It’s important to make sure you have reviewed your assets and decided what you want to happen to those assets on your death i.e. make a Will or ensure that an existing Will is updated. Also, ensure that your wishes as to what should happen to your assets are known through a Letter of Wishes.
Plan Ahead: Who Will Inherit your Wealth?
We at HaesCooper still have to deal with the IHT problems of clients dying ‘intestate’ with no Will or evidence as to what their wishes were to pass on their wealth when they died. With property values remaining high and the IHT free levels running flat (to remain at £325,000 until 2020) the IHT death tax rate of 40% can be a nasty shock to the family survivors when it comes to Probate time!
In this ‘Strictly Come Dancing season’ why not take a leaf out of the late Sir Bruce Forsyth’s book – his reported £17m estate passed to his wife under Sir Bruce’s Will (utilising the surviving spouse IHT relief rule so as to defer IHT until the second death) with a Letter of Wishes that his wife should make certain gifts to his children. Provided his wife survives 7 years from the dates of the gifts then no IHT is payable as a Letter of Wishes is not part of the deceased’s Will and is not a binding agreement. A nice ‘Brucie bonus’ you could say! However, it is important that when being completed the contents of a Letter of Wishes are discussed and made known to all the parties concerned so as to ensure that the IHT savings are known to all and to avoid misunderstandings.
To read more about the basics of IHT and giving, take a look at our previous blog post ‘Inheritance Tax (IHT) – the Giving of Wealth Explained’.
A Letter of Wishes is a useful IHT avoidance mechanism, but it cannot be seen as a guarantee that your Estate will pass to who you want it to. A solicitor specialising in Wills and Probate should be consulted in the preparation of a Letter of Wishes. For more advice or to find out more please don’t hesitate to contact our team.