Inherit, Inheritance tax, Uncategorized

No Inheritance Tax on estates worth up to £1 million? Not quite!

George Osborne announced the introduction of an additional Inheritance Tax (IHT) Nil Rate Band (NRB) for a person’s main residence in the Summer 2015 Budget. This was good news for with wealth tied up in their family home. The existing NRB of £325,000 per person or £650,000 per couple, on which 40% IHT is not paid, will remain the same. But from 2017/18, an additional Residence Nil Rate Band (RNRB) of £100,000 per person will be introduced, which will increase to: £125,000 in 2018/19; £150,000 in 2019/20; and £175,000 in 2020/21. In 2020/21, this means a house worth £1 million could be passed on tax free. But tax planning is still important, as there are a number of drawbacks you have to avoid in order to make sure you are eligible for the full amount.

Drawback 1 = you need to be married

Spouses* can inherit their other half’s share of an estate tax free so the NRB does not need to be used up. This means the deceased’s £325,000 NRB can transfer to the survivor, who will then have an IHT allowance of £650,000 when they die. The RNRB can also be passed on to the survivor so in 2020/21, this will equal £1 million. Unmarried couples do not have the right to pass on NRBs to each other.

Drawback 2 = only your children can benefit

Spouses who do not have children will miss out on the RNRB. The property must be passed to lineal descendants, such as children (including adopted/foster/stepchildren, children under a guardianship, and their direct descendants) and grandchildren, but not nieces and nephews.

Drawback 3 = the £1 million allowance does not apply now

The allowance will be phased in over the next five years so the £1 million will actually only apply in 2020/21.Drawback 4 = keep your wealth in your home

If you have a large investment portfolio and no house, you cannot benefit from the additional allowance, only the £325,000 NRB. But if your total estate is over £2 million, the RNRB will be tapered away. An estate with a net value of more than £2 million will see the band withdrawn at a rate of £1 for every £2 over the threshold.

Other points to consider


The RNRB may be lost where, for example, the property is placed into a discretionary Will trust for the benefit of the children or grandchildren.


The family home does not need to be owned at death to qualify. This helps those who may have downsized or sold their property to move into residential care or a relative’s home. The RNRB will still be available provided that:

  • The property disposed of was owned by the individual and it would have qualified for the RNRB had they retained it;
  • The replacement property and/or assets form part of the estate and pass to descendants;
  • Downsizing or disposal of the property has to take place after 8 July 2015. But there is no time limit on the period between disposal and death.

Multiple residences

Only one residential property will qualify. It will be down to the personal representatives of the estate to nominate which one should qualify if there is more than one. A property which was never the deceased’s residence, e.g. a buy-to-let, cannot be nominated.

*For ease, spouse will refer to civil partner as well.



What happens if you don’t make a will?

If someone dies without a will, they are said to have died ‘intestate’. There is a set of rules that governs who gets what in this situation and, as of 1 October 2014, these rules are changing.

What stays the same:

‘Common law’ partners

If you are in a long-term relationship but you are not married or in a civil partnership and you die without a will, your partner is not entitled to any share of your estate. There is no such thing as a ‘common law’ partner. The only way to make sure your partner is left something when you die is to marry them or leave a will.

Estates worth under £250,000

The changes to the intestacy rules don’t affect people with estates worth less than £250,000 but with the housing boom, the estates of an increasing number of homeowners will be worth more.

The pecking order

Who gets what when there is no will and no spouse:

1.     Children or their descendants;

2.     Parents;

3.     Brothers or sisters or their descendants;

4.     Half siblings or their descendants;

5.     Grandparents;

6.     Uncles and/or aunts or their descendants;

7.     Half uncles and/or aunts or their descendants;

8.     Whole estate passes to the Crown.

Each ‘class’ described above only gets an inheritance when the previous ones don’t exist. So for the Crown to inherit an estate, the deceased would have to have no family. This is unusual –  hence the rise of ‘Heir Hunters’, trying to find long lost relatives to claim their inheritances (and get a tidy cut themselves).

What changes:

Married couples / civil partners without children

Under the old rules, if a spouse died intestate and there were no children then the first £450,000 of the estate plus half of the rest went to the surviving spouse. The other half was split between the deceased’s blood relatives. Under the new rules, the surviving spouse will receive everything.

Married couples / civil partners with children

Under the old rules, the surviving spouse took everything up to £250,000. The children would receive half of the balance above £250,000 immediately (or it would be held in trust for them until they were 18). The other half would also go to the children but the surviving spouse would have a ‘life interest’ in the money while they were alive. The life interest meant they could take income from the money but not the capital.

Under the new rules, the surviving spouse will take all of the first £250,000 and then be fully entitled to half of the remainder. All the children will get is half of anything above £250,000 and they will have to be 18 before they get it.

Adopted children

Under the old rules, if someone died leaving a child under the age of 18 who was subsequently adopted by someone else, the adopted child could lose their inheritance from their natural parent. Under the new rules, the adopted child does not lose their right to receive an inheritance from their natural parent.


Under the old rules, the old-fashioned word ‘chattels’ was used to describe personal property. Its meaning included carriages, linen and scientific instruments (so you get an idea of when the rules were first drafted).

Under the new rules, ‘chattels’ are now defined as anything that is not monetary, business assets or ‘held as an investment’. However, what one person sees as an ‘investment’, another may see as a chattel’, e.g. a valuable painting or an antique car, so this is still open to interpretation.

So, out with the old and in with the new! But why let the intestacy rules govern your estate? Make a will and ensure that what you want goes to who you want. A clear set of instructions in a will can help avoid arguments among family and friends, and provide for your loved ones, at a time when emotions can be running high.

heir, Inherit, Inheritance tax, Legacy, Probate, Wills

DIY Probate runs risk

News release from Solicitors For The Elderly

It is entirely possible to apply for probate and deal with an estate, without seeing a lawyer, but it’s not without risks warns legal group, Solicitors for the Elderly (SFE).

Many professionally drafted wills contain trusts to save tax, to avoid those who inherit paying care fees and to reduce the likelihood of potential disputes. SFE members have noticed an increase in ‘DIYers’ returning to them to seek advice when they have made a mistake or find the paperwork too tricky. Mrs A’s will had included a tax saving trust, but when her husband administered the estate, he paid the whole estate to himself. The solicitor was thankfully able to sort out the matter and avoid future complications occurring when Mr A eventually dies. In Mr G’s case, he sold some shares that had made a gain during the administration of his late sister’s estate and had to pay tax. If he had transferred the shares to himself first, before selling them, he could have avoided the tax.

Yorkshire Regional Co-Ordinator for SFE, Tom Morrish – a Partner at Morrish Solicitors – today said ‘People aren’t always aware of the complexities and assume probate work is straightforward. It is true that it can be, but it is just as true that sometimes it isn’t.  In all but the most straightforward cases, it is important to seek timely specialist legal advice that can actually save you money and worry.’

Many SFE members’ practices will offer to work in partnership with the deceased’s family to help and support them with the legal and technical work. As elder law specialists, members can even add value to their work, for example by identifying cases where money is owed to the estate for care funding, which should have been met by the NHS and assist in making a claim.


heir, Inherit, Power of Attorney, Probate, Wills

Panorama expose stirs the pot

The Financial Times Adviser reports that The Will Writing Company is refuting claims made by Panorama’s broadcast last night (Monday 9 August) which exposed the lack of regulation of the willwriters industry. 

The Will Writing Company has hit back at the BBC Panorama programme that widely criticised unlicensed will-writers and a number of will-writing firms for unfair and unethical practices.

Not all will-writing companies were like those that were exposed on the programme claimed the Will Writing Company.

The documentary focused on three firms and highlighted the lack of standards that many will-writing companies subscribe to.

The Will Writing Company said it welcomed the program and as a founding member of the Institute of Professional Will Writers (IPW) since 1990 it recognised early on that proper training and ethical procedures would have to be an essential part of the industry.

It said the Panorama programme took the view that people should only go to a solicitor for will planning and should avoid professional will writers.

The Will Writing Company said solicitors actually need no personal development or qualifications in this area after university.

A member of the IPW has to demonstrate continuing professional development much the same as a financial adviser to retain their professional status.

Panorama refused to accept comment from IPW.

Tom Gormanly, managing director at The Will Writing Company, said: “Of course every industry will have people within it that will attract criticism, some wholly justified as in last night’s programme.

“But the tighter the controls and the better the training the less likelihood that anything untoward will happen.”

Mr Gormanly said his message to financial advisers was clear, not all will writers were the same and if you choose to use the service of one of them, just make sure they are a member of the IPW. 

Here at Morrish Solicitors our Wills, Probate and Elderly Client department consists entirely of qualified solicitors who have specialist training in this particular area of law.  They each undergo set units of Continuing Professional Development (CPD) Training every year and are active members of Solicitors For The Elderly, Help The Aged and the Society of Trust and Estate Practitioners in the region. 

Solicitors are highly regulated for many reasons, including that the bonds of trust existing between a solicitor and client must, by their nature, be above suspicion.  The Solicitors Regulation Authority ensures that solicitors meet those high standards of trust and, where they fail, are subject to strict and just retribution. 

The public, and particularly the elderly, the dying and – yes – the dead, deserve to know their trust is well placed.

heir, Inherit, Legacy, Power of Attorney, Probate, Wills

BBC’s Panorama: Wills – The Final Ripoff?

In case you missed Monday night’s broadcast, here’s the link to watch the show on BBC’s website. 

Panorama investigates companies who make a good living from writing your Last Will and Testament, and exposes the shocking financial pitfalls that face unwary consumers. Is it time for this industry to be properly regulated by law?


Jeremy Vine
Vivian White
Stephen Scott
heir, Inherit, Legacy, Wills

Research shows ‘incompetence’ in will-writing

From The Law Society Gazette.

Two-thirds of trust and estate practitioners have encountered ‘incompetence or dishonesty’ in the will-writing market in the past year, according to research published today.

The study has prompted the Society of Trust and Estate Practitioners (STEP), which conducted the survey, to renew its calls for better consumer protection.

Responses from 693 STEP members showed that two-thirds had come across hidden fees which were not outlined in the stated price of a will, and 63% had experienced a will-writing company going out of business and disappearing with their clients’ wills.

Just over a third of respondents said they had seen cases where incompetence had led to significantly higher tax bills.

Examples of malpractice highlighted by the research included one company that approached young mothers in shopping malls and told them that their children would be taken into care if they died without a will.

In another case, a consumer was charged £12,000 up front for executor services, and the firm then went out of business, with the family unable to recoup the money.

STEP chief executive David Harvey said: ‘This research shows how widespread cowboy will-writers have become, and it is clear those who charge a fee for writing a will should now be regulated.

‘They must have an appropriate qualification, and they must have proper indemnity insurance. Soon the consumer will be protected by new regulation in Scotland, and this benefit needs to be extended to cover the rest of the UK.’

The Legal Services Board launched a review of unregulated will-writing in June, and is seeking evidence of consumer harm. The Scottish parliament is currently going through the process of regulating non-lawyer will-writers through the Legal Services (Scotland) Bill.

STEP recently launched the STEP Certificate in Will Preparation.

9 August 2010, by Rachel Rothwell.

Charity, heir, Inherit, Inheritance tax, Legacy, Probate, Wills

Man fears eviction after his late mother leaves house to a cancer charity in her Will

By Richard Catton

A MAN has locked himself inside his Ryedale home because he fears being evicted after it was left to a North Yorkshire charity in his mother’s will.

Laborevics, 40, has become a recluse in the Norton house where he has lived for 32 years and fears a knock on the door from bailiffs any day will leave him homeless, according to his brother, Paul.

Their mother, Lily Yeomans, left the house to Yorkshire Cancer Research in a 1989 will, 15 years before she died.

But Paul, 43, said: “All of us assumed the house would go to John. When the will was read out it was a jaw-dropper to say the least.”

He said he could not risk losing tens of thousands of pounds by contesting the document in court, but said he could think of no reason why his mother would have chosen the Harrogate-based charity to benefit.

In the will, Mrs Yeomans left her estate to her then partner, Raymond Johnson, but stipulated that, should she outlive him, everything should go to the charity. After outliving Mr Johnson, Mrs Yeomans’ wish was carried out and the Commercial Street house was left to the Harrogate-based charity following her death in 2004.

To see the full article, click here.

Reproduced with kind permission from York Press.