Will disputes: how to contest a will

Posted on By Liz Skinner

An FT article in January 2024 blamed a ‘boom in asset prices’ and an increase in dementia for a surge in inheritance disputes reaching the Courts in England and Wales.

someone signing their last will and testament

This matched an earlier report, called the UK Inheritance Disputes Report 2022, published by IBB Law. It found that three in four people are likely to experience a will, inheritance, or probate dispute in their lifetime.

So, what causes will disputes, and how do you challenge a will?

Will disputes

Relatives might want to challenge a will for various reasons. They may feel they’ve been treated unfairly or that they’ve not received what they were promised. Often there’s a feeling of being entitled to inherit assets when someone, particularly a parent, dies.

Second marriages can cause will disputes too, when the children of the first marriage feel they’ve been treated less favourably in the will than the children of the second marriage.

There is also increased awareness about financial abuse of the elderly/vulnerable, whether that’s by a relative, friend or carer. Often this leads to will disputes, when family members find they’ve been unexpectedly cut out of someone’s will, in dubious circumstances.

Freedom of disposition

England, Wales and Northern Ireland have ‘freedom of disposition’, which means people are entitled to leave their assets, in their wills, to whoever they want. This compares with other jurisdictions, including Scotland and most European countries, where the law gives close relatives a fixed share of the estate.  

The only limit on the English freedom of disposition is something known as the 1975 Act. This allows you to bring a claim against someone’s estate if you were not left ‘reasonable’ provision in the person’s will. This claim is easier if you were married or in a registered partnership with the person who died. It can also be brought by other family members (usually children) or by anyone else who was financially dependent on the deceased.

The position is very different if someone dies without a will, known as being intestate. Here the law divides the estate between the deceased’s close family, prioritising the deceased’s spouse/registered partner and children. Otherwise, parents, siblings and cousins can potentially benefit.

How to challenge a will

There are, however, only a very limited number of grounds for challenging someone’s will and it is harder than you might think. ‘It’s not fair’ isn’t actually grounds for challenging a will.

If a 1975 Act claim isn’t possible, you can challenge a will if you believe that the person who wrote the will (the testator) didn’t have the mental capacity to do so. As the Mental Capacity Act 2005 contains an assumption of mental capacity, if you want to challenge a will on these grounds, you have to prove the testator didn’t have capacity.

An alternative challenge can be brought if the testator was being unduly influenced by someone else. This might be because they’d fallen under the influence of a carer or neighbour. The most common form of undue influence is between spouses and family members.

There are also formalities that a will must comply with, so you can bring a challenge if (for example) you think it wasn’t signed correctly. Again, you’ll have to find evidence to support your case.

You need legal advice on the process for challenging a will and evidence to support your challenge. The costs of a court application can be extremely high, and it can take years to get to court. You should see if you can discuss things between you and whoever is named as heirs in the will. Most will disputes are settled out of court.

How to avoid a challenge to your own will

The best way to avoid challenges to your own will is to a) tell your loved ones what you plan to put in your will, even if you fear it won’t be what they want to hear, and b) get a suitably qualified advisor to write it. Many will disputes arise because the person making the will didn’t let their family know what they were planning to put in their will or drafted their own will incorrectly.

Jo Summers TEP, Partner, Jurit Law

Can I pay more tax voluntarily?

Posted on By Liz Skinner
A person makes notes in front of a laptop

Recent years have seen many people’s finances suffering as a result of the COVID-19 pandemic. However, some wealthy people have seen their wealth increase over this time. This has resulted in calls for the wealthy to pay more taxes, including from some wealthy people themselves. An example is the group, Patriotic Millionaires, who wrote an open letter to governments in January 2022, to say they were not being forced to pay their fair share towards the global recovery.

But is it already possible to pay more tax than you owe if you wish to do so? The answer is yes, there are two simple ways in which this can be done.

Voluntary payments/donations to the government

You can give a donation to the government via the form of a direct bank transfer. To do this the potential donor should write to Her Majesty’s Treasury (HMT) at accountsreceivable@hmtreasury.gov.uk specifying that they wish to make a donation towards public expenditure and lay out the value of the donation and the planned date of the donation (which must be seven calendar days in advance).

The donor must also confirm that the money is theirs to give and is not derived from crime, money laundering or other illegal activity; additionally the donor must acknowledge they cannot request a refund of the donation once it has been made. HMT will then provide details of the bank account and reference to be used for the donation. HMT also does advise that the gift cannot be ring-fenced for a specific purpose or assigned to a specific area of public spending.

Donations can also be given specifically to reduce the national debt. To do this all the donor needs to do is download, complete and submit a form to the United Kingdom Debt Management Office (DMO). More information on donating to the government is here.

Voluntarily overpaying via self-assessment tax return

Another simple method is through voluntarily overpaying during the filing of a self-assessment tax return where there are options to amend how much one pays. If HMRC deems that you have overpaid you can ask that they do not send you a refund. More information on how to voluntarily pay more self-assement tax is available here.

Pay more tax, or give to charity?

Despite these easy ways to pay more to the government, according to the UK Debt Management Office only GBP565,349 was received in donations in 2021, which was up from GBP48,957 in 2020. In contrast, the Charities Aid Foundation (CAF) recorded that GBP11.3 billion was donated to charity in 2020[1]. The CAF figures show that the number of people giving to charity has dropped but that those who are giving are donating more money and gifts.

If you are in a position to contribute money, you have a few options: you can pay more tax or support the causes that matter most to you and monitor the impact of your donation.

For more advice on how to pay more tax or on effective philanthropic giving speak to a qualified advisor:  https://advisingfamilies.org/uk/find-a-tep/

I’d like to give money to my family or charity before I die. What’s the best way to do this?

Posted on By Joanna Pegum
family group

Here are some of the most common questions from our clients about how best to donate their money and assets:

Modest gifts

You can give away £3,000 worth of gifts each tax year (6 April to 5 April). This is known as your ‘annual exemption’. You can carry any unused annual exemption forward to the next year once.

You can give as many gifts of up to £250 per person as you want during the tax year, as long as you have not used another exemption on the same person.

More people are using these allowances, often to help people out of tight situations through reduced incomes. Keeping a record of such gifts is vital for tax purposes.

It can also benefit your family to make a larger gift now if your asset may increase in value, putting any future gain in the hands of the recipient.

Deathbed Gifts

We have also seen use of so called ‘deathbed’ giving, when people are near to death and know they will not need funds.

If you die and your estate is worth more than the basic Inheritance Tax threshold, your estate may qualify for the residence nil rate band (RNRB) before any Inheritance Tax is due. The person will need to leave some property to their descendants.

The maximum available RNRB in the tax year 2024 to 2025 is £175,000. The RNRB will gradually reduce for an estate worth more than £2 million, even if a home is left to your direct descendants. The RNRB reduces by £1 for every £2 that the estate is worth more than the £2 million threshold. For those who are in a marriage or civil partnership, using the RNRB on first death may be prudent planning.

‘Deathbed giving’ is sometimes advisable in seeking to keep the value of your estate below the £2 million threshold. You need to take into account the effect of the gift on your ordinary Nil Rate Band. We recommend you seek advice on this.

Surplus Income Gifting

Unlike other forms of lifetime gifting, this has no limit. You must be able to prove that the income, expenditure and amount you are regularly giving away is a conscious decision. It must be surplus income, not eat into capital.

Gifting to good causes

People may wish to give charity, the arts, museums, universities, and community amateur sports clubs. Such gifts are exempt from inheritance tax and do not adversely affect your tax position on death as they do not eat into your estate’s ‘nil rate band’ or annual exemption. The ‘nil-rate band’, which is currently £325,000, means that it is taxed at 0% (‘nil’) unless there are lifetime gifts or trusts.

An extra benefit of gifts to charity is that you can claim Gift Aid. Charitable causes can claim an extra 25p for every £1 you give. It will not cost you any extra.

Ask your employer or pension provider if they run a Payroll Giving scheme, so you can donate straight from your wages or pension before tax is deducted.

Assets fat with gain

Valuable items which will make a large profit when sold are an excellent choice for gifting to charitable causes. They are treated as neither a gain nor a loss. For example, historical jewellery collections could be donated.

More controlled charitable gifting

Some people choose to donate on a more personal, controlled, level by creating their own trusts and foundations. This could be a charitable trust, charitable company or Charitable Incorporated Organisation. Setting up lifetime foundations and trusts enables you to set the focus of the charity and work alongside other trustees who will then be able to continue the work after your death.

 Trusts

Although immediate cash gifts can be helpful, for some people, retaining a degree of control is equally important. A trust is the perfect vehicle. It is a mechanism which splits the responsibility for the management of administration of assets from the right to use or benefit from the assets. Trustees control and beneficiaries benefit.

There are many types of trust, but there is almost certainly one which will suit your wishes.

Mandy Casavant is a Partner with RWK Goodman

‘One day, all this will be yours’: passing on the family farm

Posted on By Joanna Pegum
farmer and cows in countryside

It can be a very proud moment for a parent to look around a farm and to say to their child, ‘one day, all this will be yours’.

Family farms are often passed from one generation to the next and the value of land means that farms can have a considerable value, even if at the time cash is tight. Often two or three generations of the same family work together on the same farm.

But sometimes, unexpected things happen: parents get divorced and remarry, or family arguments drive a wedge between parent and child. In these circumstances, a parent may change their mind and make a new will, leaving property in different shares or, perhaps, leaving it to a new partner.

Can I change my will?

Anyone is generally free to change a will at any time. When making a will under English and Welsh law, a person is entitled to be capricious, whimsical or unfair if they wish to act in that way. Sometimes a new will is made just to reflect a change in circumstances.

An individual is perfectly free to make a promise to leave a property to someone – only to change their mind later. This situation is quite common.

So what’s different for family farms?

Family farms, however, face a unique situation when it comes to owners changing their minds. For example, a property-owning farmer may say to his daughter: ‘one day, all this will be yours’. He promises this on many occasions over a long period of time, and so the daughter continues to work on the family farm and turns down opportunities to work elsewhere (perhaps for a higher wage). This encourages her to stay working on the farm for a low salary precisely because one day the family farm will become hers.

If the farmer later decides to change his mind, this starts to stray into a more complicated legal situation.

If a property owner makes a promise to someone (for example to leave them the farm), and that person relies on that promise and acts to their detriment (for example by turning down the opportunity to work elsewhere for a higher wage), then the property owner can be held to that promise – even if they make a will to the contrary.

This legal principle is known by the slightly unusual word ‘estoppel’.

Sadly, there have been numerous recent cases that have gone all the way to trial in precisely these circumstances: a property-owning farmer has made a promise to leave the farm to a particular beneficiary, only to change their mind later. These are some of the saddest cases to come to court, since they reflect a tragic breakdown of family circumstances.

Try to resolve things amicably

If you find yourself in this situation and promises have been made and then broken, a good lawyer should take steps to try to resolve any family dispute amicably, without the worry, risk and expense of a trial.

Many people embark on a process of mediation in the hope that a family relationship can be salvaged and the work of the farm can continue. Statistically, mediations have a very high prospect of success: in the region of 85 per cent of cases referred to meditation settle, with considerable benefit for family members so that they can meet again around a kitchen table rather than at in court.

Don’t make promises you can’t keep

The best defence, however, is to avoid this sort of situation arising in the first place. It may be tempting as a short-term fix to offer to leave a farm to one beneficiary, rather than to someone else. Sometimes these promises are made on the spur of the moment or in the heat of an argument. These promises can, however, have serious consequences for the future of the farm. In short, promises should never be made unless they can be kept.

Stephen Lawson TEP is a Partner and Head of Litigation at FDR Law LLP, Frodsham, UK

What is an Enduring Power of Attorney (EPA) and how is it used?

Posted on By Joanna Pegum
Older man and woman sit by paperwork with a calculator

It is good practice for people to set up a legal safeguard so that, if they lose mental capacity in future, a trusted person can look after their affairs.

In England and Wales the Lasting Power of Attorney (LPA) was introduced in 2007, replacing the older Enduring Power of Attorney (EPA), however EPAs that were signed before 1 October 2007 can still be used.

If you have been appointed as an attorney under an EPA, you will be responsible for helping the person, known as the donor, to make decisions in relation to their:

  • Money and bills,
  • Bank and building society accounts,
  • Property and investments, and
  • Pensions and benefits.

Acting as an attorney is a significant responsibility, and it is important to understand your duties and be familiar with the principles to apply when making decisions.

When can you act?

You can act for the donor straightaway using an unregistered EPA, provided that they still have mental capacity. If the donor has lost, or is losing, capacity to make financial decisions, you must register the EPA with the Office of the Public Guardian before you can continue to act.

While the donor has mental capacity you should act at their direction and with their consent.

The banks, building societies and organisations where the donor holds funds will require a certified copy of the EPA, and identification from you, before they will allow you to deal with an account.

How do you know if the donor lacks capacity?

This is a difficult question because capacity can vary from day to day. The law states that the donor lacks capacity if they are unable to make a decision due to an impairment with the functioning of their mind which means that they cannot understand, retain or weigh the necessary information.

The ability to make decisions is both time and issue specific. The donor may have capacity to make a simple decision about paying a bill but not a complex investment decision.

You should not consider the donor to have lost capacity just because you disagree with a decision they have made.

What principles should you follow?

You should assume that the donor is capable of making a decision unless shown otherwise and you should take all practical steps to help the donor make the decision themselves. All decisions must be made in the donor’s best interests and in a way that least restricts their rights and freedoms.

You should take account of any past wishes and feelings of which you are aware. Make sure you keep records of how you reached your decisions, in case you are challenged in the future.

How should you make investment decisions?

You will need to obtain and follow proper advice, ideally from a qualified financial advisor. One of your duties is to review the suitability and diversity of their investments. It is essential that you keep the donor’s assets separate from your own.

What else should you bear in mind?

Unless you are a professional attorney, you will not be paid but you can recover reasonable expenses incurred when carrying out your duties.

Take advice before making gifts or loans from the donor’s assets, or selling assets below their true value.

Finally, you will need to keep accounts of the donor’s assets, income and spending. The Office of the Public Guardian and the Court of Protection can ask to check these at any time.

What about other parts of the UK?

This article applies to English and Welsh EPAs. Different rules apply in Scotland and Northern Ireland. 

Related articles

Stephen Horscroft TEP is a Partner in the Private Client Advisory Group at Cripps, Tunbridge Wells, England

Could my will be challenged by friends or relatives after my death?

Posted on By Joanna Pegum
family on bench

Under the laws of England and Wales, an individual has complete testamentary freedom. This means that you have the right to leave your estate to whomever you choose.

Certain classes of family members and dependants can, however, potentially challenge your will after your death under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act), if they feel that inadequate provision has been made for them.

On what grounds could someone make a 1975 Act claim?

In order for someone to commence a 1975 Act claim, they would need to show that they have maintenance needs and the provision they have received from your estate is not reasonable to meet those needs.

Where, for example, your children are grown up and self-sufficient, their ability to use the 1975 Act is limited: just because they feel unfairly treated, does not mean that they are necessarily entitled to a bigger slice of the pie.

How much could they claim?

The level of provision that a claimant bringing a claim under the 1975 Act can hope to receive from your estate will depend on whether they fall within the category of spouse or civil partner, or one of the other categories, which includes: former spouses or civil partners, your children, someone you treated as a child, or someone who you maintained prior to your death.

Your spouse or civil partner could expect to receive from the court ‘such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that is required for his or her maintenance’.

For all other categories of claimant, they could expect to receive such provision as would be reasonable for them to receive for their maintenance only.

How can I avoid my will being challenged?

The best way to avoid your will being challenged after you die is to consult a professional advisor, who can consider your circumstances and ensure you have done everything reasonable to prevent this eventuality.

Caroline Miller TEP is a Partner and Head of the Private Client Team at Wedlake Bell, in London, UK

How can I leave my pension to the person I choose?

Posted on By Joanna Pegum
father and son

It’s easy to think that everything you own will be distributed according to your will when you die. Your pension, though, is a different matter. Pensions are not considered part of your estate, and generally not subject to inheritance tax. Most importantly, you will need to specify who will benefit, via a particular form, known as a nomination form or Expression of Wish form.

What is a nomination form?

Most pensions, aside from the state pension, will require you to complete a nomination form. This will allow you to give details of the loved ones that you would like to benefit from your pension when you die, who are known as your beneficiaries. While nomination forms usually only apply to lump sum benefits from a pension on death, and not to the transfer of a drawdown pension (i.e pension income),  providers do vary. You will need to ask your provider(s) what they require.

Who can I nominate?

You can nominate anyone you like, including family, friends, charities, clubs or associations.

If I am married, will my spouse automatically get my pension?

Your pension provider may automatically nominate your spouse or civil partner to receive the lump sum in the absence of a nomination form, but you should check the details of your policy and make sure it complies with your wishes.

How many people can I nominate?

Each individual pension provider should specify their requirements on the form. Some providers state that you can nominate up to 25 beneficiaries.

What happens if I nominate my personal representatives?

If you nominate the ‘personal representatives’ or ‘executors’ of your will, or more simply your ‘estate,’ there is a good chance that your pension lump sum will form part of your estate and will become subject to inheritance tax.

Is it legally binding?

Most pension providers will state that your nominations will not be legally binding, and the distributions will be made at their discretion. In the majority of cases, they will comply with your instructions if they are clear and up to date. They may be more inclined to disregard your wishes if the information appears to be out of date or inappropriate, for example if someone has died or got divorced.

What happens if I don’t fill in the form?

Distributions are usually made at the provider’s discretion if you don’t submit a nomination form. Some pension providers have a policy that they will automatically pass the lump sum to your spouse or civil partner, but this is not guaranteed, and you should check your policy.

What information should I provide?

Each pension plan is different, but generally you will be asked to provide your pension account number or reference number, the full name of each beneficiary, their date of birth and address and their relationship to you. You will then be asked what percentage share of the lump sum you would like to leave them. You must ensure that the shares add up to 100%, otherwise your provider may be obliged to use their discretion. You can of course leave 100% to one person or organisation.

How can I update it?

The nomination form can be updated as frequently as necessary, and often online, so make sure you keep your beneficiary’s personal details current and correct. The forms can usually be revoked or amended at any time.

Where is my domicile?

Posted on By admin
man looks at earth, searches for domicile

Domicile describes the country that you consider to be your home or where you have your permanent home. It is not the same as nationality, citizenship or residence.

You can only have one domicile at a time and the domicile that is allocated to you defines which system of law will be applicable to you in relation to things like marriage, divorce and succession.

The UK has three different types:

  1. Origin – where you are born, take father’s if married or mother’s if unmarried
  2. Dependency – children under 16 acquire their parents’ domicile (women would take husband’s when getting married prior to 1973)
  3. Choice – physical presence and an intention to stay ‘indefinitely’

Can I change my domicile?

Everyone acquires a domicile at birth. If you wish to change your domicile of origin or dependency then you need take a number of steps:

  • Purchasing property in new domicile, and abandoning property in old
  • Obtaining a new domicile passport and relinquishing the old one
  • Closing accounts and opening accounts in new domicile
  • Moving family and children’s education to new domicile
  • Drawing up a will and arranging to be buried in new domicile

It is very difficult to acquire a new domicile and the intention must be proven that not only do you intend to stay in the new domicile permanently, but to spend your final days there.

What does ‘deemed domiciled’ mean?

Once a person has been tax resident in the UK for at least 17 out of the preceding 20 tax years they will be ‘deemed domiciled’ in the UK. They will not have a choice about this and will not be able to change their domicile unless they can prove their physical presence and an intention to stay ‘indefinitely’ in another domicile outside of the UK.

Figuring it out

If you are uncertain of your domicile it would be prudent to speak to an expert, since a UK-domiciled person will be subject to UK inheritance tax on their worldwide assets.

*Although it is common to refer to UK domicile, for tax purposes a person is actually domiciled in England & Wales, Scotland or Northern Ireland.

Can you change a will after someone has died?

Posted on By admin
man looking concerned

Following the death of a friend or loved one, it may be necessary or beneficial to change the will. This may be in order to increase the size of a gift to someone, redirect it or even to adjust the will to take advantage of recent tax changes.

In the UK, changes can be made by a simple document called a Deed of Variation.

Common reasons for making a Deed of Variation

Some common reasons are listed below:

  • Someone in the family has been overlooked
  • A beneficiary has not been provided for adequately
  • Someone may have a valid claim against the estate
  • To reduce inheritance tax
  • To move assets into a trust
  • To resolve any discrepancies within the will
  • To give gifts to charity

How do I make a Deed of Variation?

Making a Deed of Variation is fairly straightforward, as long you do it within two years of death and all of the relevant beneficiaries contained within the will agree to the changes.

In theory, to vary a will you can just write a letter. It does, however, need to include a number of elements to ensure it meets the requirements of the Inheritance Tax Act and the Taxation of Chargeable Gains Act. A checklist is available here.

If the variation means there’s more inheritance tax to pay, you must send a copy to the UK’s tax authority, HM Revenue and Customs (HMRC) within six months of making the deed.

Minors who are beneficiaries cannot consent to a deed of variation so the beneficiaries may need to go to court to obtain consent on their behalf. Once the deed has been consented to and executed by the beneficiaries, they will not be able to claim their inheritance back.

If you are unsure about any aspect of varying a will, speak to a qualified advisor, who will ensure all requirements are met and prevent any disputes from arising.

Coping with care costs – Northern Ireland

Posted on By admin
elderly couple

Like many people, you may be concerned about the potential impact of care costs on your finances and your children’s eventual inheritance. Many people seek advice on how their family home and any other savings and investments can be protected if they become unable to care for themselves in their own homes and require either a package of care at home or need to move into a residential or nursing home on a temporary or permanent basis.

Proposals to change care fees announced in the national press will only affect England, since health and social care varies across the UK. So what’s the position in Northern Ireland?

What are the rules around care costs?

The rules around care fees are complex. Broadly speaking, care provided in a person’s own home is not currently charged for but residential and nursing care is subject to a formal ‘means assessment’.

Put simply, if an individual has capital over £23,250 then they may be liable to pay for their care, although a limited number of exemptions do apply. For example, the main home would be disregarded if occupied by a spouse or one of a number of other relatives mentioned in the applicable regulations.

If a person’s capital falls to £14,250, then it will be fully disregarded and the relevant Health & Social Care Trust must meet any shortfall after the individual’s income has been exhausted.

It should be noted that, following a Judicial Review case in Northern Ireland, there is now some much-needed clarity on what is known as ‘Continuing Healthcare’. Put simply, if a person requires a high level of medical care, this cannot be charged for by a Health & Social Care Trust even if it is being provided for in a nursing home. This has been the position in England & Wales for some time but, until now, the position was less clear in Northern Ireland.

How does the means assessment work in Northern Ireland?

The rules governing the means test procedure are contained in the Department of Health, Social Services and Public Safety’s ‘Charging for Residential Accommodation Guide’. A resident will be required to give full details of their income and capital as part of the means test. However, it should be noted that there is no power for a Health & Social Care Trust to assess the financial resources of a person’s spouse or any other third party in calculating their liability to pay for their own care.

Get advice on care fees

Anyone facing a possible liability to pay care fees, , or who believes that they may be eligible for Continuing Healthcare, should always take advice from a qualified professional before completing any formal means assessment or dealing directly with the Health & Social Care Trusts over their finances. It is important to be familiar with the rules, especially those relating to the various exemptions that apply, before submitting any financial information.

Michael Graham TEP is Head of the Private Client Department at Cleaver Fulton Rankin, Belfast, Northern Ireland

It’s never too soon to make a will

Posted on By admin
young man with cat

What have you got planned for later life? A cruise might be nice, or a cottage by the sea, but what about money? Do you know if you could afford a care home? Have you made a will? Do you know who would care for your family?

If your answers are no, you’re not alone. Apart from having a pension, research from savings organisation NS&I has shown that over half of us have not made any further financial plans.

More than a third haven’t made provision for long-term illness, nursing or care home fees, either for ourselves, or for other family members. Another third have thought about it – but haven’t put any plans into place.

Even such a basic step as making a will seems to elude most of us, even though almost everyone agrees it’s important.

Many people feel that they are too young to make a will, even those in the 45-64 age bracket.

It seems to be the big steps in life that finally prompt people to take action, notably getting married and having children.

However, it’s worth thinking of your family at every stage in life. If you die without making a will, they can be put under enormous strain trying to work out your wishes. They may face higher tax bills too.

If you don’t make a will, standard rules known as the intestacy rules will apply, and your estate could be divided up in ways you’d never have wanted.

For example, if you had been married and separated, but never got divorced, your ex-husband or wife would automatically benefit, even if you had spent many years with a new partner. If you had not married, but lived with a partner, your parents or siblings would inherit, and your partner may get nothing.

‘Many people assume their possessions will simply pass automatically to their partner or children, or believe their assets are too insignificant to need a formal arrangement’, says Emily Deane TEP from STEP.

‘But if you die without making a will, the intestacy rules will be applied, and this may not be what you want,’ she added. ‘The only certain way to ensure that your partner or relatives inherit in line with your wishes is by making a will.’

The donor’s dilemma

Posted on By admin
mother thinking of handing over house

If you are thinking about transferring your house to your children during your lifetime, you should first consider the seven Ds…

  1. Divorce

If any of your children were to divorce then there would be a risk, however remote, that any assets in their name, including your house, could be taken into account in the divorce settlement.

  1. Debt

In the event of any of your children getting seriously into debt or becoming bankrupt then there would be a risk, however remote, that their creditors may seek to force them to sell your dwelling-house in order to discharge the liability.

  1. Death

If any of your children were to die before you without making appropriate provision in their will in relation to your dwelling-house, then there is a risk that their share of your house would pass to an in-law. Indeed, the problem may be compounded if your son-in-law or daughter-in-law should subsequently remarry.

  1. Disagreement

You may subsequently want to sell your house and apply the sale proceeds to buy another house. There is a risk that your children will not agree with your request. In addition, there is a risk that your children may wish to sell your house without your agreement and seek to have you put out of your own home.

  1. Deliberate deprivation

Health Trusts/local authorities have rules against deliberate deprivation of assets. If it can be proved that you deliberately deprived yourself of an asset in order to get government help towards nursing home fees, then the value of your house could be clawed back from your children. There is no time limit on this, although the longer the period of time between your transferring ownership and going into a nursing home, the less likely it is that the transfer will be challenged.

  1. Deprivation feeling

It is very important that you should try and envisage how you would feel if you have given away ownership of your house and other assets to your children. Will you feel deprived? Will you feel out of control? Will this feeling cause you to lose sleep and wish you had not done it?

  1. Doubt

If you are in doubt about what you are doing, it is better to postpone any action until such time as you are sure.

A qualified advisor can talk you through your options, ensuring all angles have been considered.

Peter M Thompson TEP, Thompson Mitchell Solicitors, Portadown, Northern Ireland

What are my duties as executor?

Posted on By admin
man thinking, using laptop

If you have been informed that you are an executor, then sadly that probably means that a friend or relative has recently died.

That person has named you as the executor in their will, either alone, or with others, to carry out their wishes and to administer their estate. This is all the money and property that they have left behind. You will be required to pool all of their assets, pay any debts and taxes, and distribute the remainder, in accordance with their will.

What should I do next?

You may be required to register the death with the Register’s Office, if the family has not already done so. You will need a death certificate from the doctor or hospital to take to the Register’s Office. You are then in a position to arrange the funeral. Check the will first, in case it includes any funeral instructions, or details of any pre-paid plans. If not, you may wish to involve family members, who will probably have a good idea about their funeral wishes.

Once the funeral has been arranged, you might want to consult a legal advisor, and find out if the deceased had other legal documents or property you were unaware of, and to find what you need to do to obtain a grant of probate.

If the estate is sizeable or complex, you might instruct the advisor to take on the probate paperwork for you; but it’s your job as executor to sign it. The cost of the legal fees will be deducted from the estate, once the legal work has been completed. You may wish to get a couple of estimates before instructing an advisor, to compare prices.

How do I obtain a grant of probate?

If you decide to obtain the grant without the help of a legal advisor, you need to prepare the paperwork first. You will need to obtain the probate application form from the probate registry or online and then check the deceased’s financial records for:

  • Banks and building society accounts
  • Investment portfolios
  • Other sources of income, e.g. from an employer, pensions or benefits
  • Insurance policies, e.g. life, car or medical
  • HM Revenue & Customs (HMRC) details
  • Debts, including from credit cards, loans or hire agreements
  • Utilities eg gas, water and electricity, as well as council tax
  • Business contracts and agreements
  • Arrange temporary insurance on any assets such as house and car

You will need to write to each of these organisations with the date of death, enclosing a certified copy of the death certificate, and requesting a date of death balance.

Once they have replied, include all the figures in the probate application form. Send the completed form, together with the death certificates, and the fee, to the local Probate Registry to request the grant of probate.

What about inheritance tax?

The probate application form should calculate whether any inheritance tax is due, and this should be paid as quickly as possible from the available assets. If there is not enough cash available, the probate registry will accept payment following the grant of probate, when you are in a position to close the deceased’s accounts and sell any property.

What do I do with the grant of probate?

When you receive the grant of probate, send an official copy to each organisation requesting them to close the deceased’s accounts, and send the balance to you as executor (you will need to open a temporary account on behalf of the estate).

If there might be unknown creditors that the deceased owed money to, advertise the death in the local paper and the London Gazette to give any creditors or claimants 28 days to get in touch. You have then covered yourself legally, if one pops up at a later date.

When you have accumulated all the money, you can pay the creditors and expenses such as bills, funeral expenses, taxes and probate costs, and any tax due. Next you can pay each beneficiary in accordance with the will instructions, and obtain a receipt from each one.

You will be required to draw up some estate accounts which show the money coming in and out of the estate and obtain a signature to the accounts from each residuary legatee (people receiving the residue of the estate after specific gifts have been paid out).

Finally you can close the bank account, once all payments have cleared. Keep the records safely for 12 years.

What about claiming money back from the estate?

You may need to organise a funeral and pay other costs before probate is granted and you, and anyone else who is named in the will, can inherit the estate. You can claim back some of these costs from the estate. They are:

  • Costs associated with the funeral
  • Probate Registry fees
  • Estate agent fees
  • Costs for appointing professionals such as valuers or solicitors
  • House clearance fees
  • General house or garden maintenance
  • Postage costs
  • Travel costs
  • Inheritance tax that becomes due before probate has been granted

You are not allowed to charge for your time. You may not be able to reclaim interest from the estate on your money that you use to pay for a funeral. Find out more by visiting the gov.uk site.

Getting help

If, at any point in the process, you need help or advice, you can talk to a qualified advisor, who will be able to talk you through what you need to do.

How can I make sure my disabled child is provided for when I die?

Posted on By admin
young person on motorized wheelchair

Providing for our loved ones when we die is one of the most compelling reasons to make a will. If you have a disabled child this is even more important, as they will have specific and often costly needs that need special consideration.

The term ‘disabled’ can encompass a number of different disabilities. These could be physical and/or learning disabilities. People can be vulnerable for all sorts of reasons and careful thought should be given to the provisions that should be included to benefit them in a will.

What are the key considerations?

  • Where will they live?
  • What financial benefits are they already receiving?
  • What help are other family members providing?
  • What care plans are in place?
  • While it may be difficult, it is also important to think about your child’s life expectancy and medical prognosis.

When all the above factors have been thought about carefully, a will can be drawn up and a number of options can be looked at to ensure that appropriate financial provision is included.

Option 1: Making an ‘absolute gift’

The will can include what is known as an ‘absolute gift’. This means that your child will receive a financial benefit that is unrestricted and that will belong to them to do with as they wish.

Provisions are usually made for trustees to look after that money on behalf of your child until they reach the legal age of majority (18), but after that the money will belong to your child without any restriction. Before choosing this option you should think about whether your child is likely to have sufficient capacity when they reach adulthood to make decisions about how they use that money.

The gift would, in time, form part of your child’s estate, so you also need to think about whether your child is likely to have sufficient capacity at the appropriate time to make a will.

If your child is receiving means-tested benefits, you should bear in mind that by giving an absolute gift, this would be taken into consideration in calculating benefits, which may then be lost. This therefore needs careful consideration to ensure that your child isn’t disadvantaged by your decision.

Option 2: Using a life interest trust

Another possible option is to use a ‘life interest trust’. This would mean that trustees appointed in your will would look after the money you have set aside for your child during your child’s lifetime. The trustees would usually invest this money and the income produced on the investments would be available for your child for the remainder of their life. When your child passes away, the remaining money would be passed onto other individuals, who you name in your will.

Bear in mind that the income your child receives will be taken into consideration when they are assessed for any means tested benefits (the capital will not be taken into consideration).

In certain circumstances, and depending on the wording of your will, the trustees can sometimes make a ‘one-off payment’ of capital to your child, for example to pay for a holiday, or buy some equipment. The amount of capital that can be used for these purposes can be restricted by the wording used in setting up the trust.

Option 3: Using a discretionary trust

Another option to consider is a ‘discretionary trust’. The trustees would look after the assets (property, money, etc) within the trust and they are given absolute discretion to use both the income and the capital for your child’s benefit. There can also be other beneficiaries (perhaps other children and grandchildren) who will be able to benefit from the trust.

If you set up this kind of trust in your will, you would be asked to provide a letter of wishes addressed to the trustees that you have chosen, which sets out how you would wish them to make decisions about the assets in the trust.

On the death of your disabled child, any assets remaining in the trust can be distributed to the other beneficiaries.

Tax consequences

When setting up any sort of trust in a will, you should take advice on the tax consequences of the various options to ensure that you understand the advantages and disadvantages of any choice that you make.

There is a particular sort of trust that can be advantageous to use, which is called a ‘Vulnerable Beneficiary Trust’. This trust is recognised by HMRC and gets special tax treatment.

The definition of a ‘vulnerable beneficiary’ and the various tax consequences are clearly set out on the GOV.UK website.

In these trusts the vulnerable beneficiary (the disabled child) is entitled to receive the benefits from the trust during the remainder of their lifetime. Only a small amount of assets in the trust can be used for the benefit of someone else while the disabled person remains alive. The other beneficiaries would be entitled to what remains in the trust after the death of the disabled child.

When the disabled child dies it should be noted that the assets in the trust will be treated as part of their estate for inheritance tax purposes before they are distributed to the remaining beneficiaries of the trust.

Relying on your other children

You may be considering relying on your other children to look after their disabled brother or sister after you have died, so you don’t plan to leave anything to your disabled child in your will. This is a dangerous option and not one that is to be recommended.

You may feel that your disabled child already receives means-tested benefits and so doesn’t require anything else. The state may take a different view, however, and it leaves your estate open to a claim being made under the Inheritance (Provision for Family and Dependants) Act 1975 for reasonable financial provision to be made from the estate for your disabled child. This would be costly and not in the best interests of anyone. It is always best to make some provision for a disabled child, rather than to leave them out of the will altogether.

Some other considerations

When giving instructions for your will, you should give special thought to the choice of trustees and guardians for your child, as they will have onerous duties and responsibilities after you have died.

You should also think about where the child will live and what practical arrangements will need to be in place. If they are to remain at home, your other children may have to wait a long time for their inheritance until after your disabled child has died and the property has been sold.

Finally, it should be noted that you can set up a trust to benefit your disabled child in your lifetime, as well as by will. This enables grandparents and other close relatives to benefit your child either during their lifetime or by leaving gifts in their wills that can be added to the trust for your child.

This is a complicated area of law, and if financial provision needs to be considered for your disabled child then it would be strongly recommended to take specialist advice from a qualified practitioner who will be able to discuss the family circumstances to ensure the right option is chosen.

Patricia Wass TEP

Things to consider when making a will

Posted on By admin
child beneficiary

It’s very easy to put off making a will. No-one likes to think about their own mortality, and it can be tricky working out who should inherit what, whether it’s property, money or possessions.

Let’s break it down into stages to make it more manageable.

Who gets what in your will?

Who would you like to benefit from your will? You could make a list of people that you would like to inherit from you such as your spouse or partner, children, other family members, friends and charities. The people that benefit from your will are called beneficiaries.

How much do you own?

Have a think about what you own, including money in bank or building society accounts, property, pensions, life assurance and possibly a business. Try to estimate the value of these assets. You may also have cars, furniture or jewellery that have significant or sentimental value, which you may like to leave to someone in particular. You should also consider your digital assets. You can make all this clear in your will.

What about specific gifts in your will?

You could start thinking about specific items or amounts of money to leave to your beneficiaries, such as ‘my wedding ring to my daughter’ or ‘£1,000 to my son’. These are called specific gifts. You can leave the remainder, known as ‘the residue’, to your other beneficiaries. Because you won’t know how much you will have left, divide it into shares. For example ‘I leave the family home to my wife, and the residue of my estate is to be divided in equal shares between my children’.

Will you have to pay inheritance tax?

The inheritance tax allowance is currently £325,000 for an individual, or £650,000 for a couple who are either married or in a civil partnership. If you live with your partner but are not legally civil partners, then he or she will not qualify from this allowance after you die.

Anything over this threshold will usually be charged at 40% for inheritance tax. You can leave everything to your spouse or civil partner free of inheritance tax.

The Residence Nil Rate Band gives you an additional allowance of £175,000 (frozen until 5 April 2026) to be used against your home, provided you leave it to your children or grandchildren. This allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death. It’s best to take professional advice, if you are unsure, because it is a complicated matter and there could be other reliefs or allowances available to you.

There is an unlimited relief for a spouse/civil partner if both are UK domiciled (or transferor non-domiciled).

If it is a gift from a UK domiciled to a non-UK domiciled spouse/civil partner (the non-UK domiciled spouse/civil partner can elect to be treated as UK domiciled for IHT purposes) then it is £325,000.

Do you have any vulnerable family members?

If you have young children, you can appoint a legal guardian in your will to ensure that if something were happen to you and your partner, they will be looked after by someone you trust implicitly with their well-being.

If you have a family member with disabilities, or mental health issues, who you need to provide for after your death, you should speak to a professional about setting up a trust. This can be managed by someone that you trust after you have gone, and you can leave specific instructions or wishes about how they should manage it. (For further information, read ‘How can I make sure my disabled child is provided for when I die?’)

Who can help me make a will?

As specialists in inheritance and succession planning, members of STEP, who are known as TEPs, draft wills and trusts, administer estates, act as trustees and advise families on how best to preserve their assets for future generations.

Choosing a professional to help you to deal with such important and often sensitive issues can be difficult. Many aspects of planning are non-regulated, meaning anyone can write a will, for example, regardless of training or expertise. With a TEP, you’re in safe hands.

The risks of not making a will

Posted on By admin
Woman thinking about making a will

It’s very easy to put off making a will, as no-one likes to face up to their own mortality.

But there may be serious implications for your family if you don’t make one. Your home and property may not be distributed according to your wishes, and you risk depriving family members of their inheritance and even their home.

Possible consequences of not making a will

Some of the consequences of not preparing a will include:

  • Your estate may be distributed under the intestacy rules, which favour close family
  • Step children and unmarried partners may be overlooked
  • Your partner may be left homeless
  • Your children may be left with no legal guardian
  • Your family may face additional distress at a difficult time
  • Your money may go to the government
  • Family disputes may arise
  • Legal action may be required, which can be very expensive
  • Your family may face a higher bill for inheritance tax
  • The law is regularly changing, and it may not favour your family

Your will is an important document, so it’s worth using an experienced professional to make sure it’s drawn up properly. It will cost a few hundred pounds or so, but you’ll get an estimate first, so there’s no need to worry about fees mounting up.

The greatest advantage of using a professional is the peace of mind it will bring you. A professional will construct your will the way you want, to suit your individual needs, and will ensure all your wishes are carried out following your death.

There will be no technical mistakes, so you can rest assured there will be no expensive and upsetting disputes for your family to deal with when you’re no longer around.

The myth of the ‘common-law marriage’

Posted on By admin
unmarried couple

Many people believe that there is such a thing as a ‘common-law marriage’, where couples in a long-term relationship acquire equivalent rights to people who are married. But this ‘common-law marriage’ is a myth: only couples who are married or in civil partnerships have legal rights and responsibilities.

‘Common law marriage’ is not recognised by the law of England & Wales or Northern Ireland. So you need to be married, or in a civil partnership, to rely on the law for dividing up finances if you split up, or if one of you dies. It makes no difference if you have a child with the person you live with.

If you are living with your partner, you are known as a ‘cohabitee’, and you should consider your position in the circumstances described below.

We currently rent our home. Do I have any rights if we break up?

If you are living with your partner but are not named in the rental agreement, you have no legal right to stay if he or she asks you to leave.

My partner owns our home. Do I have any rights if we break up?

If your partner owns the home and asks you to leave, you have no right to stay. If there are any savings or possessions that have been acquired with your partner’s money, you will not be legally entitled to share or take them with you.

If we break up, is our child protected?

Your child will be entitled to child maintenance from your ex if you break up. However, as a former partner you have no rights yourself, so you will not be entitled to anything.

Is there anything I can do to protect myself?

Yes there is. If you are renting or sharing with your partner, you can arrange a cohabitation agreement. This will stipulate how money and property should be divided if you break up, and how any children will be cared for. A legal advisor will be able to draw up a simple agreement for you both at a reasonable cost.

What if my partner dies?

If your partner dies, you have no rights to his or her money and property unless a will was made, stipulating who should receive what.

If you held the property as joint tenants, the property will pass automatically to you on your partner’s death. However, if it was in his or her sole name, or you were tenants in common, you have no legal entitlement to it.

You may be able to apply to the court for some financial support (known as financial provision) if you were dependent upon your partner; but bear in mind this type of court application is uncertain and sometimes costly.

You should consider making wills and reviewing your property ownership for peace of mind.

Do I have any rights in Scotland?

Scotland updated its law with the Family Law (Scotland) Act 2006 to reflect the number of couples who do not get married or enter into civil partnerships, and also extended it to same-sex couples.

It introduced a basic set of rights for people living together, or if one of them dies, but these are not the same as for couples who are married. The following provisions were made for cohabitees:

  • Both parents will need to provide financially for their children following a break up.
  • If a cohabitee dies without leaving a will, the surviving partner can apply to the Scottish court for financial provision.
  • If one partner has been disadvantaged financially while living together, e.g. not working to look after a child, they can ask the court to consider some financial provision.
  • If cohabitees have acquired household possessions while living together, these are assumed to be joint possessions. If the cohabitees cannot agree on them, they shall be shared or sold and divided equally.

There are various other provisions that a Scottish legal advisor will be able to explain to you as a cohabitee.

If you are a cohabitee in England & Wales or Northern Ireland then you should take advice from a local advisor about how you can protect yourself financially.

Inheritance tax explained

Posted on By admin
Mature woman discussing inheritance tax

Inheritance tax is a tax on your estate (your money, possessions and property) paid after your death. The money should be paid from your estate to the UK’s tax authority, HM Revenue and Customs (HMRC) within six months, or interest will be charged. However, everyone has a tax-free allowance, set at £325,000, and this is known as the nil-rate band. If the value of the estate is below this threshold, then no tax is due.

What are personal inheritance tax exemptions?

As well as the nil-rate band, there is an annual exemption of £3,000 that you can give away tax free, and you can distribute gifts of £250 to as many different people as you like. You can give donations to charities tax free, and wedding gifts of up to £5,000 to your children, £2,500 to grandchildren and £1,000 to anyone else.

While you can give more cash than this, in fact any amount, you will have to live for seven years for it to be tax free. If you live for less than this, there is a sliding scale for tax payable, depending on the number of years that you survive. See HMRC’s website for further information: www.gov.uk/inheritance-tax/gifts.

What are spouse inheritance tax exemptions?

If you are married or in a civil partnership, you can pass everything to your spouse or civil partner, tax free on death, if both are both UK domiciled (or transferor non-domiciled). When they die, they will be able to leave up to £650,000 tax free, which is double the nil-rate band threshold.

If it is a gift from a UK domiciled to a non-UK domiciled spouse/civil partner (the non-UK domiciled spouse/civil partner can elect to be treated as UK domiciled for IHT purposes) then it is £325,000.

Everyone gets an additional £175,000 tax free to use against the value of your home, but only if you leave it to your children or grandchildren. This allowance, which is frozen until April 2026) can be transferred to your spouse/civil partner if it hasn’t been used up, which means that a married/civil partner couple could leave their family a combined estate of up to £1 million tax free.

If you are not married, but live with your partner, he or she will not be able to benefit from these tax advantages.

What is payable?

Once you have deducted any inheritance tax exemptions that apply, including the £325,000 nil-rate band, the rest of your estate is taxed at 40%. This rate can be reduced to 36% if you leave at least 10% of your estate to charity.

What are my payment options?

You can take out a life insurance policy, which will pay out on your death and help your family pay the tax bill. The policy will be held in a trust, so it won’t be counted as part of your estate, and your family will not have to wait to obtain a formal grant of probate to access it.

Further information

There are more ways to reduce your inheritance tax bill, see ‘How can I prepare for inheritance tax?’

The above is, however, just a quick guide. If you are unsure, or would like advice on any aspect of inheritance tax, you should speak to a qualified advisor, who will be able to consider your situation and offer advice accordingly.

Can I leave everything to charity in my will?

Posted on By admin
donating to charity - giving money - piggybank

Many people choose to leave money or other assets to charities when they die. Where a charity is particularly important to you, or where you feel your relatives are sufficiently well off, you may wish to leave most or all of your estate to charity.

In many countries, including Scotland, it’s not possible to do this, as set quotas must be reserved for certain relatives.

In England & Wales and Northern Ireland it is possible to leave your whole estate to a charity. However, you will need to make sure you provide for any close family and dependants that rely on you. If you don’t, and they bring a claim, a court can award them some of your estate if it decides it puts them in financial difficulty.

Make sure your family know your intentions in advance to avoid delays, legal costs or distress.

Avoiding disputes with your family

If there is any possibility that your will may be challenged, you should consult a professional advisor, who can ensure you have done everything possible to prevent this eventuality.

The following four steps are also all advisable:

  1. Tell your family why you are leaving everything to charity, and not to them.
  2. Write a letter to accompany your will explaining your reasons, and also why the charity is important to you.
  3. Get a doctor’s certificate confirming that you were of sound mind when you made the will. This way it can’t be challenged on grounds of mental incapacity.
  4. Make your intentions clear to your will advisor in writing.

Plan for the long term: choose your charity with care

Your chosen charity might have been wound up, or merged with another one, by the time you die. To play it safe, you could name a second and perhaps a third as a back up. Alternatively your will advisor could add a clause into your will to direct the legacy to a similar organisation.

If you are leaving a large amount of money to charity, think about setting up a charitable trust in your will. An advantage of this is that you can simply indicate how you wish the funds to be used (for example, ‘for medical research’), but leave it to the trustees to decide over time which projects should be funded.

Get advice

As mentioned above, if you decide to leave everything to charity you should speak to a qualified advisor, who will help ensure all relevant issues have been taken into consideration.

Planning for your baby’s future

Posted on By admin

Congratulations on the arrival of your little bundle of joy! Having a baby is an amazing experience, but it can also be a bit bewildering. It takes time to adjust to your new role as Mum or Dad: suddenly you are responsible for a tiny human being, and the overwhelming feeling is the need to protect and provide for them.

Getting some key documents in place can give you real peace of mind.

Make a will

Making a will is an important first step to ensure that your family will be looked after, whatever happens. Within your will you can appoint a legal guardian for your child in case you should pass away before they grow up, and you can also ensure the financial security of your child and leave instructions as to any possessions you wish to pass on. A will can also take future babies into account, although you’ll need to update it. If you die without a will, your estate will be distributed according to legal rules known as the rules of intestacy. This may not be what you want for your child or partner.

Appoint a guardian

If your child is under 18 when you die, the surviving parent will most likely be the guardian, as long as they have parental responsibility. However, if there is no one with parental responsibility, the court will decide on a guardian, and may appoint a complete stranger. This is why it is so important that you nominate a guardian for your child, either in a will or in a separate document. The guardian would usually be someone that you trust implicitly with your child’s wellbeing.

See ‘Who should I appoint as my child’s guardian in my will?’ for further information.

Set up a trust fund

You may have some money set aside for your child in your will, but you wouldn’t want them to inherit this money before they are mature enough to handle it. If so, you can set up a trust, which will look after the money until they reach a specific age. Many parents choose the age 21, but you can choose any age you like. When your child reaches that age, the trust will come to an end, and they will receive the money.

Make a power of attorney

If you lose mental capacity because of illness, an accident or for any other reason, having a lasting or enduring power of attorney in place can protect both you and your family. This document gives an individual(s) of your choice the legal authority to look after your wellbeing and/or finances if you are unable to look after yourself. You can nominate a trusted family member or friend, and feel safe in the knowledge that your best interests and your child’s will be taken care of if you are unable to make decisions. This kind of power of attorney must be made while you have full mental capacity. It does not have to be used until it is needed.

Take out life insurance

Life insurance is definitely worth considering. This can give you peace of mind that if you/your partner were to die, the surviving partner or your child would receive a lump sum that could go towards supporting their needs during what is bound to be a very difficult time. You can never be too financially prepared.

What next?

The above gives just an overview of some important areas to consider. For help deciding what is best for you and your family, speak to a qualified advisor.