So house prices have fallen for the first time in two years; repossessions have grown by 75%; the cost of the average house in the UK increased by £100 in October; stock markets could be in crisis after the USA mortgage problems; Marks and Spencer’s are going to charge 5p for plastic bags. How are we supposed to know what our own values will be in both property and life not only in a few months, let alone when we finally die?
Do we know how much our family will leave us in inheritances? This may not be something we like to think about or even consider, but it will happen to most of us.
How can we plan through our wills for the time when it will be finally used?
Of course, we can’t, exactly. We have to take logical guesses and then update our wills on a regular basis; but how often?
We recommend that you look over your will once a year; set a date in your diary or your Microsoft Outlook (or similar) software. Roughly total up your assets and take away your liabilities and see where you stand. Have things changed?
You might need to start giving money away if you have too much. There a law called the PET rule. It stands for potentially exempt transfers. Basically, anything you give away and then you live for seven years, is tax free to the recipient, in terms of Inheritance Tax. If you live less than this there is a lessened tax relief meaning that you pay some inheritance tax, but not the full amount.
So it pays to give away money if you don’t need it again during your lifetime because the tax inspector has a rule of his own to catch you out. You have to give away the item or money completely; you can’t have access or use of it again. You can’t give away your prized 1920’s model T car and then carry on driving it. You can’t put £50,000 in your son’s bank account and then continue to use the capital to fund your lifestyle. It’s got to be a gift without reservations.
We also recommend that you check your will if you receive a large amount of funds; lose a large amount; divorce, marry or have any major life changing decisions. It can’t hurt to talk through your changes with your LSUK professional consultant who’ll be able to honestly tell you if you need do nothing or if there are some changes to make.
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