Wishes 3. Executors/Trustees 4. Guardians 5. Legacies and Bequests 6. Residue 7. Administrative provisions

9 Trusts Uses - tax planning - protection Types - discretionary trust - life interest trust

10 Tax Planning Transferable Nil Rate Band More than two? BPR/APR qualifying property

11 Wills & 10% to Charity 10% of "estate" to charity and overall rate of IHT reduced from 40% to 36%. Applies to deaths after 6th April 2012.

12 Inheritance Tax The Basics

13 Basics of Inheritance Tax Rates on Death (a) 0% - the nil rate band (b) 40% Options for paying the tax bill Lifetime Rate 20% (on certain types of gift)

14 IHT Exemptions & Reliefs (1) Annual Exemption 3,000 per tax year 6,000 (if last year s exemption unused) Small Gifts 250 per gift Gifts on Marriage 5,000 per child 2,500 per grandchild 1,000 to anyone else

15 IHT Exemptions & Relief (2) Normal expenditure out of income Need for regularity Need for record keeping

16 IHT Exemptions & Reliefs (3) Spouse Exemption - 325,000 limit for non domiciled spouse Charities Business Property Agricultural Property

17 Lifetime Gifts (1) Potentially Exempt Transfers (PETs) Gifts with reservation (GROBs)

18 Lifetime Gifts (2) Potentially Exempt Transfers Example J gives 500,000 to his daughter A on 10 April J dies on 6 April The nil rate band at J s death is 325,000 IHT calculated as follows:- Value of gift at date made 500,000 Less nil rate band 325,000 Balance 175,000 at 40% 70,000

19 Lifetime Gifts (2) Potentially Exempt Transfers (cont ) Tapering relief IHT liability on death within 3 years 70, years (80%) 56, years (60%) 42, years (40%) 28, years (20%) 14,000 7 years + (0%) NIL

20 Lasting Powers of Attorney Why are they useful?

21 Powers of Attorney Without capacity Court of Protection - Application for Deputyship Order With capacity - General Powers of Attorney - Enduring Powers of Attorney (EPAs) - Lasting Powers of Attorney (LPAs)

22 Types of Lasting Power of Attorney Property and Financial Affairs LPA - Buying/Selling a Property - Operating a bank account - Tax Affairs Health & Welfare LPA - Where to live - What to do - Medical Treatment, including life-sustaining treatment

23 Main Points to Consider Choice of Attorney - Who - How Many - How to Act - Restrictions and/or guidance? Choice of Certificate Provider - Skills based - Knowledge based

24 Main Points to Consider (cont ) Choice of People to be Notified of Registration When to Register - Advantages/Disadvantages

25 Other practical concerns Other things to think about

26 Other practical considerations Property ownership Bank accounts/finances Pensions/insurance policies

27 ANY QUESTIONS?

28 Contact Us Richard Crocker: Alison Voyce: Alex Drake: Patrick Green: