Imagine you die and your entire estate goes to your spouse, from whom you had just separated. And then your children begin arguing about who gets what and why they should get it. Do not forget the child you never knew you had: the tax man.
All of these people might stand to receive a portion of your estate without proper estate planning. The good news is you can control who gets what.
The purpose of this guide is to educate and provide you with an introduction to the services you need to prevent these things from happening.
No doubt, after reading this you will have questions regarding your specific situation. In which case, please do contact us to arrange a consultation to discuss your individual needs, either face to face, virtually or over the phone.
WHO ARE WE?
Our history
Founder and Managing Director Mark Ferguson is a Will writing specialist with over 25 years’ experience within the industry. He was inspired to set up his business after being concerned about the lack of regulation in the Will writing industry and by desire to improve standards for the general public.
Our credentials
At PWS we are proud to say we are certified members of the Institute of Professional Will writers (IPW). We adhere to the IPW’s strict code of practice, which is approved by the Trading Standards Institute, and comply with their insurance requirements. All our staff have completed an IPW exam in estate planning and are required to update their knowledge and skills each year to keep hold of their certificate.
Our team
We care about our clients and are committed to providing a tailormade, personalised approach for each and every one of them. Our aim is to ensure you sleep soundly at night, safe in the knowledge that the correct legal documents are in place to take care of your loved ones and finances.
Why chose us?
Unfortunately, the will writing industry is unregulated and there are plenty of unethical, unqualified firms out there providing a poor service.
At PWS we’re pleased to say we are different because;
We’re regulated – our staff are members of the Institute of Professional Will writers and adhere to their strict code of practice.
We offer a personalised, bespoke service - no matter how complicated your family or finances.
We provide value for money - all our wills are drawn up for a fixed fee, there are no hidden extras.
We’re affordable – we’re cheaper than using a solicitor, with prices from as little as £145.
We’re fast – our experts can draw up a will in just four days
We come to you – we can do home visits or meet at a venue of your choosing. Whether that’s in the day, evening or weekend.
We don’t do jargon – all our experts make sure you understand what’s happening every step of the way.
We’re insured – in the unlikely event that things go wrong we’ve got your back and are covered for a minimum of £2 million per will.
We’re experienced – with over 25 years’ in the business you can rest assured you’re getting the best advice available.
We care - we understand working out who should look after your children and receive your assets is one of the biggest decisions you will ever make. We’re happy to listen and provide the best solution for your needs.
WHAT IS ESTATE PLANNING?
What is Estate Planning?
Estate planning is the process of arranging the management and distribution of a person’s estate, both during the person’s life and after their death. It is a way of controlling how your assets are distributed and express further wishes such as naming your children’s guardian(s) in the event of your early death.
What is an Estate?
An estate is the net worth of a person at any point in time, alive or dead. It is a person’s total assets – savings, possessions, including property, business etc – minus all their debts at that time. It is everything you own minus everything you owe.
Why is Estate Planning important?
It ensures you remain in control, even after your death, of how your hard-earned wealth is distributed or used. It gives you the opportunity to decide who receives what and how they receive it, while at the same time minimising or even reducing completely your tax exposure. It allows you to protect your loved ones, ensuring their best interests are met.
What problems can be created by not taking these steps and measures?
• In the event of there being no Will the Law dictates where your assets will be distributed. These “default” rules are known as the Intestacy Rules and may not reflect your wishes.
• Unnecessary exposure to taxes upon death.
• Potential family disputes over your assets.
• It can create additional costs by the creation of unnecessary legal and court costs- In some cases people, whom you may not know, could have a say in how your assets are distributed and who will become guardians of your children.
• Your wishes may not be known if you lose the ability to make your own decisions.
How do I create a plan to deal with these issues?
We are all different and it is important that time is taken to understand your personal situation, ideally through a meeting. Unless you have an extremely simple estate, planning your own estate often leads to more issues than it resolves. During your initial meeting, we will ask you questions that will allow us to gain a complete understanding of your full financial picture and goals. This will then allow us to recommend and tailor an estate plan for your unique circumstances. It is important to recognise that the creation of an estate plan is an ongoing process that includes continuing education and advice for you and your family as your circumstances and situation change.
What are the services / legal documents that will be included in the creation of my Estate Plan?
Most people will require the following documents:
• A Will and an accompanying letter of wishes;
• Lasting Powers of Attorney; and
• Potentially, the use of a Trust(s)
We will go through these terms more individually in the following sections, providing you with an explanation of what they mean, their importance and their benefits. However, whether your plan will include the use of some or all of them, will depend on what we learn of your situation during your initial meeting.
Furthermore, effective estate planning is a team effort and may involve the input of other professional services, such as financial adviser, accountant, insurance agent, care providers etc. We have existing relationships with local businesses within these sectors, some of which are featured in this guide
WILLS
What is a Will?
A Will is a legally binding document that allows you to decide how your estate will be handled and how your assets are distributed upon your death. It helps ensure that the people you love get what you want.
Do I need a Will?
Yes, a Will is a basic estate planning tool that almost everyone needs, even if you think you are not wealthy enough.
Most people come to us having never made a Will and we understand that thinking about death can be scary, but we are here to guide you through the process of making your will and take the fear and complication away. Furthermore, if you do not create a Will, your estate will still be distributed, but you will not have the option to choose who gets what. Instead, it will be distributed in accordance with a specific set of government rules.
Why? What happens if I die without a Will?
Whoever you are and whatever your circumstances, if you die without a Will in England and Wales then legal rules (and rather outdated, complicated ones at that) called the intestacy rules, will decide who benefits from your estate. In many cases, this means your loved ones are not guaranteed to benefit in the way you would have hoped. Look at the diagram opposite for a guide about how these laws operate.
Here are a few examples of how the intestacy rules work:
• If you are not married, but in a relationship then your partner has no automatic right to benefit from your estate. This is true even if you are engaged or living together.
• If you are married and you have children, your spouse is not necessarily entitled to all of your estate.
• Step-children have no automatic entitlement to your estate.
• The intestacy rules don’t care about what is or is not inheritance tax efficient – often tax is charged when it needn’t have been.
• The intestacy rules don’t care about protecting your assets if you have wayward children or other beneficiaries – inheritance happens at age 18 regardless of circumstances.
So, how does a Will work?
Initially, we recommend compiling a list of your assets, before then deciding how you would like them to be distributed upon your death. We use a will questionnaire to guide you through this process, and we will send this to you at the outset.
Furthermore, you should also use your will as an opportunity to make your wishes known about other (potentially even more important) matters, such as appointing a guardian for any children you have below the age of 18. Within your Will, you will also appoint one more individuals to act as your “executor(s)” and it will be their responsibility to administer your estate. This document will then be witnessed by two people to make it legally binding.
What is a Mirror Will?
These are similar documents created on behalf of married couples, same sex couples in a civil partnership or an unmarried couple. They are virtually identical and are where one half of the couple leaves their estate to other in the event of their death.
When
I have written a Will, what should I do with it?
There is no right or wrong place under the Law for a Will to be stored. However, did you know that if your Will cannot be found after you have passed away, the law presumes you did not make one, or that you must have destroyed it and did not wish its contents to take effect?
Furthermore, the only version of your Will, which will be accepted is the original. PWS can store your will safely, for as little as £25 per year, so your executors know immediately where to go should the unthinkable happen.
INTESTACY RULES FLOW CHART
Are you married or in a civil partnership? Yes
Do you have children?
Your spouse or civil partner will receive everything
Do you have children?
Everything is shared equally between your children. Your spouse or civil partner will receive:
9 Personal possessions
9 The first £322,000 together with interest on that amount from the date of death and
9 One half of anything that remains Your children will receive:
9 The other half of anything that remains shared equally between them.
The term children includes illegitimate and adopted children, but not step children.
If these relatives were not living at the date of your death but they left descendants who are, then those descendants would usually inherit the share their parent would have taken had they survived you.
Please note that this information is provided as a guide and only summarises the laws relating to intestacy in England and Wales as at 2020. This page illustrates the new rules set out in the Inheritance and Trustees’ Powers Act 2020 which came into force in February 2020.
Do you have parents living?
Everything is shared equally between your parents.
Do you have siblings?
Do you have grandparents living?
Everything is shared equally between your full siblings. If there are no full sibling then equally between your half siblings.
Everything is shared equally between your grandparents.
Do you have grandparents living?
Everything passes to the Crown
Everything is shared equally between your full aunts and uncles. If there are no full aunts and uncles then equally between your half aunts and uncles.
TRUSTS
What is a Trust?
These are legal arrangements that allow assets, such as property or money, to be looked after for the benefit of people or beneficiaries named in a person’s Will.
Why are Trusts used within Estate Planning?
They are set up usually to protect your wealth from the taxman or local authorities who may want you to use your savings or sell your property to pay expensive care home fees. They can also be used to preserve your assets for your children until they become adults.
What are the specific Trusts that we offer and what are their potential uses?
Children’s Will trust:
A children’s Will trust is usually created to look after assets on behalf of a child until they reach the age of 18. It allows a home or money to be properly managed until the child or children are old enough legally to take possession of it. Some types of trust also allow the child to receive an income from the property.
A Life Interest Trust:
A life interest trust allows for the surviving spouse or partner of the deceased to be financially taken care of, while at the same time allowing other family members to benefit should the survivor not require support after the death of their other half. It allows trustees to advance capital as well as income to the survivor if required.
Because the capital assets are classed as a gift to the surviving spouse or partner, they are not subject to Inheritance Tax, and can be passed to other beneficiaries, such as children on the death of the survivor.
As the capital is not owned by the survivor it is also protected from local authorities should the survivor end their days in a care home and cannot be inherited by a new spouse should the survivor re-marry.
Property Will Trust:
A property Will trust is designed to help protect joint owners of a home from having their property sold to pay for care home fees in the eventuality that they need specialist care in old age.
Once the first person passes away, their half share of the property passes into the trust. This gives them a lifetime right to live in the property and on their death the trust fund passes onto other relatives, usually children of the family.
Co-owners must be tenants in common and not joint tenants in order to set up this type of trust.
Unmarried Couples Will Trust:
Using a trust fund can significantly protect an unmarried couple’s estate from Inheritance Tax and ensure their children receive a larger proportion of their assets.
Unmarried couples are not eligible for Inheritance Tax breaks enjoyed by married couples, such as the ability to ‘gift’ assets to each other and combine their nil-rate inheritance tax band.
However, they can minimise their Inheritance Tax liability by using a trust to give their children the benefit of the nil-rate band that ordinarily belongs to the first partner to die.
“Last year, an elderly family member needed advice on his will. I suggested that he used Personal Will Services. Mark attended the family member’s home at a convenient time and immediately formed a rapport. He dealt with him in an easy and friendly style, making appropriate explanations regarding necessary actions which were readily understood.
The advice given was excellent and the cost was reasonable. I would have no hesitation whatsoever in recommending Personal Will Services to anyone.
- Peter, Wigan
“
“I have to say that my partner and I were very impressed with Mark.
He arrived for the appointment on time, he was dressed very smart, his mannerisms were very professional and he listened to our positions.
His questioning technique was professional and indepth to make sure that the wills were collated correctly and legally.
“- John, Leigh
LASTING POWERS OF ATTORNEY
What is a Lasting Power of Attorney (LPA)?
Lasting Powers of Attorney (LPAs) are documents that let you choose people to look after your affairs if you are not able to do so yourself - whether due to dementia, stroke, accident, or perhaps simply being unable to get out and about. They apply whilst you are alive and are completely separate from your Will.
Why
are they important?
According to recent figures, there is a new diagnosis of dementia in the UK every three minutes and a stroke happens every five minutes. Fortunately, not everyone included in these figures will end up being unable to look after their own affairs, but the statistics are still quite stark.
An LPA ensures that, should you be unable to manage your own affairs, the people you have appointed can start making decisions on your behalf immediately. This can save a great deal of money and distress, and will ensure that, as a vulnerable person, your affairs will be handled correctly and quickly.
What different types of Lasting Power of Attorney are there?
There are two types – health and welfare or property and finances. We recommend preparing both types so that you have everything covered, but you do have the option of preparing just one or the other. In addition, if you have a business, you may wish to prepare a separate LPA appointing special attorneys who can take over your business interests if the need arises.
What is a Health and Welfare Lasting Power of Attorney used for?
• Where you live
• What you eat, how you dress, how you are cared for daily
• Who you have contact with
• Your medical care and end-of-life care
This type of LPA can only be used if the Donor becomes mentally incapable of making their own decisions.
What is a Property and Finances Power of Attorney used for?
• Bank or building society accounts
• Renovations or maintenance on your property
• Payment of bills
• Pension and or benefits
• Re-mortgaging or selling your home
This type of LPA can be used by your Attorney or Attorneys as soon as it is registered at the Office of the Public Guardian. Alternatively, it is possible to restrict the LPA so that it can only be used if you become mentally incapable. In both cases, you must have mental capacity when making the lasting power of attorney, in other words, you cannot create a lasting power of attorney once you have lost mental capacity.
What happens if you become incapacitated without having a Lasting Power of Attorney?
The only course of action left is for someone to apply to the Court of Protection for the right to become your deputy, which would then grant them decision making rights, this is a much protracted process and far more costly.
What
does this mean?
Applying to the Court of Protection will take a lot longer and cost you more than creating a lasting power of attorney. On average, it is taking in the region of 9 months. Being a deputy also has far more ongoing obligations including reporting and accounting requirements. See the diagram opposite for a visual comparison of the two processes.
Furthermore, there is no guarantee that the person the court appoints as your deputy, would be the person you would have chosen to make those decisions for you. In addition, the Court of Protection is reluctant to grant ongoing Deputy Orders in relation to health and welfare. Therefore, this may not be an option if a Lasting Power has not been put in place.
WHAT IS THE DIFFERENCE BETWEEN A DEPUTY AND LPA?
A. APPLYING TO BECOME A DEPUTY
David 67, widowed, 1 child - Tom.
David has a stroke and loses mental capacity.
Court decided a hearing is necessary (cost £500) plus medical assessment (£300) and Deputy Assessment (£100).
David’s Bank and Pension provider temporarily suspend access. Tom takes legal advice.
Forms + Copies + payment of *£770 sent to COP.
Tom is advised that he must make an application to the Court of Protection (COP) as a Deputy.
B. APPLYING FOR A LPA (LASTING POWER OF ATTORNEY)
Cop Forms 1, 1A, 1B, 3 and 4 required. Tom’s own personal and financial position investigated.
Court aims to send a stamped copy of the application within a week of receiving it. Within 14 days anyone named on the application must be informed as having an interest. Tom must see David and present forms COP5 and 14.
A Security Bond/Fee of £500 is charged when Tom is appointed David’s Property and Financial affairs Deputy.
Form COP9 required if any mistakes on the Court Order
3.
4.
5. Invasive - Tom provides his personal information to Court to prove financial soundness
Tom can now act for David on his Personal Welfare.
Official copies of the Deputy Order send to Bank, Pension Provider and all other relevant organisations
Tom receives a Court Order’ telling him what he can and cannot do as David’s Deputy.
Within 7 days of serving these documents, forms 20A & 20B must be sent to the COP.
Court requests further information and the process is delayed. The court accepts Tom’s second application.
Tom needs to provide proof of name and address for him and David to the Bank. Tom needs to report all transactions and decisions to the court.
Complete and submit the Annual Report to the Court each year whilst David is alive and Tom is his Deputy
Tom must keep copies of bank statements, receipts, gifts, contracts of services, letters and emails
Cost of advice £1000 payable by Tom to become David’s Deputy.
14 days wait after Tom tells the other people involved that he has applied, in case they object.
Court can accept, reject or request further information.
As a Deputy Tom will be supervised directly by the Office of the Public Guardian.
Tom will be visited by Court official to check he is fulfilling his duties correctly.
Tom appointed David’s attorney for Property and Financial Affairs.
Tom appointed David’s attorney for Health & Welfare Affairs.
LPA presented to Bank, Pension Provider and all other relevant organisations.
David has a stroke - loses mental capacity.
Tom immediately steps in to look after David’s finances and is able to make key decisions about his care and medical.
Whilst in good health David arranges both LPAs - cost £400
LPA registered with the Office of the Public Guardian. Cost £164.
David 67, widowed, 1 child - Tom.
INHERITANCE TAX PLANNING
What is Inheritance Tax?
Inheritance Tax (IHT) is levied against a person’s estate upon death. If you are single, then the current threshold before you pay inheritance tax (known as the Nil Rate Band) is £325,000 and for married couples (or civil partnerships) this is £650,000. In many cases, on the first death of a spouse, no tax will be due, and the Nil Rate Band will be transferred to the surviving spouse and can be used on their death. Anything over these amounts will be taxed at 40%. Because of rising house prices, the government introduced an additional nil-rate band when a residence is passed on death to a direct descendant (children or grandchildren).
How does the Residence Nil Rate Band work?
The residence nil rate band will only apply if you own or have previously owned a residence, and this is passed down to your children or grandchildren (including step, adopted or foster children). In simple terms, the new nil rate band gives an extra £175,000 tax free allowance for a single (or divorced) person. This can give an individual total tax free allowances of £500,000. For married couples, the residence nil rate band provides extra tax free allowances totalling £350,000, therefore giving a total allowances of £1million.
Please note that if you have an estate of over £2million pounds then your residence nil rate band will be reduced therefore increasing your inheritance tax liability and if your estate is worth more than £2.7million then all your residence nil rate band allowance will be lost. Consequently, Inheritance Tax is becoming an issue for more and more families, largely due to house prices increasing at a high rate over the last fifty years. Many people are now finding their assets are creeping over the inheritance tax threshold, thus causing a greater liability of inheritance tax than first thought.
How and when is Inheritance Tax paid?
After a loved one has died, the executors will have to administer the estate and calculate if the estate is liable for inheritance tax. Your Executor will be liable to pay the inheritance tax at 40%. Only when this has been paid can the Grant of Probate be issued, which then allows the executor to bring together all of the assets and distribute them as per the wishes of the Will, or if no will then assets will be distributed as per the laws of intestacy.
Can I gift assets to reduce Inheritance Tax? (Inheritance Tax gifts)
Many parents/grandparents give some of their assets to loved ones whilst still alive. These are called ‘potentially exempt transfers’. For these assets to be excluded from your estate and be tax free, you must live for seven years after passing them to your loved ones. You can make gifts of up to £3,000 per annum which would immediately come out of your estate and not be liable for inheritance tax. If you would like to know how to reduce or avoid inheritance tax on property then speak to one of our Experts (mainly used for rental portfolios).
So, what can I do to minimise my Inheritance Tax liability?
• Use your gift allowance of £3,000 each year.
• If you receive income surplus to your requirements, you can make regular gifts from your income, which will be free of IHT.
• Put assets into Trust.
• Life Assurance to cover any IHT liability.
• Make a gift to charity in your will.
• Certain Investments can be used to take assets outside of your estate.
“ “ Mark took the time to explain everything to us. I feel like the future of my family is in safe hands. - Adam
FINANCIAL PLANNING
As explained at the beginning of this guide, estate and life planning will require the input of professionals from a variety of different sectors. A financial adviser helps you create strategies for eliminating financial risk and building wealth over the long term. They can give you a plan that puts you on track to achieve your financial goals. Typically, this will include:
Retirement and pension planning
With people living longer lives, it is important to have a plan in place for retirement. Typically, this will involve one or more pension products, which a financial adviser will be able to advice you over.
Mortgage advice
Purchasing a property, for most people, will be largest purchase they make and will typically involve borrowing money in the form of a mortgage. Furthermore, more and more people are choosing to invest in property, using buy-to-let mortgages or accessing funds later in life through equity release, which is a type of loan secured on a property. A financial adviser will be able to organise and advise you on the various products and lenders available to you.
Savings and investments
There are a variety of ways in which you can choose to invest your money ranging from placing it in a bank account through to investing in shares on the Stock Exchange. A financial adviser will listen to your goals as well as assessing your attitude towards financial risks, before then advising you on the various products and services that best match that.
Insurance and protection
These are covered in more detail in the following section.
Please note…
All financial advisers are regulated by the Financial Conduct Authority (FCA) which has created strict guidelines regarding how they can operate. The companies featured in this guide are registered with the FCA and therefore have demonstrated their adherence to their guidelines and are featured here for your convenience, however, you are under no obligation to use them.
“As daunting as choosing a Will can appear to the average person like myself, I’m glad we contacted PWS to handle the process. Mark explained various options suitable for our family which included all the detail necessary to encompass our needs.
We also set up Lasting Power of Attorney alongside the Will, which now its done we can rest easy knowing our future has been taken care of. Not only has Mark helpful, he was polite and explained of future possibilities to alter the Will if family circumstances change. I would recommend everyone who hasn’t considered a Will yet to do so using PWS.
- Ian “
INSURANCE
There are a variety of different insurance products available that can help protect every aspect of your life and that of your family.
Life insurance
We all want to protect what is important to us - our home and our loved ones. Dying is obviously not on your to-do list, but the reality is - every 22 minutes a child loses a parent they rely on financially. If anything happened to you, life insurance can pay out a lump-sum, so your family doesn’t have to worry about money. However, it is worth considering writing any life insurance policy you do decide to set up in a Trust. This will mean that your insurance payout will not be subject to Inheritance Tax.
Critical illness cover
This insurance could pay out a lump sum, or regular payment, in the event that you are diagnosed with a serious illness specified in your policy. Giving you peace of mind to help you concentrate on getting better.
Income protection cover
This insurance covers your outgoings and allows you to maintain your lifestyle if you are unable to work. You will receive a tax-free, monthly benefit of up to 70% of your gross annual salary. Ensuring you will still have an income if you are unable to do your job due to illness or an accident.
Mortgage protection cover
This is life cover specifically designed to protect a mortgage, ensuring that your family home is secured in the event of your death or critical illness.
Family income benefit
This insurance pays out a monthly income to your family in the event of your death.
Over 50’s life cover
This insurance pays out a lump sum to help with funeral costs, cover unpaid bills or leave an inheritance for grandchildren or loved ones.
Please note…
It is important that you obtain professional advice from an FCA regulated adviser, before you purchase any form of insurance, to ensure you receive the cover and benefits you were hoping for. The companies featured in this guide are registered with the FCA and therefore have demonstrated their adherence to their guidelines and are featured here for your convenience, however, you are under no obligation to use them.
EQUITY RELEASE
What is Equity Release?
Equity release is a way for older homeowners to access some of the value held in the bricks and mortar of their home. The money you release is tax-free to spend as you wish. Today’s equity release market is offering new funding solutions, combining rigorous consumer protections with more product choices and flexibility to help people meet their later-life financial needs and goals.
The most common and popular type of equity release product is a Lifetime Mortgage. Lifetime Mortgages are regulated by the Financial Conduct Authority.
What is a Lifetime Mortgage?
A Lifetime Mortgage is available for homeowners from age 55 with a home worth at least £70,000. It is a loan, secured against your home, that allows you to access a portion of your home’s value as tax-free cash. It is designed to run for your lifetime, usually only being repaid once the last homeowner on the deeds has died or entered permanent long-term care.
This is most often achieved from the sale of the property. Unlike a traditional mortgage, there are no obligations to make any payments,although many plans offer the ability to make voluntary, penalty-free repayments on a monthly or ‘ad hoc’ basis to suit.
The amount of cash you could release is based on the value of your home and the age of the youngest homeowner. Your tax-free cash can be taken as a single lump sum, or in stages as and when needed.
The Equity Release Council sets the standards and principles for its members. When you release equity with a Lifetime Mortgage from an Equity Release Council approved lender, it will come with important safeguards and guarantees, including:
• The right to live in your home for the rest of your life.
• A ‘no-negative equity guarantee’, meaning you will never owe more than the value of your home.
The importance of expert advice
The Lifetime Mortgage that is right for you will depend on your personal needs and circumstances. A Lifetime Mortgage may reduce the value of your estate and may affect your entitlement to means tested benefits. Seeking professional advice is therefore essential. Lenders will only accept an equity release application following advice from an authorised and qualified equity release adviser.
SEVERANCE OF TENANCY
What is a severance of tenancy?
Severance of tenancy is the process of changing a joint tenancy, commonly held by married couples and joint owners of a property, into a tenancy in common in order to protect the wealth tied up in your home. Most married couples are joint owners of a property, which means one owner automatically inherits the whole house when the other dies, regardless of any wishes set out in their will.
Why is this important?
If you want someone else, other than your spouse, to get a share of your home when you die a severance of tenancy will allow this to happen. It does not change who owns the property, but allows each coowner to distribute their half of the property, via their will, to whoever they choose. Severance of tenancy can also help protect your property from inheritance tax and care home fees should you need specialist accommodation in old age.
Why is planning for long term care costs important?
In recent years, the number of people receiving long term care - either through a residential nursing home, care home or hospital - has increased alarmingly. Presently, residential care costs an average of £850 a week which equates to an annual payment of £44,200; please note that this figure very much depends on which part of the country you live in. Depending on the level of care required, particularly for Dementia and Alzheimer’s patients, these costs can be much higher.
Will not the cost of my care be paid for by my local authority and the Government?
This only happens in rare cases. If your assets (including your home) come to more than £23,250, you will be forced to sell your home to pay for your care, whether that is because of old age, an accident or mental illness.
Wouldn’t signing over our home to our children protect us from this?
Giving your home to a child, is often quoted as being the ideal solution, but:
a. Gifting the property, but continuing to live in it, is not a “true gift” in law unless you pay a full market rent.
b. From the date of the gift, it will not be the primary residence of the owner and will therefore qualify for Capital Gains Tax on any increase in value.
c. If your child becomes involved in bankruptcy, your house will be one of their assets to be claimed in the legal proceedings.
d. If your child dies before you, your house will be part of their estate and go to their beneficiaries.
e. If your relationship with your child breaks down, your ability to remain in your house would be prejudiced.
f. Income Tax on the rental value of your house will be payable every year.
However there are steps that you can take, which are perfectly legal, and severely limit the amount that can be levied upon by the local authority.
We adjust the ownership of the house to a Tenancy-in-Common, so that husband and wife own one-half each. Then each Will gives the deceased’s half of the house to a trust which permits lifetime occupation by the survivor.
This limits the assessable value to half of the house, less the minimum threshold. As an example, in the case of a house worth £100.000, the effect (in round figures) would be:
Without Provisions
Property Value – 100,000
Less Threshold – 20,000
Maximum Levy – 80,000
With Provisions
Property
20,000
Maximum levy - 30,000
In the example, this, perfectly legal and acceptable, procedure saves the eventual beneficiaries £50,000 and carries none of the risks associated with other schemes.
FREQUENTLY ASKED QUESTIONS (FAQs)
What is a will?
A will is a legal document which tells all your family and friends exactly what you want to happen to your children, money, possessions and home - known collectively as your estatewhen you die.
Why should I make a will?
Writing a will is the only way to be certain that your money and belongings will go to the people and charities you care about.
If you don’t have a will the Government, via the courts, will split up your estate equally between your relatives, regardless of your relationship with them or the wishes you spoke about when you were alive. A judge will also decide who should take care of your children.
When do I need to make a will?
The simple answer is NOW. Everyone should make a will, no matter how large or small your wealth and it should be regularly reviewed and updated in case your circumstances change. For example, in England and Wales, if you marry or re-marry your old will automatically becomes invalid and should be altered to reflect your new circumstances.
I already have a Will, do I need to update it?
Your will must be updated when your circumstances change. For example, if you get married, buy a property, have children, become separated from your partner or get divorced.
Is it expensive to make a Will?
No, it needn’t be costly to make a Will. All our Wills come at a fixed price, there are no hidden extras, and can be set up for as little as £145.
Where should I keep my Will?
There is no right or wrong place under the Law for a Will to be stored. However, it is not a good idea to keep it in a bank safety deposit box because your executors will need to go to court to open it.
It is much better to inform your executors exactly where your will is kept. PWS can store your will for you for a small annual fee.
What is a mirror Will?
A mirror will is drawn up, usually for married couples, who want to make almost identical Wills. For example, they may want to leave everything to each other and, following both deaths, their children or a named relative or friend.
What
is intestacy?
If someone dies without a Will, they are said to have died intestate. In such cases the Government, via the courts, will divide up your possessions and property and rule on who should care for your children.
What is an executor?
Executors are the people you appoint to carry out instructions in your Will when you are gone. They will collect your assets, pay your debts
including any inheritance tax and distribute your wealth in accordance with your wishes.
How many executors can I choose?
The Law only allows for a maximum of four executors to act at the same time.
Can an executor also be a beneficiary?
Yes, provided the Will is written in the correct way. Executors and beneficiaries, or the spouses of executors and beneficiaries, however, cannot witness the signing of a Will.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney is a legal document that allows you to appoint a friend or relative to make decisions on your behalf in case you are unable to make them for yourself. For example, if you become mentally incapacitated through an accident or illness, such as a stroke or dementia, that person can make decisions about your health and finances for you.
What is Severance of Tenancy?
Severance of tenancy is the process of changing a joint tenancy, commonly held by married couples and joint owners of a property, into a tenancy in common.
Who can set up a Trust?
Anyone who understands their assets is able to set up a Trust.
We hope this guide has proved to be informative and helped you appreciate the benefits you will receive by taking a pro-active approach to planning for your future… If there is one thing we would want you to take away with you, it is the realisation that estate planning is not something you can put off any longer.
THE NEXT STEPS
While this guide is packed full of useful information, there really is no substitute to speaking to a professional adviser about your specific situation, because everyone is different, and one size does not fit all.
How it works
Following your initial enquiry, we will arrange a face-to-face meeting, either at your home, place of work or other location of your choosing and at a time – daytime, evening or weekend – to suit you. At the appointment we...
1 Assess your assets.
2
3
4
Listen to how you want your money, children and property to be divided.
Offer advice and explain your options, including pros and cons, for a Will to suit your needs.
Explain how much it will cost. All our Wills are charged at a fixed fee, there are no hidden extras.
Following on from the first appointment we will...
1 Send out a draft Will.
2
3
Provide a glossary to make sure you understand all the relevant documents.
Arrange a second face-to-face appointment to make sure your will is signed and witnessed correctly by two people in accordance with the law.
Clear pricing with no hidden extras
All our Wills are drafted for a fixed price, there are no hidden costs. The amount you are quoted is the amount you will pay. We’re also fast and offer great value for money – our will prices start from as little as £145 and can be drawn up within four days. TO START THE PROCESS OF SAFEGUARDING YOURS AND YOUR LOVED ONES FUTURE,
