The UK inheritance tax (IHT) has certain thresholds and exemptions.
- Nil-rate band: The first £325,000 of an estate is not subject to inheritance tax. This is known as the nil-rate band.
- Residence nil-rate band: An additional allowance is available when passing on a main residence to direct descendants. This is currently £175,000.
- Combined threshold: For many estates, this means the total tax-free allowance is £500,000 (£325,000 + £175,000).
- Married couples and civil partners: Unused allowances can be transferred to a surviving spouse or civil partner, potentially doubling the threshold to £1 million.
- Tax rate: Above these thresholds, inheritance tax is generally charged at 40% of the value of the estate.
- Annual exemption: You can give away £3,000 worth of gifts each tax year without them being added to the value of your estate.
Executors
Executors play a crucial role in managing a deceased person’s estate. Here are the main duties of an executor:
- Locate and validate the will
- Apply for probate (if necessary)
- Inform relevant organizations of the death (banks, utilities, government agencies)
- Secure the deceased’s assets and property
- Value the estate
- Identify all assets and liabilities
- Obtain professional valuations if needed
- Pay off debts and taxes
- Settle outstanding bills
- Calculate and pay any inheritance tax due
- Distribute the estate
- Collect assets (e.g., close bank accounts, sell property if required)
- Distribute assets to beneficiaries as specified in the will
- Keep accurate records
- Document all financial transactions
- Prepare final accounts for beneficiaries
- Resolve any disputes or legal challenges to the will
- Handle any ongoing trusts created by the will
These duties can be complex and time -consuming. The executor is legally responsible for carrying them out correctly.
Delegation
Many aspects of an executor’s duties can be subcontracted or delegated, although the executor remains ultimately responsible for the proper administration of the estate. Here’s an overview:
- Professional executors: You can appoint a professional executor in the will, such as a solicitor or bank, to handle the entire process.
- Partial delegation: Executors can hire professionals to handle specific tasks:
- Solicitors: For legal advice, probate applications, and complex estate issues
- Accountants: For tax matters and financial calculations
- Estate agents: To value and sell property
- Professional valuers: For valuable items like antiques or art
- Probate services: Some companies offer comprehensive probate and estate administration services.
- Banks: Many banks offer executor and trustee services.
Key points to consider:
- Cost: Professional services come with fees, which are typically paid from the estate.
- Responsibility: The named executor remains legally responsible, even if tasks are delegated.
- Complexity: For large or complex estates, professional help is often advisable.
- Time: Subcontracting can save the executor significant time and stress.
It’s important to note that while you can get help with most tasks, certain core decisions and legal responsibilities still rest with the named executor(s).
Free Will Month
Free Wills Month, which typically takes place in October in the UK. Here are the key points about this campaign:
- Timing: It usually occurs every October (and sometimes March as well).
- Purpose: The campaign aims to encourage people to make or update their wills.
- Eligibility: It’s generally open to people aged 55 and over.
- Service: Participating solicitors offer to write or update simple wills for free.
- Coverage: The campaign often runs in specific regions or cities, which may vary each year.
- Charity aspect: While the will-writing is free, participants are encouraged (but not obligated) to consider leaving a gift to charity in their will.
- Limitations: The free service typically covers simple wills. More complex estates might require additional paid services.
- Booking: Appointments are usually necessary and can fill up quickly due to high demand.
- Legitimate campaign: It’s organized by a consortium of well-known charities.
- No obligation: There’s no obligation to include a charity in your will to use the free will-writing service.
It’s worth noting that while this is a valuable opportunity, slots can be limited. If you’re interested in participating, it’s a good idea to check the official Free Wills Month website when October approaches for participating locations and how to book an appointment.
Will Preparation
Preparing for a Free Wills Month appointment:
- Gather personal information:
- Full names and addresses of beneficiaries
- Details of any executors you wish to appoint
- List of major assets (property, savings, investments)
- Any specific gifts or bequests you want to make
- Consider your wishes:
- Who you want to inherit your estate
- Any specific items you want to leave to particular people
- Potential guardians for minor children, if applicable
- Think about charitable giving:
- Consider any charities you might want to support
- Prepare questions:
- Note down any concerns or queries about the will -making process
- Check eligibility and book early:
- Confirm you meet the age requirement (usually 55+)
- Book as soon as appointments become available
Alternatives for creating a will:
- Solicitors:
- Hire a solicitor privately (costs vary)
- Best for complex estates or situations
- Will-writing services:
- Less expensive than solicitors
- Suitable for straightforward estates
- Online will services:
- DIY option with guidance
- Generally the cheapest option
- Best for very simple estates
- Banks:
- Some banks offer will-writing services
- Costs and quality can vary
- Charity-sponsored free will services:
- Some charities offer free will -writing services year-round
- Often comes with an understanding that you’ll consider leaving a gift to the charity
- DIY wills:
- Use a will template or kit
- Cheapest option but risky if done incorrectly
Remember, while Free Wills Month is a great opportunity, it’s not the only option. The most important thing is to have a valid, up-to-date will that accurately reflects your wishes.
Will Example
Last Will and Testament of [Your Full Name]
I, [Your Full Name], residing at [Your Full Address], being of sound mind, declare this to be my Last Will and Testament. I revoke all wills and codicils previously made by me.
Article I: Family Information
I am married to [Spouse’s Name], and we have [number] children: [Names and birthdates of children].
Article II: Appointment of Executor
I appoint [Executor’s Name] as Executor of my estate. If [he/she] is unable or unwilling to serve, I appoint [Alternate Executor’s Name] as alternate Executor.
Article III: Payment of Debts and Taxes
I direct my Executor to pay all my debts, funeral expenses, and estate taxes from my estate.
Article IV: Specific Bequests
I make the following specific bequests:
- To [Person’s Name]: [Description of item or amount]
- To [Charity Name]: [Amount or percentage of estate]
Article V: Residuary Estate
I give the rest, residue, and remainder of my estate to [usually spouse, or divided among children, or other beneficiaries].
Article VI: Guardian for Minor Children
If my spouse does not survive me, I appoint [Guardian’s Name] as guardian of any minor children.
Article VII: Powers of Executor
I grant to my Executor all powers necessary to administer my estate effectively.
Article VIII: No-Contest Provision
If any beneficiary contests this Will, their share shall be revoked and distributed as if they had predeceased me.
Signed on this [Day] of [Month], [Year]
[Your Full Name]
Witnesses:
We declare that [Your Name] signed this document as [his/her] Last Will and Testament in our presence, and we sign as witnesses in [his/her] presence and in the presence of each other.
- [Witness 1 Name and Address]
- _______________
[Witness 2 Name and Address]