Your Will is a legally binding document that appoints an executor and states how your estate should be shared out when you die.
If your family is quite small and you want to leave everything to them, making your will is quite easy.
It is common for couples to leave everything to the remaining spouse or partner and we call these Mirror Wills. If your situation is more complicated or you want to leave money and gifts to various people you will need to plan more carefully.
PECUNIARY BEQUEST (money)
This is when you leave a fixed sum of money to someone. Eg “I leave £1,000 to my nephew
SPECIFIC BEQUEST (items)
This means you leave a specific item which you own as in
“I leave my jewellery to my daughter”. If there is no jewellery at the time of your death then the gift will fail.
RESIDUARY BEQUEST
This is when you leave a percentage of whatever your estate is worth after any debts, costs, liabilities, legacies and tax have been paid as in “I leave half my estate to my sister”
REVERSIONARY BEQUEST
You can specify what happens if the person you leave a bequest to dies before you do. For example “I leave my share of my house to my husband if he survives me, but if he does not survive me then it will pass to my son” – this is a ‘reversionary bequest’ for your son.
LIFE RENT
This allows you to say who you would like to benefit from your property immediately after your death, (such as your spouse), and then who you would like to benefit from your property (such as your children) once the first beneficiary has died. An example would be “I leave my share of my house to my wife for the rest of her life, and then it will pass to my daughter” – this creates a ‘life rent’ over your share of the house. This type of bequest can easily go wrong so you will need specific legal advice; but that’s what solicitors are here for.
INHERITANCE TAX CONSIDERATIONS*
The Inheritance Tax threshold is currently £325,000 for an individual or up to £650,000 for a married couple or a couple in a civil partnership. If your estate is worth more than this when you die, Inheritance Tax (currently 40%), will have to be paid on the excess. The Inheritance Tax threshold can be reduced or eliminated by certain gifts made in the seven years before death.
From 6 April 2017, a new tax free allowance of £100,000 (rising to £175,000 by 2020/21) will give each individual an additional allowance to be used against their home, (see our article on downsizing for ways to release equity during your lifetime) provided they leave it to their children or grandchildren. The allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death. This means when added to the existing £325,000 individual allowance, a couple will be able to leave £1 million without paying inheritance tax by 2020.
The rules aren’t straightforward. If you think you’re near the limit you need to get more information on how to legally avoid it or minimise the amount – which could save thousands of pounds. You’ll probably want to get professional advice to help with this. Give us a call – we’re here to help.
*Correct as at September 2016 but may be subject to change
“That is your legacy on this Earth when you leave this Earth: how many hearts you touched.”Patti Davis
There are three legal documents every adult should have in place – a Power of Attorney, a Will and an Advance Medical Directive.
Hastings Legal specialise in providing friendly legal advice and services for Later Life matters. We are are regulated by the Law Society of Scotland so you can be sure that we have your best interests at heart.
Hastings Legal have offices in Kelso, Duns and Selkirk. If you are too ill to come to us, don’t worry, one of our solicitors can visit you at home or in Hospital
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