Tag Archive for: Wills & Probate

Alex Chambers

Five reasons you should use a solicitor to write your will

/ , , Solicitor TEP/ /by

If you are thinking about writing a will, you may have considered doing it yourself. However, there are significant benefits to using a solicitor along with many pitfalls which can be avoided.

In this article, we look at five reasons to use a solicitor such as ourselves to write your will.

As solicitors we know what to ask?
The benefits of instructing us begin at the outset, it is not just the drafting of the will which is important. Writing a will is part of estate planning, and while it is a crucial part, there are many practical and legal matters you may also wish to get in order. We will consider all of the property and interests that make up your estate, ensuring that nothing is forgotten about. We will work with you to create a comprehensive will that accurately reflects your estate and your wishes. Did you know that in your will you can appoint guardians for your minor children?

Your will, will be properly drafted
A will is a formal legal document and, as a result, must meet certain legal requirements. While you may have read and understood what these legal requirements are, can you be confident that you will be able to meet them? If your will is not properly drafted, even the smallest error may render it invalid or leave it open to challenge. An invalid will would result in your estate being distributed in accordance with the rules of intestacy, which may not accurately reflect your wishes. This could result with people you would not wish to benefit receiving monies from your estate. You can save your loved ones difficulty later on and put your mind at ease by instructing us to draft your will properly.

As solicitors we can word the document correctly
Drafting a will is complicated. It requires careful wording and understanding to ensure that your wishes are reflected accurately. Many will disputes arise out of unclear wording, but by instructing Cullimore Dutton you can ensure that your directions are expressed clearly and not left open to interpretation.

As solicitors we understand how to draft a will for complex finances or family structures
If you have complicated finances, or you have even a slightly complex family structure, we would advise you to use a solicitor to draft your will. Drafting a will to account for stepchildren for example, can be complicated. If you prepare a DIY will, you could end up unintentionally leaving those closest to you with no inheritance. Did you know that if you are not married or in a civil partnership, your partner would not inherit from your estate unless you have a will which provides for them?

Inheritance tax planning and Powers of Attorney
As discussed above, writing a will is about more than just setting out where your property will go. With our specialist skills and knowledge you can also plan to mitigate your inheritance tax liability, allowing you to leave more behind for your loved ones. Similarly, when making a will, many people choose to make Lasting Powers of Attorney too. Lasting Powers of Attorney give you peace of mind that, should anything happen to you and you become incapable of managing your own affairs, you know your chosen attorneys will take care of your affairs as you wish.

If you would like a free initial consultation with one of our specialist Wills, Trusts & Estates team please call 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Alex Chambers

Probate: What happens to debt after someone dies?

/ , , Solicitor TEP/ /by

Many people believe that when a person dies, the debt dies with them, but that is simply not the case.

Similarly, it is a widely held belief that family members are personally responsible for paying debts, but this is not always true.

In this article, we take a look at what happens to a person’s debts after they pass away.

When someone you love has passed away, the last thing you might be thinking about is debt. However, there are many misconceptions about debt and inheritance, and it is essential to understand your position.

What happens when there are debts on an estate?
If a person passes away with debt, debts will typically be paid out of their estate. The estate is made up of all of the person’s assets, including their home, cash, business interests, investments and any other property they may own. It is the role of the executor or administrator to find out what debts have been left behind and work out whether there are enough assets in the estate to cover the debts due. It is important to go through the deceased’s paperwork in detail in order to identify any debts owed and what type of debt it is. It is also important to find out whether there are any guarantors for any of the debts as the guarantor(s) may remain liable for the loan if it is not to be paid from estate monies.

When there is not enough money from available assets to cover all the debt, creditors will be paid out in a certain order until all of the money is gone.

What is the order of priority for debts on an estate? 
Before the executor pays off any debts from the estate, they are permitted to cover costs of the funeral and costs involved in administering the estate. Once they have a grant of probate, they can then begin the process of paying off the debts. Debts must be paid before any money is distributed to the beneficiaries due to inherit either by the terms of the Will or under the rules of intestacy. If there are assets such as a car or valuables, the executor may sell these to pay off debts on an estate. The order in which debts must be paid is as follows:

• Secured debts (for example, mortgage repayments)

• Priority debts (such as income tax and council tax)

• Unsecured debts (such as credit cards and utility bills)

Where there is not enough money to cover all of the debts, this hierarchy ensures the most important are paid off first.

What happens if a debt is held in joint names?
Where a debt is held in joint names, such as a mortgage, the surviving party who is named on the lending documentation will take on liability for the full outstanding amount.

Can debt pass to a spouse or civil partner?
If the deceased borrowed in their name only, the debt will not pass to a spouse, civil partner or any other person, unless they have provided a guarantee on the loan.

If you would like a free initial consultation with one of our specialist Probate team, contact us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Phil Appleby

Inheritance tax threshold frozen until 2026 – but why is IHT planning still important?

/ , , Director and Associate Solicitor TEP/ /by

If you intend to leave savings, property or other assets to family or friends after you die, you need to consider inheritance tax (IHT).

It could cost your heirs up to 40% of their inheritance. By planning ahead, you can minimise IHT and ensure as much of your estate as possible reaches your loved ones.

Understanding the tax-free allowance  
The tax-free inheritance allowance, known as the nil-rate band, allows your beneficiaries to inherit up to £325,000 of your estate without incurring tax. On anything above this threshold, the standard 40% inheritance tax rate applies.

If you are leaving property to certain family members, the residence nil-rate band may also apply. This is an additional tax-free allowance that you can use if you pass on a property that you have lived in to your direct descendants, for instance, your child or grandchild. Currently, the residence nil-rate band stands at £175,000.

Inheritance tax threshold frozen until 2026
Whilst the nil-rate band has remained the same since 2010/11, the main residence nil-rate band usually rises each year with inflation. The next increase was due this April, however, it was announced in the 2021 budget that the IHT thresholds would be frozen until 2026. A five-year freeze is significant in IHT planning, and it is advisable to review your situation in light of this announcement.

Planning for IHT 
Most of us want the wealth we have accumulated over our lifetime to be put to good use by those we leave it to. Sadly, when end-of-life financial plans are not put in place, a large portion of assets can be diverted away from the intended recipients. However, with careful preparation, you can ensure as much as possible of your estate reaches your loved ones. As IHT planning can be complex, it is best to seek professional advice.

There are many steps you can take when IHT planning, including:

Pool your allowance with your spouse or civil partner
Spouses and civil partners usually inherit tax-free from their partner. Additionally, they can often make use of the nil-rate allowances their partner was entitled to.

If your spouse or civil partner left their entire estate to you, you could apply both your own and your partner’s tax-free allowances when you pass on your estate. Doing so effectively doubles the amount you can leave your heirs without incurring any tax. If your partner uses a proportion of their nil-rate band to leave assets to others, then you will only be able to apply the percentage of the allowance they did not use.

Make a gift to loved ones 
Gifting money or other assets before you die can reduce how much inheritance tax will be due on your estate. However, this must be done carefully as the timing of any gift is crucial. If it is made seven or more years before your death, the recipient will not usually have to pay any IHT on it. If you die within seven years of making the gift, IHT may be incurred. It will depend on the type and value of the gift.

Leave money to charity
To encourage charitable donations, assets left to a qualifying charitable body are exempt from IHT. Moreover, if you leave at least 10% of the value of your estate that surpasses the nil-rate bands to charity, you can reduce the IHT rate due on the remainder from 40% to 36%.

For more information about Inheritance tax planning, contact a member of our expert Wills, Trusts & Estates team on on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.