The Conservatives have promised to raise the inheritance tax threshold to £1 million for a married couple, but this headline may not be quite as generous as it seems. In fact, they are not lifting the general threshold at all, even though it has been stuck at £325,000 since 2009 while property prices have risen considerably; the result is that more people than ever, especially in the south east, are finding themselves in the death duties trap.
Their announcement this week says that couples will be given a further £350,000, bringing the total amount before tax is due to £1 million. But (and there always seems to be a “but”), that extra allowance can only be used for the home.
So that leaves a lot of unanswered questions and assumptions which rather burst the balloon. What if the only property they owned is let? Single people presumably only have a further £175,000 allowance, so owning a far-from-extravagant house would still mean an inheritance tax bill. Divorcees would no doubt be in the same position. And what about a widow who had recently sold her home to pay for care, and now has the proceeds of sale rather than the property – no doubt that is a £350,000 allowance completely gone in a puff of smoke, and an inheritance tax bill of £140,000 instead.
One further thought – the announcement kept using the expression “to enable you to pass your home to your children”. Does this mean that the allowance would only apply to those with children? Who knows!
This isn’t a shout to vote for another party. Labour are unlikely to raise the threshold by a single penny, nor the Liberal Democrats. And a coalition government would presumably keep the Conservatives from putting this promise fully into practice.
But it does mean that nobody should put off dealing with sensible estate planning, on the flimsy basis of a promise which could come to a lot less than it at first seems to offer.
On Tuesday 22nd April 2014, the official Court fee for making an application for a grant of Probate or Letters of Administration increased from £45 to…………… £155! For personal applications (which the Courts do not like and which take up to 2 months rather than the usual 2 weeks the Court takes for applications made by solicitors), there is still an additional £60 personal application fee. In a conciliatory move, the cost of a Court sealed copy of a grant requested at the time of the application has been reduced at the same time from £1 each to 50p each.
Supposedly to help fund care fees – but quite possibly simply to help fill the Chancellor’s coffers – it has now been announced by the govenment that, contrary to the previous announcement in December, the rate at which Inheritance Tax will apply (the nil rate band) is to be frozen at £325,000 until at least 2018.
In his autumn statement, the Chancellor of the Exchequer George Osborne announced that the inheritance tax nil-rate band will be increased from 6 April 2015 from £325,000 to £329,000. This will be the first increase since the threshold was frozen until 5 April 2015.
Once a Will has been correctly signed and witnessed you should never make physical changes to it. If you do, it will usually be the Court who has to decide whether these were made before or after the Will was originally signed. Needless to say, this will prove an expensive exercise.
If you want to change your Will, it is a relatively simple matter for us to retrieve a Will we have drawn up from the digital archives, make the necessary changes and to produce a new one for signing and witnessing.
If you marry or remarry after the date of your Will, the Will is automatically revoked unless it had been written specifically in contemplation of your intended marriage and this had been stated in the Will.
Contrary to popular belief, getting divorced does not revoke your Will. However, any gifts to your former spouse or their appointment as an Executor (the person who deals with the administration of your affairs after your death) will not have effect.
The Will is interpreted as though they had predeceased you, unless in the Will you had specifically stated that any such gifts, or appointment, are still to have effect even if at your death you are no longer married to that person.
Yes, you can do this in two ways.
You can either give them the right to live there as long as it is their main residence.
You can give them a life interest, in which case they could rent it out and keep the rental income.
Either way, they do not own the property outright, and on the termination of their interest the property will pass to whoever you have named in your Will.
It is a good way of ensuring your assets eventually pass to your own children or other family, while making provision for your life partner.
We can explain the relative merits and any disadvantages of such a gift.