Making and Changing your Will

Many people fail to make a will, assuming their estate will go to their husband or wife if they die. However, those dying without a will may find in many cases their money goes to their wife and other relatives as determined by intestacy law. This may not be what they expected or wished. It is therefore sensible in most cases to set out your wishes in advance by making a will. This will also give you the chance to try to avoid inheritance tax, for example, by leaving some money immediately to your children, with the rest to your spouse. If the sum left to the children is less than the amount at which inheritance tax starts to apply, known as the “nil rate band” then no IHT will be payable. Whereas if all the money goes to the spouse, when the spouse dies and passes it to the children there will be more IHT to pay. Of course, some estates are too small to attract IHT and in others the spouse needs all the money but it is always wise to take some tax law advice at the time of making a will.

Mary Hazlewood says ; “The Finance Act 2006 became law this summer with some wide-ranging changes. Most tax professionals have advised their clients to wait until now to look at their wills and trusts as the proposed changes, which were set out in the budget, were subject to amendment before they became law. The changes mean that some trusts are subject to more tax than before, but are not as extensive as originally feared. If you have an existing life interest or accumulation and maintenance trust, this should be reviewed before the 6th April 2008 transitional period ends. You may need to review this earlier if one of those benefiting comes into their life interest before that date. If your will contains a trust (as many do) that should be looked at by experts in this area to see if any changes are needed.

New trusts can be subject to the new taxes. If you are likely to be putting into trust more than the nil rate band amount for inheritance tax (“IHT”) then you may be affected by the changes. Many people put their life insurance policies into trust for their spouse or children when they die, to avoid inheritance tax on the policy proceeds. Existing policies are mostly unaffected by the new Act but it is sensible to have them checked and also take advice if setting up a new trust for a life insurance product. Contact us on 013290822333 for further information.