Melanie Wain

Private Client Executive, Nicholson Jones Sutton Solicitors

Quotation Marks
“What this means is that in reality is our estates are being pushed over the tax-free allowances, leading to more of us leaving an IHT bill to be settled…”

The will and the way

Opinion
Share:
The will and the way

By

Melanie Wain considers clients’ fundamental needs in IHT management

In a time where covid-19 and vaccines have been in for forefront of everyone’s minds to ensure that we keep ourselves and families protected, many have overlooked whether they have effective protection in place for their families in respect of their estates and their increased wealth.

What has changed?

We are aware that cost of living has increased, but we also need to bear in mind that house prices are at a high, with average prices even outside of London exceeding the base inheritance tax (IHT) allowance of £325,000. What this means is that in reality is our estates are being pushed over the tax-free allowances, leading to more of us leaving an IHT bill to be settled when we die.

As we exit the pandemic and prospects look better than they have in the last two years, one could argue that now is not a time to be morbid. None of us want to think of a time when we may no longer be here – and so broaching the subject of finances, losing capacity and ultimately our passing, leaves many of us thinking it too difficult, and a task for when we’re older.

How can we help our clients?

However, providing the service of a simple review of personal circumstances and preparing the necessary documentation to protect clients and their loved ones, avoids uncertainty and confusion when the inevitable happens.

Estate planning professionals work with families to ensure that family wealth is protected. Even if there is a will in place, does it still meet your client’s current needs? Have there been additions to the family, or changes in a potential beneficiary’s circumstances – or have assets unexpectedly increased?

What needs to be considered?

Estate planning professionals provide advice and guidance to ensure that family wealth is protected. It is important that our clients understand their available allowances including nil rate band (NRB) and residence nil rate band (RNRB), as well as the best way to ensure that wealth is transferred in the most tax efficient way during their lifetime. It is important that we, as practitioners, make our clients aware of the limits that can be transferred and when, for instance:

  • Transfers between spouses or civil partners are exempt.
  • Lifetime gifts to certain charities are exempt, and legacy gifts of over 10 per cent of the estates value reduces IHT from 40 per cent to 36 per cent.
  • Assets and cash can be transferred during a client’s lifetime but gifts made within the 7 years prior to a bereavement may be subject to IHT. Such gifts are limited to £3,000 per tax year.
  • Unlimited small gifts of up to £250 subject to other allowances.
  • Wedding or civil partnership gifts can be made, with the amounts dependent on the relationship to the client.
  • Regular payments out of income, providing the client can maintain their own standard of living.

We, as practitioners, must advise our clients as to which of these gifting options are best for their specific personal circumstances and benefit.

What else is relevant?

In addition to making provision for wealth on your client’s demise, they also cannot assume that matters in relation to their finances and health will be dealt with by their spouse or partner automatically if they are unable to manage their own affairs, due to accident, illness or general old age.

Safeguarding to protect us, as individuals, means that if our clients want to ensure that someone can access their finances or make a decision in relation to life sustaining treatment, they have to have the relevant Lasting Powers of Attorney (LPA) in place, appointing the individual(s) of their choosing to act for them.

What’s our working model?

Our team has extensive experience in dealing with wills, LPAs, and probate matters. We are sympathetic, understanding, and prepare the documents that meet our clients’ individual requirements, with a range of fixed price services, so our clients are safe in the knowledge that there are no hidden fees – reassurance, in this area of practice, being of utmost importance.

Melanie Wain is a private client executive at Nicholson Jones Sutton Solicitors: njslaw.co.uk