Over the past year, with all its ups and many downs, we have seen a dramatic increase in the number of clients who would like to discuss Estate Planning Solutions and talk about Inheritance Tax Planning. This often relates to an individual or a family who haven’t yet formalised any future wishes and also those who would like to review any plans already in place. Whilst this isn’t necessarily borne out of panic over Covid, the current circumstances surrounding the pandemic are certainly encouraging people to focus their minds and consider their future plans.
Many people are finding themselves wondering: should I write a new will? Do my original estate planning solutions still meet my family’s needs? If the answer is unclear then this could be the time to make changes.
One area where Family Matters are seeing a steep rise in demand, is that of our will writing service. Recent figures suggest that just over 50% of adults in the U.K. have wills in place. To write an up to date Will, whatever one’s age or situation, is the bare minimum needed to ensure your loved ones future financial security. And it’s not just the older generation getting their ducks in a row. We have also seen an increase in the demand for our Will writing service amongst the younger generation too.
Pandemic or not though, we have always recommended that clients Write a Will as soon as possible. This is particularly the case when there is a significant change in circumstances, such as the birth of a child, a divorce, a marriage, or the purchase of a property, rather than leaving making a Will until they are much older.
It appears that the Covid pandemic has prompted people, especially those with partners or children, to seriously consider seeking a will writing service and reviewing the relevance of existing Wills. Regardless of the situation the world is in at any given moment, the idea of you, or someone you love, dying is not something that anybody wants to think about but, it is something that will eventually happen. To write a Will allows you to prepare for this.
What About Inheritance Tax?
We can help you work out if you have a potential Inheritance Tax liability. Once we have had a discussion, we will make recommendations about how you could reduce your overall bill by reviewing all the different inheritance tax solutions available. Funding your expenses from assets that are subject to Inheritance Tax will also help reduce your taxable estate.
A trust may also help you protect your wealth, making sure that the people who matter to you most are the ones who benefit in a way that you want them to at the right time.
What Are The Inheritance Tax Thresholds In 2021?
Everyone in the 2020-21 tax year has a tax-free inheritance tax allowance of £325,000 – this is known as the nil-rate band. The allowance has not changed since 2010-11.
The standard inheritance tax rate is 40% of anything in your estate that comes over the £325,000 threshold. For example, if you leave an estate worth £500,000, the tax bill will be £70,000 (40% on £175,000 – the amount between £500,000 and £325,000).
However, if you’re married or in a civil partnership, you may be able to leave more than this before paying tax. As of April 2017, you can also pay less inheritance tax if you’re leaving property to a family member.
For the 2020-21 tax year, this new transferable allowance rose from £150,000 to £175,000 from 2019-20.
So as we approach the end of the tax year, now is a good time to review your Inheritance tax planning and ensure you have taken advantage of all the reliefs and options available to you.
- Use Your IHT Nil-Rate Band
Your nil-rate band for Inheritance Tax is £325,000, plus any unused nil-rate band from a deceased partner. You also have an additional nil-rate band of £175,000 when leaving a home to a direct descendant.
- Claim IHT Relief On Charitable Gifts
If you leave at least 10% of your total estate to charity, Inheritance Tax is applied on the portion outside of your nil-rate band at a reduced rate – 36% rather than 40%.
- Use All Available IHT Reliefs
If you work in agriculture, you are probably aware of the property relief on agricultural property, including the farmhouse. You should also be aware, though, that if before your death you retire and no longer actively farming the land yourself, then the relief may be lost. These reliefs are currently under review
All Business owners should look at how their estate is arranged to ensure their Estate Planning Solutions are suitable.
- Update Your Will
With any significant change in your financial circumstances, or to tax rules, reviewing and updating your Will can help to reduce your IHT bill.
Why Should I Use A Solicitor To Write Or Update A Will?
Using the Family Matters Will writing service will save a lot of stress for those you leave behind, as well as giving you more peace of mind.
The benefits of using our service include:
- You Are Protected If Something Goes Wrong. As solicitors, we are fully regulated. In the unlikely scenario that you have any problems, you can make a complaint to our firm. If the firm doesn’t deal with your complaint properly then you can go to the Legal Ombudsman.
- You Can Be Confident There Will Be No Mistakes. Common problems with wills are things like using the wrong witnesses or forgetting to have it signed. This could mean your will is not valid when you die. Using our will writing service this will minimise the risk of things like this happening.
- The Complicated Bits Are Taken Care Of. The law surrounding inheritance tax planning and Trusts is complicated. Our solicitors are familiar with the law and will be able to help you make the most financially effective choices.
- Your Will Is Stored Safely. If we help you write your will, we will store the original for you free of charge.