19th July 2018
In January 2018 research by the Macmillan Cancer Support charity revealed that 63% of UK adults had yet to make a will. That means that nearly two in three of us have left the disposition of our goods to the laws of intestacy; in the process passing up on any inheritance tax planning options which could be available.
Does that mean that the 37% of us who have made a will can sit back and relax? Well, not necessarily. The same Macmillan survey showed that 8% of those who had made a will had subsequently married rendering their will invalid, whilst 20% of wills still included an ex-partner or had failed to take account of the arrival of children or grandchildren.
Best practice recommends that people review their wills every five years or after a life-changing event. But even if family circumstances haven’t changed there is another reason why it is good practice to take another look at your will. We’re talking here about the potential effect of legislative changes.
Let’s take one example. Prior to 2008 it was relatively common practice to consider discretionary trusts as part of an inheritance tax planning package. Then new legislation brought in the concept of a transferable nil rate band. This effectively enables an individual to leave their assets to their spouse, with the estate of the second spouse then potentially being able to offset double the nil rate allowance against inheritance tax. Add in the availability of a residential nil rate band (currently standing at £125,000 per individual) to the equation and this could result in no inheritance tax being payable on second-death estates of up to £900,000.
This raises two important points. Firstly, wills may need to be reviewed to ensure that they take advantage of the transferrable nil rate band. Secondly, those whose wills were written prior to 2008 and which establish a discretionary trust may find that the trust is no longer an effective inheritance tax planning vehicle. On the other hand, it is important to note that there is a tapered withdrawal of the residential nil rate band for those with net assets in excess of £2m, meaning that they may still wish to consider some form of will trust.
Thompson Jenner LLP Partner Simon Lewis commented “As with all planning, the caveat here is that decisions need to be made on an individual basis taking into account personal circumstances and testamentary wishes. Nevertheless, particularly if you haven’t reviewed your will in the last five years, it may be worth a quick review in the light of personal and legislative changes to ensure it still meets your intentions.”
Whether you are planning for your retirement, need help with your taxes, or are looking for personal accountants to assist with the management of your finances, we can help. Along with our sister company, Thompson Jenner Financial Services Ltd, we offer advice on how to optimise and improve your personal finances while helping you plan for a secure future.
If you would like to find out more or meet to discuss the services which we are able to provide, please contact Simon Lewis or one of our other Partners on 01392 258553 or 01395 279521 to arrange a free initial meeting.