An increase in property prices over the last few years could mean that you have more wealth than you ever realised. Although this may sound like good news this could also mean that you could fall into the Inheritance Tax Trap.
Despite this rise in house values the Inheritance Tax threshold is only £300,000 per person. This is known as the Nil Rate Band.
It is important that everyone should make a will, but few people are aware that in the case of a married couple, if they have joint assets in excess of £300,000 and each make a will leaving their estate to their surviving spouse, although there will not be any tax payable on the first death, when the surviving spouse dies tax will be payable at the rate of 40% on the combined estate exceeding £300,000.
It is possible to avoid the above scenario by having a properly structured will drawn up. This ensures that you both use the whole of your Inheritance Tax allowances.
This is known as a Discretionary Trust and this is created in each will and can save your family around £120,00 in tax payments.
To make sure that you don’t fall into the Inheritance Trap contact Janet or Richard on 01282 695400
Power of Attorney rules RevampWith effect from October this year the Enduring Power of Attorney will no longer be available.
Existing arrangements will be allowed to continue, but from October anyone wanting to put control of their money and property into the hands of a trusted family member of friend will have to follow a new procedure.
Powers of Attorney are a vital part of financial planning. The point of them is to choose someone whilst you are well to look after your affairs in case you become unfit to look after them yourself. It is therefore important to do something quickly because after October it will become more complex.
It is possible to draw up a standard Power of Attorney, but this only has a limited life and will run out if you become ill and incapable of managing your own affairs. The Enduring Power of Attorney avoids this and it continues to have effect even if you are unable to manage your affairs.
The person who gives the power is known as the ‘donor’ and the person appointed is known as the ‘attorney’ it is the attorney who takes over the management of the donors affairs when they become incapable of doing this themselves and the attorney has to apply to the Court of Protection to have the EPA registered.
The EPA is to be replaced with a new Lasting Power of Attorney, which will come in two forms. The first is a new form, which covers health and welfare, the second deals with property and money.
The Lasting Power of Attorney will then need to be registered with the Office of the Public Guardian and a fee will be payable.
There will also be an added level of security with the Lasting Power of Attorney. The LPA cannot operate until it is registered, and it cannot be registered without a signed certificate from a reputable person confirming that the donor is of sound mind.
If you require any further advise on EPA’s or LPA’s then please contact Janet Lalor on 01282 695400.
