Plan how you want to split your estate before you meet your maker!

Plan how you split your estate before you meet your maker!

On the face of it the Inheritance Tax and Trustees’ Powers Act that was given Royal Assent on the 14th May seems to be a good step forward in simplifying the sharing of assets when you die.  However, it’s our view that this Act serves simply as a reminder of the importance of doing a Will.

If you don’t make a Will, chances are that  your friends and family will not necessarily receive the specific things you want them to. What you leave will be subject to inheritance tax, but if you think ahead you could potentially save a stack of money by tapping into possible tax exemptions – why let it go to the state after all! Inheritance Tax Planning is one of the easiest and biggest ways you can save money possible and you don’t have to be rich for your estate to be subject to tax.

Below are top line changes made to the rules of Intestacy (source: IPC):

Married/Civil partnership with no children – Where someone dies intestate leaving a spouse/civil partner and no children, the Act now states that the entire residuary estate will pass absolutely to the surviving spouse/civil partner

Married/Civil Partner with children – In addition, the new Act aims to simplify the sharing of assets on intestacy where the deceased is survived by a spouse/civil partner and children. Currently, the surviving spouse is entitled to the personal chattels and a statutory legacy of £250,000, plus a life interest in half of the balance of the estate which would then pass to children on subsequent death. The other half is held for the children on statutory trusts. The new Act amends this provision so that £250,000 plus half of the balance of the estate passes to the surviving spouse absolutely. The other half would still pass to the children, again held in trust until the age of 18.  However, this means that the surviving spouse/civil partner would be free to deal with the assets as they wished instead of only having a right to the income. This would also involve less administration for the personal representatives, as this share would not be held upon trust.   It also means that the children do not have to wait for the surviving spouse to die in order to inherit – particularly useful where the surviving spouse is from a second marriage, the children are from the first marriage, and the two sides do not get on!

So if you want to plan ahead and ensure what you have goes to the right people, and doesn’t leak into the government coffers, Searchlight Investments can offer significant help.

 

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