Category: Wills and Probate

Whilst it is not something that most of us would like to think about, the Covid 19 situation has brought into sharp focus the need to think about succession planning and prepare a will and lasting powers of attorney.

The Sunday Times on 22 March 2020 reported that law firms have witnessed a soaring demand for will services. People are spending time at home, speaking to their families, and thinking about elderly relatives as well as young children.

Wills

By making a will:

• you (rather than the Government) will decide who gets your assets,
• you (rather than the Government) will decide who administers your estate,
• you have an opportunity proactively to tax plan,
• you can appoint guardians of your choice if you have young children,
• you can provide for dependants if you have any, and
• quite significantly in these times, make provision for charities of your choice.

Lasting Powers of Attorney (LPAs)

These allow attorneys you appoint to make decisions on your behalf if you become mentally incapacitated. There are two types: (1) health and well-being; and (2) property and financial.

Your Business

If you are running a business or are director of a company, you should also think about making sure you have plans in place if you are not there, so that the business can continue, hopefully after the Covid-19 situation settles down.

Digital Assets

Another important thing to think about is your digital assets and accounts. Think about your Facebook, LinkedIn, Spotify, Apple, photograph, email, and other electronic accounts. You should think about giving somebody authority to deal with these if you are not able to do so. Maybe you should keep your usernames and passwords with your will.

Social Distancing

People may be worried about meeting with us face-to-face in order to discuss and prepare such documents. In most cases, however, we will be able to do everything over the telephone and by email including, taking initial instructions, sending  drafts by email, discussing the terms with you, making any necessary changes, and guiding you through the signing and execution process.

Please do not hesitate to contact us if you have any questions or concerns regarding any of the above. We are happy to help.

The Government has announced that, with effect from April 2019, the Court fees for obtaining Probate could cost up to £6,000, whereas the current fee is less than 5% of this amount.

What is Probate?

When someone passes away the Executors named in the Will or, where there is no Will, the Administrators under intestacy, usually have to obtain a Grant from the Probate Registry authorising them to deal with the estate. This is commonly known as “obtaining Probate,” and involves valuing the assets and ascertaining the debts of the estate, collecting the assets in and paying off those debts, including tax, and distributing the estate to beneficiaries.

How are the fees changing?

The current Court fee to obtain Probate is fixed at a flat rate of £215, or £155 when applying via a Solicitor. There is currently no fee payable for estates with a value of less than £5,000. From April the fee payable will be scaled to the size of the deceased’s estate with the maximum fee of £6,000 being paid for estates worth £2 million or more. The scale is set out in the below table.

There is still some good news for small estates. Estates with a value of less than £50,000 will pay no fee at all – the previous cut-off was £5,000 – and it is estimated that this will lead to an additional 25,000 estates a year paying no fee at all. However, most estates will be subject to a substantial increase.

Thankfully the fees are not as high as those that were proposed in 2017 when the Probate fee would have been as high as £20,000 for estates worth over £2million.

Reform or a tax by stealth?

Although the Government has argued that the increased fees are necessary to ensure the proper funding of the Courts system and would improve access to justice for taxpayers, many have questioned the size of the increase in fees, which are far in excess of the cost of the actual service provided. Some commentators have accused the Government of introducing a further tax on death by stealth. The Law Society is strongly opposed to the increase has called on the proposals to be withdrawn.

Regardless of the reasoning, with Inheritance Tax receipts increasing year-on-year, and exceeding £5 billion for the first time in the 2017-18 tax year, it is clear that the cost of dying has only increased.

How we can help

Quite apart from the Court fee increase, the process of obtaining Probate and dealing with an estate can be a lengthy, complex and daunting task, especially if you are dealing with the responsibilities alone. Vyman Solicitors have an experienced team who can advise and guide you on obtaining Probate and all aspects of estate administration. If you would like further advice or guidance then give our Private Client team a call on 0208 429 1010 or contact Matthew Whaley matthew.whaley@vyman.co.uk

The world is becoming more digitised and inter-connected as information and communication becomes more accessible and simpler to manage. Platforms such as Facebook, Twitter, Instagram, WhatsApp and iTunes, amongst others, allow us to access, share and store messages, images and music at the click of a button. But what happens to these ‘digital assets,’ when you are no longer around?

What is the problem?

It is a common misconception that digital assets are owned by the user. This is often not the case. When using online services or programs we normally agree to certain terms and conditions that give us the use of a service but no more. For example, certain social media sites state in their terms of use that they own the content you upload and not you. Some service user agreements set out what will happen to the user’s account on death, but they are normally silent on such matters.

Even if you do have ownership of the assets, for example photographs stored on a laptop, it may not be quick or simple for others to access these. Frequently the service provider will not permit third parties, such as your family, to access this data. Many service platforms also state in their terms and conditions that usernames, passwords and other codes are not to be disclosed on the grounds of confidentiality.

There have been some developments in recent years. For example Facebook, on the death of a user, may allow the user’s Executors to access the profile and memorialise it. Nonetheless family members still regularly encounter problems in accessing and preserving a loved one’s data.

What is the Solution? 

1. Consider which digital assets you want to preserve or pass on to a beneficiary.
2. Review any terms of use you would have signed up to and ascertain whether they state what happens on death.
3. Store any documents, files or photographs that are only held digitally on to an external hard drive.
4. Make a Will or update your existing Will with a specific clause dealing with your digital assets, and review this regularly to ensure it is kept up-to-date.
5. Consider keeping a list of usernames and passwords in a secure location with instructions (maybe in your Will) as to how the list can be accessed.

This is a developing area of the law and there is no one size-fits-all approach. Vyman Solicitors can advise you on how you would like your digital assets to pass on your death and how this can be set out in your Will.

E-mail us on: info@vyman.co.uk

Call us on: 0208 427 9080

The death of beloved comedian, Ken Dodd, last week has shone a light on the Inheritance Tax rules and the importance of planning your estate correctly.

The late comedian married his long-term partner of over 40 years just two days before his death and it is thought he did this to ensure the tax man cannot claim over £2 million in Inheritance Tax from his approximate £7 million estate.

Tax advantages of being married

A person’s marital status can make an enormous difference when it comes to the Inheritance Tax bill of their estate. The current Inheritance Tax threshold (the ‘nil rate band’) is £325,000 (and may be up to £425,000 for certain homeowners). Assets pass between married couples on death completely free of any Inheritance Tax, regardless of the size of their estate.

Moreover, where married couples leave their estates to each other on death their nil rate band is preserved and can be transferred and utilised on the second death. This gives married couples a tax-free allowance of currently up to £850,000.

IHT problems for unmarried couples

For unmarried couples, however, only an amount up to the nil rate band can be passed to the survivor free of tax. The excess is then taxed at 40%.  This could result in unfortunate consequences, such as the survivor having to sell their property to pay the tax bill.

There is also no transferable nil rate band between unmarried couples.

Conclusion

Marital status is not necessarily enough to ensure the Inheritance Tax saving can be made, however. It is also important to plan your estate in advance and a crucial part of this is to have a Will in place so that you can ensure your assets pass to your chosen beneficiaries, and in a tax-efficient way. This could save your loved ones thousands of pounds in tax and provide reassurance at a difficult and emotional time.

If you would like further advice  or guidance on estate planning or Will-writing then please do not hesitate to contact us on info@vyman.co.uk or 0208 427 9080.