Wills & Executaries
The Importance of Writing a Will
A Will, properly drawn up by a solicitor, provides instruction to ensure that on your death, everything that you own will be handled in accordance with your wishes and be passed on to the people of your choice. There are several reasons you should make a Will, these are just a few:
You can ensure that your estate will pass to your intended beneficiaries. It is especially important to have a Will written if you have family members who financially depend on you, or if you would like to leave something to an individual outside your immediate family.
In your Will, you will appoint an Executor or Executors of your choice.Your Executors may be family, your solicitor or someone else. Peterkins Trustees Limited can also be appointed as your Executor at no extra cost. It is the duty of the Executors to see that the terms of the Will are carried out and to deal with any legal formalities. If you have not made a Will, an Executor will have to be appointed by the court, which will incur a delay and expense that can be avoided if there is a Will.
Where your beneficiaries are children, you can incorporate provisions in your Will to deal with their shares until they reach a certain age. Additionally, you can appoint legal guardians for your children.
You can take steps in your Will to reduce the amount of Inheritance Tax payable on your property and money left behind, thus leaving more for your beneficiaries.
If any of your personal circumstances have changed, such as marriage, divorce, the arrival of children or grandchildren, purchase of property and so on, we would strongly recommend you make a new Will. We advise our clients to review their Will every 5 years to make sure it is still fit for their needs.
The whole process is usually completed in approximately 4-6 weeks, depending on how quickly you respond to inform us that the draft Will we have prepared fits your requirements.
WILLS & EXECTURIES
Executries
The role of an Executor is to stand in the place of the deceased to wind up their estate. In a situation where there is no Will, and therefore no Executor appointed, the Court will appoint an Executor Dative. However, if there is a Will, then an Executor Nominate will have been chosen by the individual. Both types of Executor have legal obligations in dealing with a deceased person’s estate, and It is important they take advice from a solicitor. The main duties include:
- In most cases, applying to the local Sheriff Court for a grant of Confirmation. This is a legal document which gives authority to the Executor to uplift all of the funds and other property due to the estate, and deal with their assets as per instructions in the Will.
- Calculating and paying Inheritance Tax on the estate.
- Ensure Income Tax matters are closed for the deceased’s lifetime record with HMRC.
- Ingather all of the assets of the deceased, pay the funeral expenses and all debts, including debts known as Legal Rights. Under Scots Law, irrespective of the terms of any Will, a surviving spouse and children are entitled to Legal Rights out of the estate, so these must be settled. The remainder of the estate should then be settled by paying or transferring to the beneficiaries in the terms of the Will, or if there is no Will, in terms of intestate succession (the law will decide how the estate is distributed).
WILLS & EXECTURIES
Inheritance Tax
Inheritance Tax (IHT) defines tax on the estate (the property, money and possessions) of the deceased individual. It can also apply to gifts made during an individual’s lifetime. The threshold at which Inheritance Tax (IHT) becomes payable is set annually in the Budget. The tax-free threshold, or otherwise referred to as nil rate band (NRB), is £325,000 for the current tax year. If part of your estate is of greater value than this threshold, it will be subject to 40% tax. Married couples or civil partners can have a combined NRB of up to £650,000, as unused NRB of the first civil partner or spouse to pass away, referred to as transferable nil rate band (TNRB), can be claimed on the passing of the survivor.
Another tax band to be aware of is the residence nil rate band (RNRB). This is applicable for deaths on or after 6 April 2017, where the deceased owned a home or share of a home, which is then inherited by direct descendants. The RNRB first came into effect in tax year 2017/2018 at £100,000 and has increased by £25,000 each year until reaching the maximum allowance of £175,000 in tax year 2020/2021.
With thorough planning, however, there are many ways to reduce the liability of an estate to IHT. Many pension and life assurance policies can be written in trust allowing any lump sum benefits to fall out with the deceased’s estate and are therefore free of IHT. In addition, gifts made during a person’s lifetime, provided certain conditions are met, are”potentially exempt transfers” (PETs). These gifts become exempt only if the donor survives for seven years, although life insurance may be available to protect the estate against the cost in the event of an early death.
Further Tax Planning advice can be obtained from our Financial Services Department. Please contact: John Barrowman, Head of Financial Services, JB@peterkins.com, 01224 428270
WILLS & EXECTURIES
Trusts
Trusts can be set up by Wills as a mechanism to deal with a person’s estate after death or can be set up to operate during the creator’s lifetime. A third party, known as the ‘Trustee’, will take care of the assets to avoid anything passing to an individual you do not wish to benefit. Reasons for the establishment of a trust include:
