Do you have a will? Or a will trust, or a family trust?
Do you really understand its tax implications?
And if you don’t have a will, do you fully appreciate the implications for those you may leave behind?
Research from Macmillan Cancer Support reveals 63% of UK residents do not have a will. And those that do may not have revisited it for years.
What are the implications if I die without leaving a will?
Without a valid will, for Inheritance Tax purposes, an individual’s estate will be dealt with under the intestacy rules.
In short, this could lead to –
- additional expense
- potential family dispute
- a much longer delay before the estate is resolved.
In some circumstances, applying for probate can be a really drawn out process, even taking a year or more to obtain the grant of administration, the legal requirement before the deceased’s assets can be distributed. If an individual dies with a will in place, the administrators will have authority (called a grant of probate) to speak to relevant companies on behalf of the deceased far sooner than under the intestacy process, which can lead to significant problems in managing the estate of the deceased particularly in relation to mortgage payments and utility bills.
For more details of the potential implications of dying without a valid will, i.e. of an estate being dealt with under the rules of intestacy, including examples for married couples, people in civil partnerships, people that are divorced but had children together, couples that jointly own their home (either as beneficial joint tenancies or tenancies in common) and many others, there is some really clear, independent guidance here via the Citizens Advice service.
In recent years there have been several changes to the law that governs the operation of wills and the laws that govern the tax treatment of trusts.
Inheritance tax is a complicated area.
If you would like to get an idea of the liabilities that could be due from your estate, or to make an approximate calculation based on someone else’s, there’s a do-it-yourself guide to calculating potential Inheritance Tax liabilities here from Which? Or, if you’d like some expert help and guidance, we’d be glad to help.
We’ve helped many clients to understand what their potential Inheritance Tax liability is and to understand the terms of their will when the terms of the will come into practice.
In addition, we’ve assisted many individuals through the probate process by advising of the Inheritance Tax liabilities and preparing the relevant tax returns to reflect this, preparing self-assessment tax returns to report income or gains received during the administration period and on-going support with HMRC correspondence.
There are many different types of trust that can be established in life or death and it is common for a will to reference a trust.
If your will references a trust, we can explain, clearly and in plain English, just how this will operate after your death and what the tax implications are. In some cases, a trust can establish an entirely new legal entity with its own tax identity, liable to make payments for tax and file tax returns.
Other help & resources
You can find more detailed information on what the implications are if you die without leaving a will from the following sites:
For an example of the strict legal rules that govern who inherits what when someone dies without leaving a will, there’s a very good illustration on the This Is Money site here.
And the GOV.UK site has an excellent step-by-step tool here to help you understand who stands to inherit what when someone dies without a will.
Finally, if you would like some personal help to understand your will or advice to help you consider effective tax planning for a new will, please contact us today – in most cases, we can even offer you a free consultation.