Frequently Asked Questions
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If I put my house in trust, is it safe after 7 years?
This is a very common misconception and commonly confused with other laws. There is no finite time as to how far back a local authority can go to investigate whether you have deliberately deprived yourself of an asset when you had a foreseeable need for care. However, if you were to enter into care, any gifting, excess spending or use of trusts in the six months prior which meant that you were now reliant on local authority funding would be examined. Seven years has nothing to do with care costs and is for inheritance tax purposes only.
What difference does it make if we are married at my death?
This depends on the value of your estate. Not being married can cause an unnecessary inheritance tax bill at first death and then again at second death. If you were married, there may no longer be a tax bill at first death and enough time to mitigate or eliminate a tax bill at second death. Certainly, as well as the potential tax bill, not being married without a Will can be disastrous in that your partner is not entitled to inherit from your estate at all, whereas a spouse can.
Can my daughter / son / brother / sister claim on my estate?
In England and Wales, the Will law enables us to leave whatever we wish to whomever we wish in our Will. However, running alongside that law is another law called the Inheritance (Provision for Family and Dependants) Act 1975. This was designed to enable those who feel they have a legitimate claim to have a platform to contend. This Act is restricted to several groups and not everyone who thinks they have a claim can use this Act. Many aspects are taken into consideration such as their relationship to you, their earning capacity, who you chose to leave your inheritance to instead, to name just a few. Please discuss this with us if you feel this could be relevant to you.
Will I get taxed if I give away more than £3k in a year?
It is very common for people to get confused and concerned with not exceeding their £3k annual allowance. Yes, everyone is entitled to gift £3k a year (and £3k for the previous tax year, on a rolling basis, if you did not use your annual allowance last year) but you can give away as much as you want in excess of £3k without causing a tax bill in your lifetime. The only time this becomes an issue is if you were to die within seven years of gifting. If you do then that gifted amount is just regarded by the HMRC as not having left your estate at all and is counted as part of your taxable estate for inheritance tax purposes. So, you have not caused an additional tax bill by gifting it. There are many misconceptions with gifting money so please ask us at the appointment if you feel this would concern you and your estate.
Will I have to pay inheritance tax – it’s £1 million, isn’t it?
Everyone thinks they now have £1 million before they have to pay Inheritance Tax. That may not be the case and in many circumstances, it is not. There are various allowances and enhancements that potentially make up that figure of £1m but not everyone meets the criteria. This will be covered at your appointment as part of assessing whether your estate could be taxable.
I don’t want my ex to have our children if I die, how can I do that?
This is a difficult and very emotive conversation that needs to be discussed. If your partner is the other legal parent of your child, the law says that the child will pass to them if you were to die and, of course, vice versa. However, there are provisions we need to make in your Will to show your wishes and intentions and, of course, we need to nominate who will be guardian to your minor children should your ex-partner predecease you and you subsequently pass away.
Does a Will stop probate?
No, we are afraid it does not. A Will ensures that you enter the process of obtaining a grant of probate whereas, without a Will, you enter ‘letters of administration’. If there is no property involved at death and the liquid assets are under the ‘probate threshold’ of the institution that holds them, it may not be required to get a grant of probate. However, many companies require a grant before they release the asset to the executors of the Will.
I have an Enduring Power of Attorney, so I don’t need a Lasting Power of Attorney, do I?
If the Enduring Power of Attorney (EPA) was correctly signed and witnessed before October 2007, it will be legal and can be used. However, an EPA can only be registered once someone has lost or is losing their mental capacity. Registration and the notification process that accompanies this can take four to five months. Therefore, under those circumstances, as the document can only be used once it has been registered, there can be a gap of four to five months where the attorney(s) cannot act for the estate of the donor (the person who set up the EPA). This can cause financial issues for the donor and those reliant on them. However, a Lasting Power of Attorney (LPA) can be registered as soon as it is set up and therefore be ready for when it is required. Also, an EPA does not cover health and welfare decisions; an LPA does. Many decide to update their EPAs to LPAs because of the latter two points.
How can I make sure my children get the house if my partner remarries?
If your Will leaves everything to your partner, at your death they now own everything. All the assets are now theirs so, if they remarry, their new spouse is entitled to half of those assets and, indeed, if the new spouse outlives your partner, the new spouse may end up with ALL the assets. The new spouse has no obligation to leave your children anything. There are ways around this to protect the assets for your children and it requires the use of a trust within your Will which becomes active at your death.
My house in France doesn’t count for tax if I die, does it?
If you are ‘domiciled’ to England and Wales, then your Worldwide assets are accounted for within your estate for inheritance tax purposes, even if you have a Will in the country where your property is located. The Will in that country controls the distribution and succession of your estate in that country and often follows the ‘fixed succession’ laws of that country. If you are not domiciled to England or Wales, there are different considerations. We would be pleased to discuss this at our appointment.
My mum will get my children if we both die, won’t she?
No, not necessarily. The only way you can determine who looks after your minor children if you and the children’s other parent were to die is to appoint guardians in your Will. If you have not made a guardianship appointment, it will be social services who make that decision for you, which may not be the choice you would make, and it could mean a temporary stay in foster care for your children.
The State gets it all if we die, doesn’t it?
There is a statutory law called the Law of Intestacy (see attached) which will determine where your assets pass if you were to die without a Will. There are many levels to reach before The Crown receives your estate but there is always that possibility…
I’m estranged from my mum / dad and no way do I want them to get anything if I die – what do I do?
If you have no Will then the Law of Intestacy will apply. If you are not married and have no children, your estate will pass to your parents, whether you like it or not. So, the first task is to write a Will. Once you have a Will directing your assets to others, your parents will not have a claim on your estate, unless they are financially dependent on you in any way. Make sure that your Will is professionally written (i.e. that it complies with the Wills Act 1837).
Homemade Wills can often be proven as invalid and, if deemed so, again you have no Will and your parents may inherit. Also, make sure that you have made adequate provision in your Will if you are married / have children so that you direct where your estate would pass if you and your spouse / children all died together. If you do not, then the Law of Intestacy will apply again and your parents will inherit.
If I die and my partner remarries or meets someone else, our kids will still get my share of their estate…right?
No, not necessarily. If your Will gifts your share of the estate to your partner / spouse, that partner now owns everything. If they remarry then their new spouse has a right to half of what is now your partner’s estate (the whole of your combined estate). If your partner’s new spouse outlives your partner, they may end up with it all. If they do, they have no obligation to leave your children anything as it now their estate and the children are not theirs! (This is similar to point 9 above).
Wills and Estate Planning seems a bit expensive. Is it worth it and is Hamilton Legacy the cheapest?
Hamilton Legacy is not the cheapest nor the most expensive on the market. Our appointments are free. At that appointment, having ascertained what you and your partner own, your debts and liabilities, the dynamic of your family and what you want to achieve, we will present to you a bespoke solution as to how we can help you. As one size does not fit all, we can never tell how much our quote will be until we have had that meeting. From that recommendation, we can inform you how much that work will cost based on our fixed-fee price list which you would have received in advance. Only then can you make an informed decision as to whether you wish to proceed with our recommendation. Setting up your Will and Estate Planning in a manageable, tax-efficient and protective way is a hugely important job; it must be done properly.
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