Record numbers seeking advice on inheritance tax
With the inheritance tax threshold now frozen at £325,000 for individuals or £650,000 for married couples, more people than ever are seeking inheritance tax advice, in an attempt to minimise any IHT which will fall due on their estate, in the event of their death.
In a study by deVere United Kingdom, 73 percent of its clients have sought IHT advice. No longer is it just the requirement of high net worth individuals – many of those with family homes who feel they will be caught in the net are also seeking professional advice. In total, it is estimated that this IHT freeze will hit around a million more individuals over the next few years.
There are a number of exemption and relief schemes available, so if you feel that your assets on death may well be valued over this threshold, then it is worth finding out if you can reduce the 40% inheritance tax which is likely to be applied.
No regulation for will writing industry says government
Despite having worked hard to bring a standard regulation to the will writing industry and to protect those seeking to write a will, the Lord Chancellor has ruled that other avenues of protection must first be explored before considering the possibility of regulation again.
On 13 February, the Legal Services Board (LSB) presented its report regarding English will writing, estate administration and probate activites; recommending that the Lord Chancellor bring these activities entirely under the regulatory umbrella of legal protection.
Although the Lord Chancellor agreed that there was a problem of unprofessionalism among some within the industry, regulation was a costly exercise, and would not be considered until other solutions had been explored, namely:
- targeted guidance for practitioners
- strengthening of regulation of authorised professionals
- voluntary regulation schemes & codes of practice for non-authorised providers
- increased education for consumers on differing types of provider & their rights
In addition, investigation is currently underway as to whether will writing could become classified as legal services, without adding any extra burden to the regulatory landscape. Until such time as this has been completed however, no decision will be made.
It must be said that the focus of this ruling does seem to lie on minimising costs as much as possible, to the detriment of the consumer. However, in the meantime, if you’re looking for a will writer or probate expert, ensure that they are a member of a regulatory or self-regulatory body (for example, IWC is a member of The Society of Will Writers). In addition, do your research – check reviews online and ask for references, or check with friends and family.
Equitable Life compensation scheme failing
Reports that the Equitable Life compensation scheme is also failing, makes for alarming reading.
Equitable Life closed around 12 years ago, amidst accusations of regulatory failure.
Millions of pounds were subsequently allocated to customers who had lost money through investing in this mis-managed scheme. However, the National Audit Office has revealed that since this time, around one-fifth or 200,000 savers have been unable to be traced – meaning that many customers could be missing out on the £370m pot of money.
The government’s compensation scheme has already been extended in 2011, until March next year, in an attempt to track down relevant individuals. However, it appears that despite its failure to do so, almost three-quarters of the dedicated £57m administrative budget has already been spent, with 35% of the original Equitable Life customers having received their due payment.
Of course, with Equitable Life having closed down over a decade ago, it may well be that a sizeable proportion of its original savers may now be deceased – a sad conclusion to a resource in which thousands of people placed their trust, and their money.
Death following exchange of contracts
Buying or selling a new home can be fraught with complications and stress at the best of times. Having an offer accepted is only the first stage in what is often a lengthy legal conveyancing process.
But what happens if the death of either party occurs after contracts have been exchanged but before completion has taken place?
If it is the seller who dies unexpectedly before completion, it may be that the transaction can still go ahead, with the buyer asking the deceased’s personal representatives to sign the transfer deed.
It’s not all good news, however. A transfer cannot be registered without proof of the grant of probate. In turn, the grant will not be issued until probate has been processed – a procedure which can take up to several months.
For buyers who incur substantial costs as a result of having completion delayed, a claim can be made for compensation.
Unfortunately, in cases where the buyer dies before completion, the conveyancing process cannot continue. The buyer’s representatives will not be able to carry it through to the final stage and neither they, nor the deceased, can be registered as proprietor of the property, which is required in order to complete.
In such instances, the contract is considered to be “frustrated” (or unable to remain legally binding), due to the death of the buyer.
Why choose a funeral plan?
With the average cost of a funeral now exceeding £5000 and rising by around 7% annually, it’s worth allocating money now to help with your funeral costs. By doing so, you’ll be sparing those left behind, the financial strain and unnecessary stress caused when trying to find the money to give you a decent funeral.
Confused.com carried out research which revealed that over the last five years, about 100,000 people have been given a pauper’s funeral, yet around 80% of us still have no savings or funeral plan in place for this eventuality.
Usually costing around £2000 – £4000 in total, with payments starting at about £34 per month, a funeral plan will often state that acceptance is guaranteed, and that medical or health history is required. One of the advantages of a plan such as this is that whilst funeral fees continue to rise by 7% per year, your funeral plan payment will often remain the same throughout the length of the term.
Additional extras can be added into your package, including your favourite flowers or readings, giving a personal touch to the proceedings.
Be careful to check the cover required, along with any restrictions, however. Some plans will ask for additional money to cover the distance travelled by the undertaker, cremation or your burial plot.
New banking industry guidelines for powers of attorney
The British Bankers’ Association (BBA) has recently implemented guidelines for all banking staff in England, which should make handling the financial affairs of a loved one much easier.
In the past, the criteria and procedures associated with handling another person’s finances varied from bank to bank. Confusion reigned regarding the documents needed and processes to be followed. Another common complaint was that bank staff often had no knowledge of recognised financial arrangements. Now however, these new guidelines will ensure that the process is standardised across all banks.
For customers with a physical disability but with sound mental capacity, they may require assistance over the short term. In this instance, the helper may simply contact the person’s bank and complete the relevant form for a “third party mandate”. For longer periods of time however, it may be advisable to apply for power of attorney.
If the individual either has limited mental capacity or is looking to plan for this eventuality, then lasting power of attorney rights can be granted to their specific nominated person.
What is a Power Reserved Form?
A Power Reserved Form, otherwise known as Form PA25, should be used to inform the Probate Registry that although you have been named as executor of a person’s will, you in fact do not wish to take on the role at the current time and wish to renounce the responsibility.
It is natural to feel guilty about not wishing to take on the role of executor. Although flattering to have been chosen, the weight of its responsibility should not be taken lightly. Always remember that if any part of the probate process is not carried out correctly, you as executor could be held personally liable.
If you feel that you’re not ready to take on this responsibility and wish to renounce your role in the probate process, you must do so before it begins. After this time, you could still be held accountable for any inaccuracies.
Registering a Power Reserved Form doesn’t have to be your only option, however. If you’re simply unable to dedicate the time or resource to probate, then you can still remain as executor, but delegate the task to a probate professional, who will oversee the entire procedure and ensure that all tasks and valuations are accurate and carried out to a high standard.
Rules of intestacy set to change
Proposals have been made to alter the English rules of intestacy, which could place children and relatives of the deceased at a disadvantage.
If the first parent or civil partner should die without having made a will, their estate will subsequently be distributed, according to the rules of intestacy. Currently, this means that, depending on surviving relatives – children, cousins or parents could be set to inherit a large portion of the estate. Under the new rules however, the surviving spouse or civil partner will benefit from the majority of the estate.
Where there are no children in existence, the other partner will become the sole beneficiary. Siblings and other relatives will no longer automatically be considered as key beneficiaries.
With the consultation due to end later this week, then should this new legislation come into force, those who have separated yet not divorced should consider making a will, to avoid giving the bulk of their estate to their estranged spouse, in the event of their death.
In recent decades, increasing numbers of us are choosing not to have a standard burial or cremation, but to explore ways of resting in peace with a view to helping the environment even after our death, through eco-friendly funerals.
Spreading our ashes is of course one way to ensure that our demise causes as little impact as possible to the earth. Woodland burial sites are also increasing in popularity as way of having an eco-friendly funeral, as our churchyards have become overcrowded and relatives move away, leaving no-one to tend our plot.
Eco-coffins however, are a fairly new concept. Now, not limited to just wood, we have the option of wicker, wool, cardboard and even bamboo coffins, which have been proven to decompose much faster than their traditional counterparts.
Remember that if you choose to have an eco-friendly burial, that woodland burial sites insist on only allowing environmentally sensitive caskets to be interred.
To find out if there is a woodland burial site near you, visit http://www.naturaldeath.org.uk/