August 2020 – Arford Henderson Law

Why your children may not inherit what it says in your Will!

What goes hand in hand with your financial advice that your client will be indebted to you for arranging for them?

Estate Planning! – Your clients will forever be grateful that not only have you sorted out their long term financial plan but you also helped them ensure that their assets are protected when the they pass from this world.

There are so many different facets to Estate Planning that clients just have not thought about.

Why would your clients want to invest and save all their lives (with your help) and then have 40% of it to go into inheritance tax and the rest of it divided amongst people they didn’t intend to.

Let me tell you of a horror story. Mr. Thrifty married to Mrs. Thrifty hopes that one day his only child, Lucy will inherit his £1m home. You have advised them to get a mirror Will that they obtained from the Internet.

However, Mr. Thrifty dies a year later in an accident. The home transfers to Mrs. Thrifty who marries her tennis coach, Mr. Opportunity a year later. They have two children. She makes a new will, leaving everything to her children.

Unfortunately they divorce ten years later, and Mr. Opportunity receives half the value of the house (£500,000) in the divorce settlement. Mrs. Thrifty dies in shock and the rest of the estate is divided amongst the three children. Lucy receives £166,000.

This is not what Mr. Thrifty had intended when he was setting out his long-term financial plan with you.

And the moral of this story is…

If there is a lesson to be learned from the above tale, it is this:

It is a good investment to obtain sound Estate Planning advice.

Please contact me on [email protected] or 0207 041 6069 to find out how I can best help you protect your family and your assets.

What happens to jointly-owned property when someone dies without a Will?

Estate Planning advice / By Nadeem Afzal

This depends how the ownership of the property is structured at the Land registry.

Married couples normally own property as “beneficial joint tenants“, meaning the property goes entirely to the deceased’s spouse or civil partner.

The same principle applies where this form of ownership is used but the joint owners are not married.

Here, though, inheritance tax may have to be paid if the deceased’s share is worth more than the nil rate band.

The “tenants in common” form of ownership is more common where co-owners aren’t married. This is because it allows different proportions of ownership and also allows individual owners to bequeath their share separately.

But where there isn’t a Will, this poses a risk to the survivor. The part of the property belonging to the deceased will be distributed according to the intestacy rules.

“Chattels” are personal items used by an individual, for example furniture, vehicles, art and other household items. Post 1 October 2014 this excludes items that are held as an investment with no personal use at the date of death (so for example art held as an investment).

They go entirely to the deceased’s spouse or civil partner where there is no will and are not considered part of the estate to be split under the rules of intestacy.

However, where someone is unmarried, these are treated like any other assets and distributed according to the intestacy rules.

To illustrate this point, Jack is in a 20 year relationship with Jill but are unmarried. Jack has two children from his first marriage. Jill has no children but her father is alive.

Jack and Jill buy a house for £1m and register the property as equal tenants in common.

Neither of them have made a Will.

If Jack was to die, his share of the house will go to his two children, including his wine collection.

If Jill was to die, her share of the house would go to her father, including her record collection.

And the moral of this story is…