hand-229777_640Wills are for anybody with assets who love someone or something more than they love the government. This includes young people, who, sadly, can die unexpectedly. The simple fact of the matter is that we come into this world with nothing and what we accumulate in this world stays in this world when we leave it. We therefore need to take a decision as to what will happen to our assets when it’s time for us to move on.

Leaving it to our family (friends or other loved ones)

At current time, individuals can leave up to £325K worth of assets to anyone they please without any inheritance tax being paid. Couples who are married or in a civil partnership can leave unlimited assets to each other without IHT being paid on them (provided that the surviving partner is a permanent resident of the UK). In most circumstances, the remainder of the deceased’s assets are then taxed at 40%, although there are some exceptional circumstances in which IHT is waived completely. There are also some assets which qualify for various forms of IHT relief and it is possible to reduce overall tax liability through leaving 10% or more of the estate to a recognized charity.

A surviving spouse/civil partner will automatically inherit any unused portion of the deceased’s IHT allowance as a percentage. In other words, if the deceased leaves £162.5K worth of assets to people other than his/her spouse/civil partner, then the surviving spouse/civil partner will have their own IHT allowance plus an extra 50% to reflect the unused portion of the deceased’s IHT allowance. The reason that this is given as a percentage is that this means it can be altered to reflect any changes in IHT allowance, i.e. if the IHT threshold is increased then the surviving party (or the beneficiaries of their estate) will benefit from it.

https://www.gov.uk/inheritance-tax/overview

https://www.gov.uk/inheritance-tax/leaving-assets-spouse-civil-partner

https://www.gov.uk/inheritance-tax/inheritance-tax-reliefs

Leaving it to charity

Gifts to registered charities, museums, universities, community amateur sports clubs (CASCs) or qualifying political parties are exempt from IHT. If 10% (or more) of the net value of the estate is left to registered charities or CASCs, then the tax liability on the remaining estate is reduced to 36% (as opposed to 40%).

https://www.gov.uk/inheritance-tax/giving-to-charity-to-reduce-an-inheritance-tax-bill

Leaving nothing

Leaving absolutely nothing could be trickier than it sounds. You’re going to need to have somewhere to live and something to eat right up until you draw your last breath. On the other hand, you can certainly aim to gift away your estate to the point where it is below the IHT threshold. The first key point about gifting is that (with some specific exceptions) the gift has to be given at least 7 years prior to the donor’s death in order for it to qualify for full IHT relief. If the donor lives for at least 3 years after making the gift, the gift will qualify for taper relief. In other words they will still have to pay some degree of IHT but there will be a reduction depending on how long the donor lived after making the gift. The second key point about gifting is that the donor must give the gift unconditionally, in other words they need to surrender all beneficial interest in a gift. For example if a parent gifts the family home to their child, they would need either to move out of it or to pay the child a fair market rent.

https://www.gov.uk/inheritance-tax/gifts

https://www.moneyadviceservice.org.uk/en/articles/gifts-and-transfers-exempt-from-inheritance-taxSaving Doesn’t Have To Be Hard.doc (see section on PETs)

Dying with assets but without a will

The legal term for this is dying intestate. There are different rules regarding this situation in England and Wales, Scotland and Northern Ireland. In general terms however, spouses/civil partners and close, blood relatives can inherit an estate even where there is no will. If there is, however, no surviving family, the estate becomes the property of the crown.

https://www.citizensadvice.org.uk/relationships/death-and-wills/who-can-inherit-if-there-is-no-will-the-rules-of-intestacy/#h-who-cannot-inherit

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen. 

Will writing is not part of the Openwork offering and is offered in our own right.  Openwork Limited accepts no responsibility for this aspect of our business which is not regulated by the Financial Conduct Authority

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