Help needed from Inheritance Tax Advice Solicitors and Wills Solicitors?

Help needed from Inheritance Tax Advice Solicitors and Wills Solicitors?

Article by Mischa Weston-Green

In order to mitigate a potential inheritance tax liability, many of us are now looking to give away assets to our children or other beneficiaries in our lifetimes as well as by our Wills. When considering estate planning, the decision to make lifetime gifts to the next generation for inheritance tax purposes must be balanced against the need to preserve those assets should the recipient of the gift encounter marital or financial difficulties. When deciding upon the distribution of assets in a Will, care needs to be taken when selecting the beneficiaries and the Will writer should be made aware of any potential beneficiaries who have not been included in the Will who might make a claim for provision. There are therefore two common questions asked to Wills solicitors and inheritance tax advice solicitors:

Question 1

To avoid a large inheritance tax liability in my estate, I want to begin giving my money away to my children now but I am worried that money may be lost if one of them enters a disastrous marital relationship which then ends in divorce. Likewise, if I leave assets to my children in my Will and the marital difficulties arise soon after my death I am concerned about the preservation of the assets for my children. How can I minimize the risk both through advice on lifetime gifts and will writing services?

Answer 1

This is actually one of the most common problems will writers and estate planners face. It is a sad fact that 45% of marriages end in divorce. With the divorce rate continuing to increase, Wills and estate planning solicitors need to consider not only how best to mitigate the 40% inheritance tax liability charged on all assets in an estate over £312,000 but also how to preserve the intended financial provision for the next generation should the lives of those children not turn out as expected.

It goes without saying that we will always want to do the best by our children but most parents are also realistic and know that handing over cash is not always the most responsible of actions. If lifetime gifts are going to be made in excess of the annual exempt amount these should be made as soon as possible to maximize the potential for a seven year survivorship period when such a gift would fall outside the donor’s estate. When making the gift it is, however, prudent to protect those assets gifted and the most obvious way to do this is by use of a trust structure. Such a trust could also be established when thinking about the provisions in a Will.

There are many types of trusts available depending on your situation including bare trusts, discretionary trusts and trusts which give beneficiaries a right to income but not capital. There are also a number of options available in order to safeguard your assets and mitigate inheritance tax while still providing your beneficiaries with the financial provision (and protection) that you personally choose. Please consult your solicitor or estate planner for more information on writing your will.

Question 2

Can my children challenge my Will if they disagree with it?

Answer 2

While it is often said that we are all free to deal with our assets as we would wish under our Will, recent court cases governed by the Inheritance (Provision for Family and Dependents) Act 1975 have altered this freedom of testamentary disposition.

Many recent court cases have sought to address the issues of whether the distribution of the estate by Will is such that reasonable financial provision has been made for the maintenance of the claimant. If the provisions fail to provide a reasonable finding then the court has discretion to consider what order it may make.

In considering the position, the Court will have regard to the size of the estate, the claims of other interested parties to the estate and, in the case of able-bodied adults capable of earning their own living, why the deceased should have made provision for them if they are capable of maintaining themselves.

For more information on issues raised by please consult solicitors who have a dedicated Will and estate planning department. Many of these offer will writing services and guides on how to make a will.

About the Author

I am fairly new to the wonderful world of article writing, but have been a copywriter for 3 years. If anyone deems any of my articles good enough for them to add to their blog/website please put my name on it and a link to our website http://www.mooreblatch.com and use the anchor text ‘Hampshire Solicitor’