Make a Will and Put Your Affairs in Order Before You Die
Think about inheritance tax. Thousands of ordinary families with just one property have been hit with huge inheritance tax bills. You may want your family home to be preserved by your children, but the property may have to be sold quickly to pay inheritance tax.
Many families don’t realise that simply having a will doesn’t always prevent unnecessary tax being taken from what you leave behind. Taking proactive steps around Comprehensive UK inheritance tax planning can help ensure more of your estate actually reaches the people you care about instead of being lost in preventable liabilities.
Following the tragic loss of a dear friend and business partner this week, I was reminded of just how precious and fleeting life can be. We all should make the best of our time on this earth.
She certainly packed more into her short life than most people would in three lifetimes.
Someone once said that there are two things certain in this life:
Death and taxes!
We’re all going to die one day, but unfortunately, taxes, and other financial liabilities, do you not die with you. The government still wants its share of your estate before it is passed on to your beneficiaries.
Even though you build up your savings and property from money on which you have already paid tax, the taxman still puts his hand out for a cut when you die so that the government can spend it. Each year, HMRC collect’s around £5 billion in inheritance tax (IHT) from ordinary families, as well as the rich. Politicians on the left would like to see this increase, as they do not believe children should inherit wealth.
You cannot change the system, but you can take steps to legally mitigate inheritance tax liabilities. See my article on the billionaire Duke of Westminster who legally avoids several billion pounds inheritance taxes. Even the staunch left-wing socialist MP Tony Benn used trusts to avoid inheritance tax on his substantial estate before he died.
You need to take advice on IHT planning, but three of the common methods used are:
- Wills
- Trusts
- Life Assurance
Where there’s a will there’s a relative.
There’s an old saying, “where there’s a will there’s a way”, but there is also a saying, “where there’s a will there’s a relative!”
When somebody dies, relatives you haven’t see for years turn up from all over the place.
Even if you think you don’t own very much, you should make a Will.
If you die without a Will, known as dying intestate, the state will make one for you and distribute your assets in accordance with the laws of intestacy. Furthermore, if no beneficiaries can be found when you die, your estate will go to the state! If you’re facing a dispute over a will, trust or estate, you need to get in touch with an estate lawyer as soon as possible who can help resolve this for you.
Here are some points to consider.
Make a Will even if you think your situation is simple and you don’t see the point because you are going to “leave everything to your spouse or children”. Wills can include ‘expression of wishes’, such as whether you want to be buried or cremated, where you would like to be buried and the type of funeral service you prefer.
Have it done professionally preferably by your solicitor or a Will specialist. You can buy basic Will online or at WH Smith’s, but I wouldn’t recommend it, as it needs to be prepared properly in order to be valid. You don’t want relatives turning up challenging the Will or claiming that it is not valid for one reason or another.
Make sure that people can find your Will. Your solicitor can hold the original, but you also need to let people know you’ve made a Will. Burying it away in a drawer or in a box in the loft is not the best place.
How will your family pay for your funeral? Do you have insurance, a funeral plan or a pre-paid funeral with a reputable firm?
People often do not realise that when a loved one dies, their financial assets, such as bank accounts, are effectively frozen. In other words, your family will not be able to access your money until a grant of probate has been given, which could take several months or even years in more complex cases.
A basic funeral costs between £3000 and £5000, which will have to be paid for upfront. In addition, there are also costs for a graveyard plot, as well as cemetery or crematorium fees.
Make sure you have adequate life assurance insurance if you have dependents (check out PHP agency reviews Link – https://www.instagram.com/phpagency/ – if you’re not sure where to start).
You should also take advice about putting your insurance cover into trust so that it does not form part of your estate upon death, which means the money from the policy will also be paid out to beneficiaries far quicker without the need to wait for probate.
In some cases, people may ask what is life insurance and why they even need it? However, life insurance can be a strong financial protection to ensure your family is cared for after you are no longer able to provide.
I was in financial services for over 25 years and almost everybody I met was underinsured. Husbands who were the main breadwinners would often say things like, “well, she’s got the house hasn’t she?“.
People even have mortgages that are not protected by insurance. Clearing debts upon death should be your first priority unless you have no dependents.
Think about inheritance tax. Thousands of ordinary families with just one property have been hit with huge inheritance tax bills. You may want your family home to be preserved by your children, but the property may have to be sold quickly to pay inheritance tax.
You can also make use of lifetime allowances to gift monies to children or grandchildren.
Finally, don’t leave things to chance and take professional advice from your solicitor or financial adviser. This is not something for the DIY enthusiast!
