Probate fees to rise so ensure fixed fees
With court fees for probate applications expected to rise by around £100 immediately after Easter, it has never been as vital to ensure that any probate expert you choose, offers a fixed fee basis for their work.
All too often, we hear of stories whereby solicitors and banks are vague about how much their fees will be, once probate has been processed. Many work on receiving a commission in the form of a percentage of the overall value of the deceased's final estate. In this way, relatives who have been left behind end up confused, worried and completely in the dark about how much they will eventually end up paying.
At IWC Ltd, we believe in being as honest and transparent as possible with you. We'll explain all the legal jargon in plain English if required and outline our fixed fee costs and terms from the very beginning. That means whether your loved one's estate is worth £60,000 or £6 million, you'll only ever have to pay the amount which we quoted. We're sure you'll agree – that's much fairer.
To find out more about IWC's fixed fee probate service, simply telephone us on 0800 612 6105 or visit our fixed fee probate page. Regardless of how much court costs rise, you'll only ever pay the figure which we've quoted.
Inheritance tax reliefs come under scrutiny
Farmers are being warned to be exceptionally well prepared, with news that inheritance tax reliefs will come under further scrutiny by HMRC.
Criteria surrounding tax breaks including Agricultural Property Relief (APR) and Business Property Relief (BPR) is likely to become much stricter, following an investigation by the National Audit Office.
This means that in order to qualify, farming families must be extra vigilant on how they structure and operate their businesses, before, during and after the retirement and death of the principal farmer.
One of the key criteria for qualification of these tax reliefs is that the main farmer must be shown to be still farming or at least managing the farm when they died. "Retired" farmers will continue to attract IHT on their final estates. In addition, the main farmer must also be in residence in the main farmhouse at the time of death, for the estate to qualify for relief.
Although a popular choice among many farmers today, giving land over to a renewables project could result in that land being no longer viable for any reliefs.
Another popular tactic among farming families has been to convert redundant farm buildings into other businesses such as holiday accommodation, cafe or leisure activities. Converting these buildings into spaces suitable for a non-agricultural business may also have an adverse effect on any relief which may otherwise have been granted.
It's worth bearing in mind that government schemes, consumer trends and demands may ultimately guide a farming business through the decision of whether to diversify. However, professional farm succession planning advice should be sought before any decision is made, to ascertain any effects on the final amount of IHT which must be paid.
Probate solicitor complaint sees pensioner evicted
It was recently reported in the Lancashire press, that a pensioner is having to sell his home, following complaints he made about a probate solicitor.
Mr Paul Cowdrey from Rochdale, felt that his probate solicitor was billing him for too many hours during the probate process following the death of his father. He sought assistance from Rochdale MP Simon Danczuk – but was then dismayed to find that he was also being billed by the same solicitor, for the investigation of his complaint.
Mr Cowdrey's final bill arrived at £130,000 – meaning he is having to sell his home, which formed part of his late father's inheritance, in order to pay the bill.
Although the battle reached the attention of the Prime Minister, Mr Danczuk was informed that Mr Cowdrey's solicitor was perfectly entitled to invoice for the work he put in, as part of the investigation.
The legal regulators, the "Solicitors Regulation Authority" (SRA), have subsequently written to Mr Danczuk to apologise, but state that they in fact are unable to do anything about this large bill and its knock on effect, as the solicitor has worked entirely within the law.
In a last ditch attempt to rectify matters, the Prime Minister is trying to arrange a meeting between Mr Danczuk and the minister for legal services, to discuss any potential remaining options.
The firm of solicitors in question has posted a public response on its website, criticising Mr Danczuk and the SRA about which, it says it is making a separate complaint. It emphasises that it acted within the law at all times and states that it will be seeking a public apology from Mr Danczuk, via the Speaker of the House.
Be careful of gifting property
With the inheritance tax threshold still frozen with no signs of being raised, parents are being warned to be careful of gifting property to their children, as a means of reducing the overall amount of inheritance tax to be paid at the time of their death.
Although David Cameron has indicated that he would like to raise the inheritance tax threshold to £1 million per individual, there are currently no firm plans in place to reflect this. With the UK property market once again extremely buoyant and house prices soaring – especially in the capital, latest figures estimate that 10% of estates will attract IHT in 2018.
All this has led to frantic activity by many people, all searching for ways in which to minimise any inheritance tax liability on their estate. Much of this can be done by reallocating funds and capital into properties, trust funds, companies and shares. One of the most popular methods is to "gift" the family home to the children whilst the owners (their parents) are still alive. This tactic, however, can present its own risks if it is not considered and executed carefully.
If the home has been gifted but the parents still wish to live within the property for the rest of their lifetime, then they must remember to pay market rent to its new owners – their children. If no rent is paid after the gift has been made, then it will continue to form part of the overall estate under "gifts with reservation" rules – and so will still attract inheritance tax.
If the home is subsequently sold and none of the new owners have previously lived in it, they will then also be charged capital gains tax in addition to inheritance tax – poor planning which can have an extraordinarily expensive result.
Is the UK's inheritance tax fair?
The news that Britain and Ireland have the highest death duties in the developed world has led many to ask: "Is the UK's inheritance tax fair?" Or is it, as some may feel, just another way for the government to grab as much money as it can from the British public – even after death?
The recent research, revealed by accountants UHY Hacker Young, shows that Britain and Ireland are one of the few developed countries still to apply this form of tax. Others, including Australia and New Zealand abolished this form of taxation long ago.
Currently, Britain's IHT threshold stands at £325,000 per individual or £650,000 per married couple. With the average national house price standing at around £250,000 (£409,000 in London), it's easy to see why an increasingly high number of estates are being trapped in the net. Simply compare these figures to the US' IHT threshold of £3.2 million.
The accountants' report has also indicated that the spectre of inheritance tax is having a direct impact on the numbers of younger people looking to start their own business. It's not difficult to see why there's a lack of motivation to work hard, if around a quarter of the revenue will eventually be passed to the taxman.
The prime minister has indicated that should the Conservative government win the next election, it will seek to raise the inheritance tax threshold to £1 million – certainly this can't compare to the rest of the developed world but it is a step in the right direction. Do you think this is high enough and do you think we as the British public should take him at his word?
London hospice received £250,000 legacy
I read a heartwarming article recently, about how a London hospice received a £250,000 legacy from a gentleman, by way of thanks for the care he received at the end of his life.
Sometimes I think we become hardened to the subject of charitable legacies. We're bombarded with marketing literature, TV advertising and doorstep salespeople, all trying to encourage us to leave a legacy to a particular charity. Of course, there's an additional incentive to do so – provided by the government who has allowed us to use legacies as a means of reducing inheritance tax liability. But rarely do we take the time to understand precisely what that cash injection can do for a charity.
In this instance, Mr Eric Rawson, who died in November 2012 aged 89, left £250,000 in his will to St Luke's Hospice in Kenton.
In March last year, five months after his death, the hospice was presented with the cheque and expressed its delight and gratitude to Mr Rawson.
The hospice's director of fund raising stated that this money will fund an impressive 40% of its Home Care teams, who looked after Mr Rawson in his own home.
Interestingly,the deceased's executor also revealed that by leaving this charitable legacy, Mr Rawson's estate saved almost £200,000 in inheritance tax charges.
What a very fitting and wonderful end to this generous gentleman's life.
Have you thought about leaving a charitable donation as part of your estate planning process? Contact the team at IWC Ltd who will be able to discuss your individual circumstances and highlight the benefits of charitable legacies in more detail.
Inheritance tax threshold back on the agenda
Prime minister David Cameron indicated that the inheritance tax threshold was firmly back on the agenda recently, when he attended a meeting in East Sussex.
The threshold is currently frozen at £325,000 – a move which has been forecasted to net the government billions of pounds over the next few years. However, Mr Cameron insisted that he would like to address the issue once more, so that only "the rich" would in fact be liable to pay inheritance tax.
This insistence comes on the back of failure to raise the the threshold to £1m in 2007 – a failure, says Mr Cameron, which came about through political opposition.
Mr Cameron says: "I believe in people being able to pass money down through the generations and pass things onto their children. You build a stronger society like that".
I suspect that the hackles will be rising on the necks of wealthier individuals, at the prime minister's ambiguity regarding the term "rich".
For the rest of us who aren't so well-heeled however, there is light on the horizon, with the hint that the issue could once again become a hot topic in the run up to the next election in 2015.
Are you confident that the government has the best interests of the hard working British public at heart, or do you think that this latest comment is simply lip service and that its key objective is to bring in as much revenue as possible? Does his comment: "Inheritance tax should only really be paid by the rich" annoy you? Would raising the inheritance tax threshold to £1m lift you out of the net?
Who will inherit your money?
Vanessa Feltz kick started an interesting conversation in the newspaper the other day, when she asked: "Who will inherit your money?"
The question was prompted by recent comments from well known individuals including millionaire businessman John Roberts, Sean Connery and Nigella Lawson – all of whom declared that they wouldn't be leaving their children any money.
I see their point. The hundreds of thousands or even millions of pounds left behind by these individuals could cause more harm than good.
Even leaving aside the large amount which would inevitably be paid to the tax man in the form of inheritance tax, a significant windfall has been known to lead to a short-lived lifestyle of excess in the form of holidays, cars and fine dining. Before the beneficiaries know it, the money's gone and they have very little to show for it. Hardly a fitting legacy for someone who worked hard for their money during their lifetime.
With the latest government inheritance tax initiative, more and more legacies are being made to charities, which is great news for worthwhile causes. However, for those of us who can't afford to live a millionaire lifestyle, shouldn't we aim to help our loved ones financially after we've gone, if we're in the position to do so? Even a few thousand pounds may perhaps help to dig them out of debt, help them to fund the grandchildren's university education or simply give them some breathing space.
So who will inherit your money? Your children, grandchildren or a charity? Perhaps you may be saving it to fund your retirement or care, should you need it in the future? You should be starting to plan, now.
Irish funerals to be streamed to mourners
With the news that a businessman plans to offer streamed Irish funerals to mourners, a whole can of worms is presented, ready to be opened.
By their very nature, funerals are usually solemn, formal and respectful affairs. Close relatives and friends may be grief-stricken but are comforted with the knowledge that they are surrounded only by other loving friends and family of the deceased. It’s often a very private time.
So I suspect that many people will be horrified at the thought of such an emotional event being broadcast over the internet to any number of relevant individuals, based right across the globe.
But looking at the issue from a different perspective, it may well be that the gentleman is actually meeting a need which has until now, been unfulfilled.
The examples he gives are of friends or relatives who for one reason or another, may not be able to attend the funeral. They may live on the opposite side of the world, are unable to find childcare or be physically unable to attend due to disability. Perhaps it is these people who will find comfort in some small way, and feel that they have managed to pay their respects to their loved one, through viewing the funeral online.
The Irish businessman, Alan Foudy, says he came up with the idea of live streaming, after being asked to tape a funeral onto DVD – which obviously has its own limitations. Those requesting to view the clip will be charged a small fee, with the stream password protected to ensure privacy.
At the moment, the streaming service, called Funerals Live, is being targeted specifically at Irish emigrants who are unable to return back to Ireland for funerals. Feeds are currently available for funeral and graveyard services, with the permission of the deceased’s family and parish priest.
What’s your opinion of streaming funeral services to loved ones? Is it a constructive, comforting use of modern technology or a disrespectful invasion of privacy?
No inheritance tax for emergency service workers
In the recent Budget, Chancellor George Osborne announced there would be no inheritance tax charges for emergency service workers should they die in service.
The government and emergency service workers are without doubt, rarely in agreement regarding wages and benefits. However, this show of support and recognition must surely go some way towards easing the financial burden of thousands of families, particularly those in property hotspots including London.
Property in areas such as this are currently experiencing a sharp rise in value, with the average London property price having now risen by over 12%. This unfortunately means however, that many more families and individuals will be captured in the inheritance tax web, with the threshold currently frozen at £325,000.
Emergency service workers and their families will have certainly welcomed this news – although of course exemption only applies to death in service.
This was a bold and sweeping statement by the Chancellor, but for me, it was a little ambiguous. “Emergency services” is a term usually used to describe those working within the fire service, police and ambulance staff. However, it is unclear as to whether this initiative also extends to doctors and nurses, coastguards, search and rescue teams, lifeboat crews and bomb disposal experts. Presumably, more detail will be given at a later date.
This move brings emergency services benefits in line with armed service benefits. Currently, any former or currently serving member of the armed forces is exempt from inheritance tax liability, providing it can be clearly demonstrated that their death was caused directly through active service or if their illness or fatal injury was caused or exacerbated as a direct result.