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The processes behind Wills, probate and inheritance

When a family member dies, you may need to get the legal right to deal with their property, money and possessions – known as their estate. To do this in England and Wales you may be able to apply for a Grant of Representation – known as ‘probate’.

In most circumstances, applying for ‘probate’ follows a common series of steps:

Check if there’s a Will – this normally states who sorts out the estate. If there’s no Will, you can apply to be the ‘administrator’ – the person who deals with the estate if there’s no Will in place.

  • You can usually apply for a grant of representation to be the administrator of the estate if you’re the person’s next of kin, eg their spouse (or civil partner) or child.
  • You can apply if you’d separated from the person but you were still married or in a civil partnership when they died.
  • You can’t apply for a grant of representation if you’re the partner of the person but weren’t their husband, wife or civil partner when they died. You’re also not automatically entitled to any of your partner’s estate.

The law decides who inherits the estate if there is no Will.

Firstly, if this is the case, apply to get a Grant of Representation which gives you the legal right to access things like the person’s bank account. A grant of representation can sometimes be known as a ‘grant of probate’, ‘letters of administration’ or ‘letters of administration with a will.’ You can apply for a grant of representation yourself or use a solicitor or another person licensed to provide probate services. There are 4 steps to follow.

  1. Complete a probate application form.
  2. Complete an Inheritance Tax form.
  3. Send your application.
  4. Swear an oath.

You will then need to:

  1. Pay any Inheritance Tax that’s due.
  2. Collect the estate’s assets, eg. money from the sale of the person’s property.
  3. Pay any debts, eg. unpaid utilities bills.
  4. Distribute the estate – this means giving any property, money or possessions to the people entitled to it – the ‘beneficiaries.’

You don’t normally need a grant of representation if the estate either:

  • Passes to the surviving spouse or civil partner because it was held in joint names, eg. a savings account.
  • Doesn’t include land, property or shares.

You should contact any organisation holding the money and assets of the estate, eg. the bank or building society. They may ask for proof of death, such as the death certificate, after the death has been registered. Each financial institution has its own rules but it is likely that you will need to apply for a grant of representation.

In Scotland and Northern Ireland, gaining the legal right to deal with the estate is called ‘Confirmation’ in Scotland and a ‘Grant of Probate’ in Northern Ireland.


Sources: www.gov.uk/probate (Information: April 2015)

 

building your financial future

A lack of will … ?

Why do 61% of UK adults not have a current will? According to research conducted on behalf of Standard Life, the main reason is that they “have just not got round to it”.

Perhaps more worryingly, this was the reason given by over half of those aged between 55 and 64. A will is important for everyone, whatever their wealth status. But in particular it should be a priority for this group of people nearing, or already in, retirement, who may have accumulated substantial assets and pensions, and have children and grandchildren they may want to look out for.

The next 2 months see initiatives by charities and solicitors to encourage individuals to write a will – maybe the perfect incentive your clients need to finally “get around to it”.

  • October is ‘free wills month’, and gives the over 55s the chance to write a simple will for free, with the opportunity to leave a gift to their favourite cause.
  • November is the turn of ‘Will Aid’, where a charitable donation can made in place of the solicitors fee.

Details can be found on their respective websites.

The importance of having a will should not be under played. Without one, the distribution of your clients’ assets will be at the mercy of the intestacy rules. These rules are fixed, and not particularly contemporary, dating back to 1925 in England and Wales, and 1964 in Scotland. They can, therefore, have undesirable results in terms of who gets what, and potentially unnecessary inheritance tax.

Top 10 reasons for writing a will

A will ultimately provides peace of mind. It can take care of the following situations which, if left to the intestacy rules (dying without a will), may not give a desirable result:

  1. Where the spouse/civil partner does not necessarily inherit the house. For example, where the family home is not owned as joint tenants.
  2. Unmarried partners and dependants do not have an automatic right to inherit under intestacy. A will ensures that they are not left in financial difficulty or even homeless.
  3. Those who have re-married and have children from an earlier marriage, who may not benefit under intestacy.
  4. To avoid unnecessary IHT. This may be the case where intestacy rules distribute the deceased’s estate to people other than their spouse, and this value exceeds the nil rate band.
  5. To manage assets for those who may be considered too young to inherit, or not trusted to manage for themselves. For example, creating discretionary trusts to look after assets for children.
  6. To appoint guardians to look after minor children.
  7. To avoid money going to a bankrupt or someone who may be in the process of divorce.
  8. To create a trust for a dependant who cannot care for themselves.
  9. Donations to favourite charities.
  10. To benefit individuals who are not related.

It should be noted that while the intestacy rules for Northern Ireland are similar to those for England and Wales, the position for Scotland is quite different and a will may not always have the final word. For example, those with ‘legal rights’ under Scots law could have a claim on ‘moveable property’ that is also mentioned in the will. In this case, additional planning may be required to achieve the desired outcome.

…and how things can go wrong without one

Intestacy can prove adequate for some. But for the unwary, the results can be surprising.

For example, in England, a widow only inherits everything if her husband’s parents or siblings are no longer alive, or if the estate falls below a certain value. She could find her in-laws or her late husband’s siblings would be entitled to a share of the estate.

There are plans to bring these rules back into the 21st century. A modernisation of the intestacy provisions for England & Wales and simplification of certain inheritance rules to more closely reflect the reality of families today is around the corner.

Under the proposals the widow(er) would always inherit everything if there are no children. It shifts the balance back in favour of the widow(er) and away from the parents and siblings of the deceased.

This could have a positive impact on as many as 5.9 million* UK married couples without children.

However, there are no changes to be made which would see this modern approach extended to the 2.9 million** co-habiting couples. The Government has rejected the Law Commission’s recommendation that unmarried couples should be treated in the same way once they had been living together for a set period of time.

Despite these future potential changes, the best route is to take control and follow the advice in the Law Commission Report:

“If this Report has one over-arching message to the public, it is this: make a Will and keep it under review.” And make it quick.

 

* http://www.ons.gov.uk/ons/rel/family-demography/families-and-households/2012/cohabitation-rpt.html

** http://www.ons.gov.uk/ons/rel/family-demography/families-and-households/2012/stb-families-households.html#tab-Further-information

 

Our message – ‘Get a Will’……simples !!   a true financial plan is not complete without a Will for the reasons above, we can not stress enough how important it is in terms of lifetime wealth planning and the destination of any death benefits from pension schemes, in fact we have designed a special trust for pensions for this very reason.

 

Should you wish to take action NOW ! please contact our preferred partners who would be more than willing !!!  to help you through the process and provide you with first class service !

Louise Harris – Quanticks – 43 Bell Street Reigate LH@qlaw.co.uk on 01737 233555

or

Masayo Crumbie – Lawson Lewis Blakers – 11 Hyde Gardens, Eastbourne on 01323 720142

 

building your financial future

 

Sources: Standard Life and ONS

The NO Wedding Planner

Recent figures show a significant decrease in the marriage rate. From a peak in 1940 when, spurred on by an impending war, 426,1000 young couples married, in total just 228,204 marriages took place during 2008 in England and Wales.

The falling marriage rate is partly attributable to a rise in the number of people choosing to remain single but is mostly down to the fact that more and more couples are choosing not to marry and this has ramifications for their financial planning.

Let us consider the example of Paul and Sarah. They own a property valued at £600,000. The property is owned 60% by Paul and 40% by Sarah, reflecting their differing initial deposits. They have an outstanding mortgage of £100,000. The mortgage is covered by a life assurance policy which will pay out on the first death. They also have a joint savings account with a balance of £50,000. They have wills which leave assets to each other on the first death.

Sadly Paul suffers a fatal heart attack. His estate is valued as follows:

Property £300,000 (60% share less mortgage)
Life assurance benefit £100,000
Savings Account £25,000
Total £425,000

Assets passing between UK domiciled spouses are exempt from Inheritance Tax but the same exemption is not afforded to cohabiting couples and therefore the value of the estate above the nil rate band (currently £325,000) will attract Inheritance Tax at 40%. This means Sarah will need to settle a tax bill of £40,000 before probate can be granted.

The tax bill could have been easily avoided simply by writing the life assurance policy in trust so that it did not form part of Paul’s taxable estate. This would also mean that the proceeds would be available immediately without the need to wait for probate to be granted which can take many months.

The position could have been considerably worse had Paul and Sarah not written Wills. Under the laws of intestacy, where there are no children, cohabiting partners do not receive anything and Sarah could have found herself co-owning the house with Paul’s parents.

David Anderson is a Chartered Financial Planner with Concept Financial Planning

Concept Financial Planning Website

Is there anyone there? – Alliance and Leicester?

I thought I would write my story … to enlighten people and in the hope, that no one goes through what I have been through … so far.

My father passed away in May and since then I have had experienced the most stressful time dealing with Alliance & Leicester trying to get joint accounts changed to my mum sole name and any other accounts held in my dad’s name.

From the start Alliance and Leciester has shown that they have no idea how to deal with such a sensitive matter and at a difficult time for families. Their processes, if they have any? and inability to deal with them if they do, just cause unnecessary stress, grief and anxiety to those left to sort it out.

My poor mum is under enough stress dealing with her grief and as an older lady, with all due respect to her, really would not know where to start when it comes to dealing with the banks, and thankfully working within Financial Services and Customer Services for over 20 years, I have a huge amount of experience which meant I could take some of the pressure off of my mum. Unfortunately I had no idea what I was going to experience…..

In order to deal with the account on my mum’s behalf I had to complete some security forms which I had to request 3 times from Alliance & Leicester before I actually got them.

Trying to find someone to help in the first instance was my first battle and getting passed around to different departments and getting told different things was a regular occurrence.

I was told to make an appointment to see my local branch in Croydon to hand over the death certificate so it could be copied and sent to head office. The assistance I received at the branch was extremely worrying as the girl I saw did not have a clue what she was doing and I eventually spent the morning speaking to head office myself and relaying back the information to the branch.

Result I thought, however, the branch managed to lose the copy of the death certificate and to this day it has still not appeared within Alliance & Leicester. I even spoke to their credit card team the day I went into the branch to pay my mum’s outstanding bill which was due, and it only came to light some 2 months later that whoever I spoke to in head office was not in a position to take payment, so not only did we then get charged overpayment fees, I then I had to speak to a completely separate arm of the company to pay the bill, as no money had been taken from the current account!!!.

I eventually got through to the Probate & Trust team in Bootle who have been dealing with the accounts department……..even having a specific team to deal with I am now 5 months down the line and some of the accounts have still not been transferred.

My solicitor has sent over the probate to Alliance & Leicester and after me chasing – they said they did not receive the documents, but after my Solicitor phoned to complain they miraculously found them. They have however not passed this onto the Probate & Trust team and when I call the team I was told it is my responsibility to contact the team who received the probate in the first instance…but oh what do you know, no telephone number on the correspondence, so you have to type up a letter and fax it to them….to which I have had zero response.

I would like to add at this point, that at the same time as sending the documents to Alliance & Leicester we sent them to Nationwide and within less than a week the accounts were closed and transferred into my mum’s name. The service I have received from Nationwide has been superb. Just what you would expect – and I thank them.

Some of the other problems I have experienced are: Accounts being cancelled in error, Direct Debit Mandates cancelled, Debit and Credit Cards cancelled that were in joint names, losing legal documents, correspondence still being sent in my fathers name.

I cannot begin to tell you how much time I have spent speaking to this bank and I am still no further forward and have no faith whatsoever in their ability to get this resolved. As soon as I the accounts are transferred, whenever that may be, I will be closing them and transferring the money to a bank that does want to offer good Customer Service.

I have been told that I should be going through the grieving process for my dad, but this is impossible until such time as I have been able to sort out what should be a simple process.

I would like to add that at no point has anyone with Alliance & Leicester offered their condolences or shown one bit of understanding as to what families have to go through during what is the most emotional time in anyone’s lives.

Is this how they treat their customers fairly? – Thank goodness I am not a customer !

Written by Sarah Johnson

Sarah’s Profile

Concept Financial Planning Ltd

Why make a Will?

Is this one of the tasks that is always something to do next week or you get a free moment? We all know that next week never arrives and as for a free moment !

Benjamin Franklin (1706-90) said ‘ In this world nothing can be said to be certain, except death and taxes’

So why is it important to make a Will or regulary review one?
It is the only way you can determine who you want your estate to go to. If you have minor children, you can indicate in a Will who you would like to look after them should you die. This is particularly important where a relationship has broken up and the relationship between the individual and former partners is not good.
If your circumstances change it is important to make sure that you Will reflects your new circumstances.
Making a Will can mean a different inheritance tax IHT treatment of your estate or a change in the way that assets are assessed for Means Tested purposes should you need long term care.

Writing a Will is fundamental to the financial planning process because you are able to guide how your wealth is passed on down generations should you wish.

What happens if I do not make a Will?
You will die intestate. The rules of intestacy are different in different parts of the UK so it is important to keep up to date on the current position as this can change. The rules may mean that the people you want to inherit from you don’t or in a different proportion from want you would ideally like.

Who can make a Will?
Everyone aged 18 or over (12 in Scotland) or a serving member of the armed forcescan make a Will if they are of sound mind.
Even people who are deemed not to be of sound mind can make a Will or codicil to an existing Will if approved by the Court of Protection.

Do I have to use a solicitor to draft a Will?
You do not have to use a solicitor but I would strongly advise that you do so or at the very least use an individual who specialises in drafting Wills. This is especially true if your Will is complex. Sorting out mistakes after you have died may cause huge problems for your executors/personal representatives

TOP TIPS
If you don’t have a Will, make sure you know what will happen to your estate if you die without making one.

Before making a Will, think about what you want to happen to your estate.

Before making a Will yourself, think about taking advice from a solicitor or professional Will writer

Don’t try and change a Will by writing on the original

Make sure your chosen executors are happy to act in that capacity. Make sure they know where the Will is kept and if there are any special arrangements you want them to carry out quickly on your death such as funeral arrangements and organ donations. Time may be of the essence.