How Much Are You Expecting To Inherit
Did you know that one in ten people over 40 have planned to fund their entire retirement in an inheritance? In fact, the average amount that people in their early 40s expect to inherit from family is just over £180,000. Perhaps you’re one of them.
But it’s all guesswork for the most part. Unless the conversation between parents, grandparents, or whoever has the money, and the person expecting to receive it has taken place, nothing is guaranteed. And even then, wills can be changed.
So for the most part when the time comes for those people to inherit, they often receive much less than they had expected, thanks to a lot of over-estimating. In some cases this can simply be a little disappointing. In others it can cause serious financial problems.
The reality of inheritance is that the average amount left to the people in this age bracket is just under £70,000 (this is after tax and any care home costs associated).
The problem in the sums seems to be mainly due to lack of communication. Only around 40% of 40-50 year olds had actually discussed the whole inheritance issue with their loved ones. The other 60% made assumptions which turned out to be very wrong indeed. It could be that they have over valued any property involved, or underestimated just how much care their parents will need – and how much it costs – as they grow older. This can easily eat away at an inheritance, and quickly too.
The repercussions of these miscalculations can sometimes mean that retirement plans have to be delayed indefinitely, and a vision of having the time and the means to finally enjoy one’s hobbies, go travelling, or simply have a comfortable life can disappear forever.
If you are planning to use an inheritance to fund your retirement, you should talk to those you expect to leave you the money as soon as you can. You need to be able to make long term plans, and having this information is essential. You may need to source alternative additional funds, and the earlier you find this out the better.
Knowing the figures involved will also be helpful when it comes to calculating inheritance tax, and perhaps even reducing that bill whilst your parents (for example) are still alive. And to ensure they have written a will in the first place.
Who wants a regulated will writing industry? According to a YouGov poll which was commissioned by The Law Society, around 55% of UK adults would like to see some form of regulation. However, the survey also showed that those polled were, by a vast majority (90%) perfectly satisfied with the will writing services they had received.
Of course, that does mean that 10% were not. And of those 90% who were satisfied, they may not realise anything is wrong with their will (if something is), and it is only when they pass away and their family has to deal with their estate that the truth usually comes to light. That's the problem with cowboy will writers; it's often too late to do anything about it by the time the problem becomes apparent. Perhaps that's why a relatively small number of people are keen to have the industry regulated, and why so many are happy with the service they have received, and yet also why so many problems seem to occur in the courts thanks to invalid wills.
At the moment, there are no regulations in place that stop someone from setting up as a will writer and practising – and charging customers for their work which may not may not be up to standard. A governing body overseeing everyone who practises as a will writer, and offering a recognised qualification would ensure that those writing the wills know what they are doing and, if something where to go wrong, there would be some kind of fall back.
The Legal Services Board (LSB) has been campaigning for this for a number of years now, and has recommended that it become a 'reserved legal activity' (meaning that it is regulated and those who are qualified are the only ones who can practise).
Is it really that important though?
Let's look at the figures.
Poorly drafted and invalid DIY wills are causing problems for about 38,000 families every single year. And those figures are rising. This is partly due to poorly drafted wills, and also partly due to changing family structures with more divorces and combined families making some wills invalid or inaccurate. This is why updating your will when any of your personal circumstances change is so important.
Fixing an invalid will can be a costly and time consuming – not to mention emotionally charged – problem.
For many, being left money in someone's will – at least enough to make a difference – is akin to winning the Lottery, although with much sadder connotations attached (assuming those left behind knew and were close to the person who died).
But the chances of being left a vast inheritance are much higher than winning that multi million pound Lotto jackpot, so it can and does happen fairly regularly.
And it happened to a woman in Ashford, Kent.
Patricia Boaden, a 49 year old mother, not only received a £400,000 inheritance from her aunt, and she used some of that money to purchase a luxury holiday home in Florida (with five bedrooms, private cinema, and a heated indoor pool) which she then rented out to generate an income of around £1300 a week.
It sounds great – and why not use an inheritance to bring in an income? It's what many of us would do. But what many of us wouldn't do is to claim housing benefit at the same time. Neither would we not declare the inheritance. Unfortunately for Patricia, she did continue to claim housing benefit, and she didn't declare her inheritance.
In fact, she claimed over £50,000 over four years. But instead of using that money to pay her £1500 a month rent, she instead used it to buy luxuries, and maintain a lifestyle that she and her family had become more than accustomed to.
Boaden was found guilty of fraud (and this was compounded by the fact that she created a company to manage the property in Florida; the company made a profit but she did not declare that either), and jailed for two years.
The story of Lord Lucan is one that has entered the annals of history as something of a legend, growing more and more intriguing as the years pass. No matter what the stories say, it is all rooted in the truth: Lord Lucan (John Bingham, 7th Earl of Lucan) was a British peer who, on 8th November 1974, disappeared, never to be seen again.
That's all we really know about what happened to the man who, in all probability, and certainly according to the inquest into her death, went on the run after murdering Sandra Rivett, his children's nanny, in the basement of 46 Lower Belgrave Street. This was the family home that Lucan have moved out of two years previously when his marriage to Veronica Duncan collapsed.
Why did he kill Ms Rivett? The motive seems unclear, but some have speculated that he mistook her for Veronica, with whom he was going through a bitter and nasty divorce. Lady Lucan was also attacked that night, and it was she who identified her ex-husband as the culprit. As for Lucan himself, on that night he drive to a friend's house in Uckfield (East Sussex). When he left there, he was never seen again – although his car was found. The interior was covered in blood and there was a bloody lead pipe in the boot (presumably Ms Rivett's murder weapon).
Since then there have been thousands of sightings, stories, and pop culture references to Lord Lucan, including the idea that he shot himself and his body was fed to tigers (not so far fetched; he was friends with John Aspinall, who owned a large zoo).
Although Lord Lucan was officially declared dead by the High Court in 1999 so that his will could be executed, his eldest son was unable to claim the title of 8th Earl of Lucan without a death certificate. George Bingham was just seven years old when his father disappeared. The new Presumption of Death Act allows for a death certificate to be awarded when it could be in the past.
Today a High Court ruling has given George Bingham what he wanted; a death certificate for Lord Lucan will be issued, and George can take the title of Earl of Lucan.
David Bowie's shocking death from cancer earlier this year on 10th January made the nation grieve. This chameleon of incredible music, this man who was so many different men and had lived so many different lives was gone – but his musical legacy will remain, and sometimes that's all someone as well known and well loved as that can ask for.
But it's not just Bowie's music that will be passed on. That music made him a fortune, and his estate was, in his death, worth in excess of $100 million.
Bowie's will states that his wife, Iman, and his two children would all share in his $100 million fortune. He also requested that his ashes were taken to Bali to be scattered over the beach and into the sea. Generously, Bowie also left $2 million to his assistant, Corinne Schwab, and another $1 million to Marion Skene, who was nanny to one of his children, and remained a good friend of the family.
Bowie's youngest child, his 15 year old daughter Alexandria, received 25% of the estate (the same as Bowie's 44 year old son Duncan from his previous marriage) as well as a house near Woodstock. It is not known how much the property on Little Tonshi Mountain is worth, but it is suggested that it is not the money that is of importance here – that instead, perhaps, there is a special significance for father and daughter about this home, and that is why Alexandria inherited it.
The remaining 50% of the estate is left to wife Iman. She also inherits their Manhattan apartment and other properties.
Bowie chose not to have a funeral in the traditional sense, but instead opted for a Buddhist ceremony in Bali, after which his ashes were scattered by his close family.
Delay in death order proceedings for missing peer's son
The elusive Lord Peer disappeared in 1974 amidst accusations that he had murdered his children’s nanny and attacked his estranged wife. Since that time, there have been many supposed sightings, but no proof of his whereabouts.
Until 2013 and the introduction of the Presumption of Death Act, this meant that whilst his father remained missing, Mr Bingham was unable to lawfully claim the title.
The new Act now allows relatives of persons missing after seven years, to apply for a death order. This order acts as a document officially declaring them dead, so their affairs can then be dealt with. The Earl’s son took advantage of this change in legislation to apply to inherit the title, but was turned down by the Lord Chancellor at that time.
With his recent marriage about to take place and no doubt concerned about the issue of having his own children and means of succession, Mr Bingham subsequently applied for a death order earlier this month. He issued a public notice in a local newspaper which stated that anyone objecting to the claim had 21 days to stop the process. Unfortunately, the Royal Courts of Justice deemed that although Lord Lucan had already been officially declared dead for probate reasons by the High Court in 1999 – 25 years after his disappearance, this had not proved death “for all purposes” – namely allowing his son to take over the claim to his title of 8th Earl.
It appears likely that the fact that Lord Lucan is still wanted for questioning over the murder of the nanny and the matter of the peer’s title are sufficient grounds for delaying the application of the death order and instruction for another hearing to take place next year.
#iwcprobate #bereaved #probate
Death of a child: a guide for divorced parents
The death of a child deals both parents a devastating blow, regardless of their marital status. This tragedy however, can be made all the more stressful by warring parents, at a time when emotions are running high.
Both biological parents have the same right to apply for a Grant of Letters of Administration and it is during this process that the difficult discussion regarding funeral arrangements will take place.
Hopefully, the grieving parents will agree on the details of the funeral but sadly, some do not. In this instance, the decision will then lie with the court, which will attempt to deal with the matter as quickly and fairly as possible.
In Fessi v Whitmore, a 12 year old boy was the victim of a tragic accident. His father had been his main carer since his parents were divorced, and the pair had recently moved away to a new area. The father wanted his son's ashes to be interred close to their new home, whilst the mother requested that they be scattered close to the old family home at Nuneaton, where the boy's paternal grandparents' ashes had already been scattered.
The court in this instance reached a decision which was a compromise between the two, and the boy's ashes were finally interred at Nuneaton Crematorium, where all family members could come to pay their respects.
In another recent case, a bereaved mother was kept in a state of grief, whilst her son's ashes were retained at a funeral parlour for over a year, under the instruction of the father, who did not want them to be released to his former partner. It was only following legal intervention that the boy's ashes could be released, and he can now finally be laid to rest.
Will pension drawdown increase inheritance tax liability?
The introduction of pension freedom earlier this year has led many people to ask: “Will unused pension drawdown increase the amount of my inheritance tax liability?”
Now, individuals aged over 55 are being given what is known as a “pension pot”, worth thousands of pounds in addition to regular state pension, to provide them with an income meant to see them through their retirement.
Providing an alternative to annuities, this pension pot has provided a debate as to whether individuals would be better off simply drawing down funds from the pot, as opposed to taking out an annuity to provide a regular income during retirement.
The pension pot has caused concern since its introduction, with many wondering what would happen to any remaining funds in the event of their death.
With the tax man taking 40% of the value of all assets above the nil rate band, an additional sum worth potentially thousands of pounds could have tipped many over the edge of liability. Thankfully, in the recent Autumn Statement, it was announced that inheritance tax would in fact not be payable on any unused pension drawdown funds.
The Treasury has said: “The government will legislate to ensure a charge to IHT will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to deaths on or after 6 April 2011”.
This clarity will provide welcome relief to many, who feared that they would need to spend all of the money before their death – a risky business when the funds are designed to provide a regular income for perhaps up to thirty years or more.
#iwcprobate #bereaved #probate
#iwcprobate #bereaved #probate
Confused by inheritance tax?
Many of us are confused by the issue of inheritance tax – how it’s calculated for example, when and how we pay it. Sadly, perhaps because it can be such a complicated subject, it is often overlooked. This lack of planning can have devastating consequences on the financial circumstances of beneficiaries however, with the difference between inheritance tax payable on a planned estate as opposed to unplanned, often reaching thousands of pounds.
A recent survey revealed that 81% of people are irked by the idea of so much of their hard earned cash going direct to the tax man in the event of their death, yet three in ten of us expect our loved ones to be saddled with an inheritance tax bill, whilst another four in ten aren’t sure or don’t understand the process. So what can you do about it?
First of all, what you need to know is that when you die, everything you own (including property, shares and savings) will be valued and totalled. If this amount comes to over £325,000 (or £650,000 if you had a spouse who died before you), then under normal circumstances, 40% of everything above this amount will need to be paid under inheritance tax rules. After you’ve gone, it will be up to your executors to pay this amount – before they receive a penny from your estate. If they don’t pay up within six months, interest can be added to the amount due, resulting in an immense financial headache.
So how can you reduce this whopping 40%? Well, there are a number of ways but they need to be examined right now, whilst you’re still alive. These can take the form of gifting (giving specific amounts of money to your loved ones from now on, to reduce the value of your savings when you die for example) or tax relief, which may be applied in certain circumstances, such as within farming families or businesses.
The message is this – if someone were to relieve you of thousands of pounds right now, whilst you’re still alive, you’d be rightly furious and perhaps feel as though you’d been robbed. So why allow the tax man to do it after you’ve gone? Think about what could be facing your loved ones and act now.
#iwcprobate #bereaved #probate
How much money can be released without probate?
It is up to the executors of a will to handle the financial dealings of the deceased person. Often, this means they have to apply for probate in order to begin to settle their estate.
On being provided with the death certificate; banks, building societies and other financial institutions will automatically freeze the deceased’s accounts until probate has been granted – a process which can often take months or even years, depending on the value and complexity of the estate.
This can obviously cause problems when the undertaker needs to be paid and the inheritance tax bill settled, all before the funds in their entirety are released.
Until recently, banks allowed executors to access a certain amount of money from the late person’s estate, so that at least part of these bills could be paid. This amount usually ranged between £15,000 and £20,000, dependent on the institution. In recent weeks however, some of the more well-known banks have agreed to raise this limit, to allow more funds to be accessed which in turn, may help loved ones who are left with a financial burden.
Lloyds Bank has raised its limit from £25,000 to £50,000, whilst RBS has raised its limit from £15,000 to £25,000.
Whilst this may seem a great deal of money however, families are increasingly feeling the pinch when it comes to laying their loved ones to rest. With the average funeral now costing around £7000, growing numbers are turning to loans and other forms of credit, to pay the undertaker. It makes sense therefore, for adults to consider paying into a funeral plan whilst they still can, to ease the financial strain when they’ve gone.
#iwcprobate #bereaved #probate