Tony Crocker

Tony Crocker is Director of IWC Estate Planning & Management Ltd. With over 15 years’ experience, he is knowledgeable and proficient in all matters regarding Probate, Will writing, Estate Planning and Inheritance tax avoidance. In addition, he has a wealth of experience in dealing with estate settlements and issues with the capital taxes office in the event of bereavement. As a member of the Society of Will Writers & Estate Planning Practitioners, he is widely respected within the field, having helped many people at difficult points in their lives through complex probate and tax issues. Tony Crocker

What happens if beneficiaries die?

It is more common than one might think, that a beneficiary named in a will, dies before the writer of that will.

In this instance, should the beneficiary have been their adult child, then that person’s claim to the estate is automatically passed to their children.  If there are no direct grandchildren in existence (children of the deceased) or the beneficiary wasn’t their child, then any nominated assets are absorbed back into the estate.

Some more detailed wills, anticipate this scenario and add further instructions, often stating that if the beneficiary dies before the person, then their share of the assets will pass to another named individual.

The key to avoiding complications during the probate process is to ensure that the will is drawn up correctly and without ambiguity in the first place.  This involves careful wording and additional clauses where necessary.

Want to ensure all the estate’s debts have been paid?

 

The role of executor brings with it a whole host of legal and moral responsibilities.  Knowledge or experience of the probate process is extremely useful but for a first time executor, the pitfalls of ensuring that all debts are paid can be hazardous.

The first stage of the process is to go through all the deceased’s paperwork to pinpoint any outstanding bills, creditors, bank accounts, savings accounts and funds.  Monetary gifts or additional income can often be identified through bank statements and will need to be declared to HMRC.

Next, turn your attention to their home.  We often advise that it’s best to bring in a professional home valuation team, who can value the entire contents much more accurately and quickly than an executor.

If you’re not sure of what income they received and regular outgoings, then it may be wise to ask someone closer to the deceased who might have more information.  An excellent defence tactic is to advertise in the press for anyone who feels they may have a claim to the estate.

Of course, all this takes time and effort, so we always recommend that executors use the services of a professional probate practitioner, who can shoulder the burden of this often enormous and stressful task.

Fake will results in jail for conman

A conman who took advantage of a newspaper article searching for relatives of a deceased man, has been sentenced to jail for more than three years, after he and an accomplice created a fraudulent will.

The deceased was a Lithuanian national who was described as having lived a “fairly solitary existence”.  A notice was put into local and national press, asking any surviving relatives to come forward and make a claim on the estate and a genealogy company had identified a living nephew in Lithuania.

In the meantime however, a second gentleman had attended the probate registry in Cardiff, along with what appeared to be a genuine will belonging to the deceased, and signed by the accused.  All assets were duly granted to this man.

Subsequently, it came to light that the two men had carried out another similar fraudulent act regarding an estate around the same time, which alerted the authorities.  Both cases had originally netted them a total of £150,000 before judgement was passed.

Probate industry regulation update

The Institute of Chartered Accountants in England & Wales (ICAEW) has applied to become the key regulatory body for those offering probate services in those countries. 
 
With its focus firmly on Alternative Business Structures (ABSs), the institute hopes to be able to authorise individuals and firms to practice probate, and license ABSs, therefore allowing solicitors and accountants to work together.
 
It hopes that by being the accepted regulator of this aspect of law, the ICAEW will be able to widen consumer choice and offer protection against rogue traders at the same time.
 
As always, IWC Ltd welcomes a progression towards regulation for the probate industry. However, there has been a continuing battle among legal professionals, who are regulated by the SRA, to confine the practice solely among its own members; so whether they will in reality welcome an introduction by the accounting industry is unlikely.
 
It must also be remembered that we as a society are used to seeing cases of fraudulent probate solicitors on a weekly basis, so regulation by a body other than that currently connected to independent probate practitioners is certainly a cause for concern.

Inheritance Tax planning for farmers

Under current Inheritance Tax rules for farmers, up to £325,000 per person or £650,000 per couple can be inherited by their next of kin, tax-free. In addition, any assets left to a spouse or charity or also exempt from any Inheritance Tax. 
 
If a child or next of kin inherits assets above this nil rate band however, they will normally be forced to pay tax at 40% of the remaining value, in accordance with general Inheritance Tax rules.
 
Although HMRC is reluctant to apply Agricultural Property Relief to estates, carefully and professionally prepared cases can see farm land and property benefit from up to 100% of this APR.
 
The case should claim that either that the land or property must have been at least owned by the deceased farmer for at least seven years before the date of their death, or that they owned and lived in it for at least two years before their death.
 
Certain types of leased land may also qualify for APR including woodland, farm buildings and studs, if the lease can be terminated within 12 months. 
 
The criteria for claiming Agricultural Property Relief is notoriously strict and relies principally on occupation and retaining farming character and functionality.

Inheritance Tax payments rise

HMRC has certainly cashed in on Inheritance Tax payments over the last twelve months, receiving an additional £190 million from 20,000 individuals – a rise of 3000 people on the year before.
 
Paying 40% on the value of any inherited assets above the nil rate band of £325,000 for a single person (or £650,000 for a married couple), executors are often forced to pay the subsequent Inheritance Tax bill before any remaining assets can be distributed. This nil rate band is fixed until 2014/2015, at which time it will be raised to £329,000.
 
Critics have claimed that this rise in Inheritance Tax income has been a deliberate ploy by the government, to trap as many families as possible into giving away almost half of their wealth through a lack of, or ineffective estate planning. However, HMRC has responded by saying that there has in fact, been a relative decline in the number of individuals paying Inheritance Tax since 2006/2007, during which time, 34,000 tax payers became eligible to pay IHT.

Cap on Jersey probate duty reintroduced

Earlier this month, Jersey’s parliament voted to reintroduce a cap on the amount of probate duty which can be applied to an estate in the event of a person’s death – a move which has been welcomed by many.
 
Similar to England and Wales’ Inheritance Tax laws, probate duty in Jersey falls due when a person dies, and must be paid out of their estate when a grant of probate or letters of administration are applied for by the executor.
 
Normally, this duty is calculated at around £80 per £10,000 value on an asset other than land and until 2005, a cap was set at £13,360,000 value, meaning that the most that would ever be paid on an estate would be £100,000. This cap was then removed at that time.
 
Many high net worth individuals of course found the cap to be financially attractive, and so they chose to be domiciled on the island, only to be disadvantaged once more, once the cap was removed.
 
Its reintroduction therefore, on the same basis as before, is sure to attract these individuals once more to the island.

Campaign against the cost of dying

We have seen the cost of dying and burials increase significantly in recent years, despite many thousands of families facing hardship during the recession.
 
This has inevitably led to a dramatic increase in the number of so-called “paupers’ funerals”, adding to the financial burden carried by local authorities. Last year, local authorities in England and Wales carried out around 3000 of these funerals.
 
Over the last eight years, the cost of dying has risen by over 70%, with prices currently settling at around £3000. However, financial assistance provided by the government, for those who are unable to afford to bury their loved one, has remained at the same level as it was nine years ago. Currently, almost half of claims made for this assistance are denied, with successful claimants receiving up to a maximum of £1,200 – less than half the money needed for basic funeral costs.
 
Campaigners claim that this financial stress often exacerbates the grief and pressures faced by those left behind, who can then easily find themselves in debt. They are therefore lobbying for amendments to be made to the government grant system, particularly as it has been calculated that within eighteen years, an extra 100,000 deaths per year are likely to take place.

Aristocrats call for new succession rules

There are calls for outdated succession rules for titled aristocrats to be altered in line with accepted royal succession legislation, to permit ladies to inherit titles.
 
According to laws introduced in the 17th and 18th centuries, females in direct line to the throne are able to take up this position. However, this is not the same for aristocrats despite family titles dying out, should there be no male heir to continue the line.
 
It is believed that the laws governing aristocratic succession were based on male primogeniture, in an attempt to prevent estates from being divided up. Generations ago, ladies were expected to marry and bear children and were not considered to be able to take on the pressures of successfully running the family estate. However, it has now been recognised that this approach is no longer appropriate for the twenty first century.
 
 With many significant family titles already having died out as a result of women being passed over with regards to succession, it will be interesting to see whether these changes will be made quickly, and whether any claims will be made to reinstate titles.

Inheritance tax threshold is frozen

It was gloomy news for many of us this week, when Chancellor George Osborne stated that the inheritance tax threshold will remain at £325,000 until 2015, when it is expected to be raised by by £4,000 to £329,000 – just before the next general election.
 
This is of course a far cry from the promised £1 million nil rate band and is a move which will see potentially hundreds of working and middle class families, with parents who own fairly modest homes, being hit in the pocket, at a time in which every penny counts.   In fact, the Treasury has calculated that this freezing of the threshold will result in an additional £80 million being paid to HMRC in inheritance tax payments between now and 2015.
 
A professional estate planner will be able to advise those making a will, of the best ways to minimise any inheritance tax liability which may fall due, in the event of their death.

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