Why Should I Make a Will?

It is the only way to be 100% sure that your assets go to the people you love.

Has an Inheritance Tax Saving Will been affected by changes to trusts in the 2007/08 Budgets?

NO, the comprehensive Nil Rate Band Discretionary Trusts used in LSA Wills have not been affected in any way and they remain the most effective way for couples to optimise the use of each of their individual Inheritance Tax allowances to the long term benefit of their children, grandchildren and/or other beneficiaries. However, a recent court case has made it an imperative that proper legal advice is sought at the time the trust is set up on the first death, since there are different options available and their optimum use depends upon your prevailing circumstances at the time.

Can I make sure that my children/grandchildren don’t spend their inheritance until they are older than 18?

Yes, by including a Children’s Trust in your Will, their inheritance is controlled by the Trustees and need not be paid out until they are e.g. 21 or 25. However, changes in the taxation of certain Trusts, proposed in the 2006 Budget and revised during the passage of the Finance Bill, mean that, now, if you choose an age to inherit as being over 18 then, at the time the children/grandchildren inherit, there will be a pro-rated 6% tax to pay on the amount inherited in excess of whatever the Inheritance Tax (IHT) allowance is at the time they inherit

In practise, this means that, 0.6% tax is levied for every year over 18 that money is in the trust. As an example, if money goes into trust when a child is aged 15 and the trust says that they cannot inherit until they are 25, then, for each of the 7 years from 18 until 25, a tax of 0.6% is levied (4.2% in total over the 7 years) on any money in the trust that is in excess of the Inheritance Tax (IHT) allowance in force at the time. The IHT allowance is shown in ‘5’ below.

I have just got married again. Does my previous Will still stand?

No. Your marriage certificate makes sure that any previous Will is made null and void. To avoid having to think about making a new Will immediately you marry, or re-marry, we can make sure that a Will made in advance of that new marriage, or civil partnership, will not be rendered null and void.

How do I know if my children will have to pay Inheritance Tax when I die?

The Chancellor makes regular changes to the value of assets that are exempt from tax. At the moment this gives each person’s estate an allowance of £300,000, rising to £312,000 in April 2008, £325,000 in April 2009 and, by April 2010, this will further rise to £350,000. All assets forming part of your estate in excess of this allowance will usually be subject to tax at 40% unless you take steps to protect those assets e.g. through an Inheritance Tax Saving Will.

Does an Inheritance Tax Saving Will (IHT) help protect against long term care fees?

IHT Wills do not come in effect until the death of one spouse. Owning the property as tenants in common has no bearing on whether care fees are payable. Your local authority will decide this via a means test.

How is a person assessed for long term care?

When a person needs to go into care they are assessed by their Local Authority to decide what kind of care they need and whether they can pay for it. There is a means test of your income and capital – currently (from April 2007) individuals with over £21,500 are expected to meet the full cost of their care. If you have capital between £13,000 and £21,500 you will be expected to make some contribution and if you have capital below £13,000 then you will not be expected to make a contribution from this capital but may contribute from your income. The individual will be left with a personal expenses allowance of £20.45 per week (naturally, this amount is subject to change) - this should not be used towards the basic cost of your care. If you choose a more expensive home than the Local Authority would normally provide for someone with your assessed needs a third party may pay the difference - these are called third party contributions and they are ignored for income support purposes but will be included as part of your income by the Local Authority. Third Party contributions would need to show that they can reasonably expect to be able to contribute for as long as the arrangement lasts - the third party will need to consider things like the cost rising and what would happen in this case.

I own assets outside of the UK. Does a UK Will cover this?

No. British law only has jurisdiction within Britain. If you own assets abroad you must also have a Will drawn up in that country. However, you may find yourself taxed on those foreign assets as part of your estate in this country. You should, however, only pay tax in one country.

Can I state what kind of funeral I want in my Will?

Absolutely. If you have a specific wish then it can be included - provided that you have the assets to pay for it. There are some special circumstances, however, that are not straightforward and we will explain these and how they might impact your choice. We can also help you to arrange a pre-paid funeral if you wish.

I have young children. Can I say who should look after them if I die?

Yes. If you have parental responsibility for children, then, in your Will, you can make the courts aware of the person(s) that you would like to act as guardian(s) for your children until they are 18. Your chosen guardians should a) agree to the appointment and b) make their own Will to ensure continuity. We also recommend that you write a letter outlining the reasons why you have chosen those appointed as guardians in your Will.

Will my common law husband/wife inherit my assets when I die?

No. If you have not made a Will then your assets will pass directly to your next of kin. If you do not have any next of kin then the money goes to the state.

What happens if one or more of my beneficiaries dies before I do?

This happens quite often. We will word your Will in such a way that it makes allowances for such an occurrence after discussing the various options with you.

I have a business. What if I want it to continue after my death?

This is not a problem. There are many businesses, which are run by trusts, for example: The Guardian

What can I do to make sure my assets are properly looked after and help my family if I should become mentally incapacitated through accident or illness?

You can become the donor of Enduring Powers of Attorney to those that you trust to look after your best interests. We can help you understand what this means, how it works and the process you need to go through and then prepare the necessary documents. New documents, referred to as Lasting Powers of Attorney are due to come into force in October 2007, but existing Enduring Powers of Attorney will continue to be valid after the introduction of these new documents, which are expected to add considerable complexity and cost to the process.

Can you help me with a Living Will?

Yes we can help you understand how this works and produce the necessary documentation. It is known as an Advance Directive. The introduction, in October 2007 of the new Lasting Power of Attorney documents, as part of the Mental Capacity Act 2005 (itself coming into force in April 2007) will offer additional opportunities to appoint ‘attorneys’ to look after your health requirements as well as replacing the Enduring Power of Attorney for control of assets as mentioned above.

I’m now in a Civil Partnership. Do I have the same rights through a Will as a spouse?

Yes. Spouse exemption from tax and the special spouse provisions within IHT Wills apply. The appointment of guardians needs special attention. Equally the dissolution of a Civil Partnership followed by a new Civil Partnership will render a previous Will null and void.

Can our appointment to discuss my/our requirements be anywhere at any time?

Yes. Whatever suits you best and makes you feel most comfortable. If a couple are both making Wills then it is best to be seen together.

Are you happy to just review a Will that I have made already?

Yes. We are very happy to help you to understand whether it does what you expected both when you made it and, more importantly, now. However, if changes are needed, then we can only make those changes to existing Wills or make a new Will from scratch.

How do we know IF we own our property as ‘tenants in common’ so that we can take advantage of IHT Wills or Property Protection Trusts?

The Land Registry entry for your property’s title number will contain, in Section B : Proprietorship Register (or Property Register), a restriction which will be worded as the following example shows:

3. (29.02.2004) RESTRICTION : No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by another order of the court.

A Land Register search can be carried out on-line at a cost of, currently, £3.00 per entry via www.landregisteronline.gov.uk (the service is available Mon – Sat 7 a.m. until midnight). If the restriction above is not shown then you do not own the property as ‘tenants in common’ and a Deed of Severance is required. We can provide this for you along with other forms necessary for the appropriate Land Registry.