Claire

Farming inheritance battle likely to cost £1 million

Farming inheritance battle likely to cost £1 million

A farming inheritance battle, which was eventually won by the daughter of a farming family, is likely to cost the parents around £1 million in legal fees.

This high profile case as reported in Farmers Weekly, involved one of three daughters within a farming family.  Two of the daughters wanted no part of the family business but the third stated that she spent 30 years working on the 320ha farm for little or no salary.  Indeed, Eirian Davies said that she didn't receive any wages at all until she was 21 years old.

In return, it seems that her parents showed her a draft will in 2009 which gave details indicating that the entire farm, worth £3.8 million, would be left to Eirian.  At some point in time after this event however, the will was changed, putting the farm in trust so that all three daughters would benefit equally.

The woman's parents sought to evict her from a cottage on the farm where she still lives and argued that they had left Eirian enough to buy a house, but the court ruled that this was not enough to compensate her for her suffering and did not reflect their original promise to her, awarding Ms Davies £1.3 million.

Since the court case a few weeks ago, there has been an indication that Mr and Mrs Davies are to attend another hearing on 18 March which may allow them to appeal against the compensation award given to their daughter or to delay the payment.  Meanwhile, Eirian's lawyer says that he will use this hearing to apply for costs to be reimbursed,  which his client incurred during the Court of Appeal and High Court hearings.  If successful, the final legal bill for Mr and Mrs Davies is likely to reach up to £1 million.

#iwcprobate #inheritancetax #probate

close down a deceased’s social media accounts

How do I close down the deceased's social media accounts?

The tricky subject of what happens to our social media accounts has, unsurprisingly, only become an issue over the last few years.  Although it is now widely recognised that individuals are likely to leave digital legacies as well as physical assets, there is as yet no law to govern what happens to them. In response, many social media and e-commerce platforms have introduced their own guidelines as to the procedure for closing down the account of a deceased person, as outlined in a recent "This is Money" article. Facebook Facebook has introduced a facility whereby a person can nominate a legacy contact who can make changes to their account after they've gone. This means that they can legitimately post notification of the death, update profile pictures and respond to friend requests.  If preferred however, the legacy contact may just be given authorisation to close down the account. Twitter To close down a Twitter account, the deceased's username and a copy of the death certificate must be supplied.  The person requesting the closure must also supply further details including their own name, contact information and relationship to the deceased. Gmail Google requires details including the name, postal and email address of the person seeking to close the account, along with a suitable form of ID. The Gmail address or Google username of the deceased, along with a copy of the death certificate, must also be supplied. iTunes Unfortunately, an iTunes account cannot be edited or deleted at this time, unless the deceased noted down their Apple ID and password.        

#iwcprobate #probate #bereaved

Planning for IHT liability

Planning for IHT liability

Planning for IHT liability is absolutely vital, in order to ensure that your loved ones or chosen charities receive as much as possible from your estate, and the taxman as little as possible.

We cannot emphasise enough how important it is to start planning your estate right now.  There are stipulated time periods within English law which have significant bearing on your estate planning and, should you leave it too late, you run the risk of ultimately increasing the amount of inheritance tax to be paid.

For example, the concept of "gifting" has long been recognised as an accepted means of reducing the value of your estate whilst you are still alive – thereby reducing inheritance tax liability after you've gone.  Small gifts up to the value of £250 each time can be gifted to as many loved ones as you wish.  In addition, a parent can make a £5000 wedding gift, a grandparent can gift up to £2,500 for their grandchild's wedding and anyone else, up to £1000.  However, there is a condition attached to these gifts.

As the individual giving a gift to a beneficiary, you must then live for at least another seven years from the date of the gift, if the value of your estate is to be reduced by that amount.  Should you not live that long, then your executor will be expected to pay a percentage of the whole IHT liability.  This is known as Taper Relief.  So, should you die within three to four years of making a gift, then 80 percent of the inheritance tax will be charged. Alternatively, between years six and seven, 20 percent will be charged.

From this then, it should be clear that you need to start planning for IHT liability well in advance.  Any delay could cost your loved ones potentially thousands of pounds.

#iwcprobate #inheritancetax #probate

Can I write a will myself?

Can I write a will myself?

We're often asked about DIY wills and the reasons why we suggest that it's far safer to have an experienced will writer draft the document, rather than try to do it yourself.

Legally, there is nothing to stop you from writing your own will.  However, the consequences of getting it wrong can be far-reaching.

A DIY will is often fine for very simple circumstances and estates of smaller value – a husband with an estate of £250,000 leaving everything to his wife, for example.

Remember however, that in order to be valid, wills must be worded correctly and witnessed by two independent adults at the same time, who are not beneficiaries.  Any incorrect spellings of names, ambiguity or incorrect witnessing may well result in significant delays in the probate process or even render the will invalid.

Wills should not be considered as a one-off document.  Why?  The reason is simple – the will you prepare as a new parent at the age of 30 is unlikely to have any significance by the time you're a grandparent aged 70.  Undoubtedly, the family unit will have altered several times, and relationships will be forged and lost over those four decades.  These changes must be taken into consideration, but amending your will is not as simple as crossing through existing content and adding new instructions in pen.  Any changes in assets or beneficiaries must be reflected in a new will.

It's worth remembering too, that a professional will writer and probate practitioner will be able to advise you on how to structure your estate so that your beneficiaries will receive as much as possible, and the inheritance tax (IHT) liability on your estate will be minimised.  By not seeking this advice and writing a will yourself, your loved ones could potentially lose out on thousands of pounds.

#iwcprobate #probate #bereaved

Debt from cost of funerals leading to DIY burials

Debt from cost of funerals leading to DIY burials

An MP made the startling statement earlier last month, that debt arising from the increasing cost of funerals, is leading to a number of families having to resort to DIY funerals.

Taking her information from a recently released report by Royal London, Labour MP Emma Lewell-Buck revealed that as much as 20 percent of bereaved families could now be struggling to give their loved one the funeral they deserve.

Ms Lewell-Buck also said that some relatives are so desperate, they are holding DIY funerals, cremations without any formal service or opting for pauper's funerals.  A number of those who are determined to find the cash are unfortunately turning to payday loan companies, who offer loans with extortionate interest rates – plunging applicants even further into debt from which many will inevitably struggle to recover.

The cost of a funeral now ranges from around £3,500 to £7000, depending on the geographical area of where the deceased will be laid to rest, and the family's requirements.  To meet the demands of struggling families, a number of companies now offer cut price, basic services.

In response, the government reiterated that funeral payments are available to those who can prove that they are unable to afford the cost of a funeral. However, it has been reported that these payments are difficult to secure and at an average payment of £1,225, fall far short of the actual cost of a decent service.

#iwcprobate #probate #bereaved

What bills need to be paid during probate?

What bills need to be paid during probate?

When a person dies, their debts unfortunately do not magically disappear.  Although that person may sadly no longer be with us, their outstanding credit card balance, mortgage, water, Council Tax, power and telephone bills are likely too be very much still in existence and need to be paid.

If the deceased was married and leaves behind a spouse, then that wife or husband will automatically become solely responsible for continuing to make payments on joint debts.  Even if they weren't married but co-habiting, the surviving partner may still be responsible for payment of bills incurred, which are connected to the home, such as mortgage and utilities.

Should there be no surviving partner, the onus is on the executor to make sure that probate follows the strictly outlined process and that all unpaid bills and taxes are paid before the remainder of the estate is distributed among the beneficiaries.

One of the first steps when someone has died, is to locate and notify all outstanding creditors.  This tells them that there is likely to be a valid reason for a delay in the settling of the balance, if there is no other named person connected with the debt; and should prevent any further recovery action from taking place.

Executors should then have all assets valued including property, shares and savings, to arrive at a total valuation figure for the estate.  This total will indicate whether inheritance tax (IHT) will be applied, with the current nil rate band fixed at £325,000.

Once inheritance tax has been paid, executors will then be able to apply for Grant of Probate and should be prepared to wait between six and twelve weeks for the application to be approved.  It is only when this approval has been granted, that money from the deceased's bank accounts, along with other assets including property, savings and shares, may be accessed and used initially to pay any outstanding bills.  It is also worth inquiring as to whether the deceased had taken out any life assurance or PPI to cover their debts.

If there is enough money in the estate to cover all outstanding debts, they may be paid off in any order at all, although it would be sensible to focus first on paying off those debts which are still accumulating interest.

If there is not enough money however, there are strict guidelines as to the order in which the debts are settled as follows:

Secured loans (ie mortgage)

Funeral expenses

Executor's expenses

Unsecured creditors (credit cards, utility bills)

Interest on secured loans

Informal loans

Ignoring this set payment procedure could well result in the executor being held personally liable.

#iwcprobate #probate #bereaved

Probate properties – what you need to know

Probate properties – what you need to know

If your loved one has died, leaving you with their family home and other assets to dispose of, you should familiarise yourself with the facts surrounding probate properties.

There is no getting away from the fact that probate can be a lengthy process, particularly where valuable assets such as property is involved.  The IWC probate team understands that you may wish to sell the property as soon as possible, to avoid heavy maintenance costs and further bills.  For this reason, it makes sense to use a probate professional in order to try and move the process along as quickly and smoothly as possible, particularly if the deceased has any outstanding debts.

The added complication of probate formalities and delays can deter many investors from buying a probate property.  However, with the rising cost of houses and a shortage of available property across the country, such properties can prove to be an excellent opportunity for investors who are prepared to wait to buy what they want – often at a greatly reduced price.

A probate property valuation must reflect the price of the property at the time of the owner's death.  It is possible to value a property yourself but this is rarely recommended; valuing it too low could see you losing money, whilst valuing it too high may mean it will sit on the market for a considerable length of time, running up more maintenance costs.

A RICS chartered surveyor will be able to give you an accurate figure for valuation, which will take into account the current state of the property, any repairs which may need carrying out, and the status of the property market at the time.

#iwcprobate #probate #bereaved

Potential lifeline for those struggling with inheritance tax

Potential lifeline for those struggling with inheritance tax

With inheritance tax falling due before any inheritance monies are released, this can prove to be a huge financial burden for grieving relatives – particularly when that bill can reach many thousands of pounds.

We have heard horrific tales of relatives resorting to extreme measures in order to raise funds to meet funeral and inheritance tax costs, such as taking out extortionate payday loans.  However, the legal press recently gave details of a new, alternative provider who is helping a number of families who have found themselves in this unfortunate financial position.

One such client of HNW Lending needed a loan of £100,000 to pay for the funeral costs and inheritance tax bill of £60,000 on a £2 million Mayfair flat – money which the executors would otherwise have needed to find themselves.

So how does it work? Loans are secured on the property in question and are normally available for repayment over a three or six months term. The application process is relatively fast, with successful applicants receiving their money in around 10 days.

Funding is provided by a number of high net worth individuals rather than a financial organisation and interest rates are negotiated.  HNW Lending will complete a valuation of the property concerned and then attempt to identify a lender who will provide funds, secured against the value of that property.

Although this is the latest kid on the block offering funding for this particular type of debt, we anticipate that other alternative lenders will follow suit, to cater for increasing numbers of families facing financial hardship due to funeral and probate issues.

#iwcprobate #inheritancetax #probate

Common problems for executors

Common problems for executors

Last month, SunLife released details of its report "Cost of Dying", which uncovered some startling statistics about the common problems faced by executors today.

Overall, the report showed that the cost of dying has risen to around £8,427, an increase of 10% over the last year.  38% of those who responded said that they had been forced to pay an associated bill from their own funds – almost a quarter paying an outstanding energy bill for the deceased and 23% spending over £100 on travel expenses.  Unfortunately, if as an executor you find yourself in the same position, there is no guarantee that any money you pay out of your own pocket, will be refunded once the deceased's estate is settled.

The role of executor can often prove time consuming.  Almost a third of executors who responded to the survey, said that they had to take at least five days off work during the probate process, to sort out administrative tasks.

Customer care it seems, is lacking in financial institutions, when it comes to administering an estate.  Almost one in five of those surveyed, expressed that they had received poor service from such companies, which had left them feeling distressed.  27% said that they had found it difficult to get in contact with the right person and 48% felt that staff should be trained to offer a more sympathetic service to bereaved individuals.

#iwcprobate #probate #bereaved

What is a property protection trust?

What is a property protection trust?

If you want to protect your home from being sold to fund care home fees or from being inherited by specific individuals, then a property protection trust (otherwise known as a "protective property trust) is the perfect answer.

Families aren't what they used to be.  Where once, divorces were rare and extended families all tended to live locally, this structure has now changed forever.  Children and grandchildren move away or even emigrate, relationships can become strained and many couples split up and remarry – sometimes several times.  This means that the family unit becomes dynamic, introducing new individuals – both adults and children, who could potentially benefit from an inheritance, thanks to you.

If you'd rather dictate specifically to whom you want to leave your share of the family home after your death, then by placing it into a property protection trust, you can do precisely that, whilst still allowing your civil partner or spouse to live in it during their lifetime.

Property protection trusts are the ideal way to control the management of your most valuable asset and help to ensure that those who you want to benefit from it after you've gone, will do so.

For more information on property protection trusts, asset trusts and family trusts, contact the IWC team for more details.

#iwcprobate #probate #bereaved

 

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