Monthly magazine of articles about estate planning

1. THE
ESTATE
PLANNER
INSIDE
THIS ISSUE
Welcome to the December 2016
issue of The Estate Planner.
On page 04, we look at what’s
involved when it comes to
paying Inheritance Tax. Usually
the executor of a Will or the
‘administrator’ of the estate pays
Inheritance Tax using funds from
the estate. An executor is a person
named in the Will to deal with the
estate – there can be more than
one. An administrator is the person
who deals with the estate if there’s
no Will. Trustees are responsible
for paying IHT on trusts.
No one likes to think about what
will happen when they die, but
planning ahead will save your
loved ones a lot of heartache.
Bucket lists have become
increasingly popular in recent
years. They take the form of a
number of things you want to
do before you die (or ‘kick the
bucket’). On page 02, we provide
our nine-step financial bucket
list plan.
Your pension is your life savings
you’ve built up to give you the
retirement you want. Since new
pension rules came into effect
from 6 April 2015, pensions have
become more flexible – including a
cut in tax when a pension is passed
on. With more money able to be
passed on, it’s never been more
important to plan whom you’d like
to inherit it. Read the full article
opposite.
May we take this opportunity to
wish you all a Merry Christmas and
best wishes for 2017.
01
It’s good to talk
To arrange an appointment or
to discuss any concerns that you
may have in relation to making
appropriate protection for you,
your loved ones and your estate,
please contact us. We look forward
to hearing from you.
PASSINGONYOUR
PENSION SAVINGS
It’s never been more important to plan whom
you’d like to inherit them
Your pension is your life savings
you’ve built up to give you the
retirement you want. Since new
pension rules came into effect
from 6 April 2015, pensions
have become more flexible –
including a cut in tax when a
pension is passed on.
PLAN WHO INHERITS
YOUR PENSION
With more money able to be
passed on, it’s never been more
important to plan whom you’d
like to inherit it. What’s not
always well known, however, is
that your Will doesn’t usually
control who inherits your
pension. That final, crucial
decision is down to your
pension provider, who makes
reference to who is named on
your Beneficiary Nomination
form. If you don’t have this in
place, your pension savings may
not go to the person (or people)
you wanted them to.
LIFE CHANGES AND
YOUR WISHES
All you need to do is request a
Beneficiary Nomination form
from your pension company.
It’s vital, too, to keep your
Beneficiary Nominations up to
date, as life changes and your
wishes may not be reflected
in the form you completed
ten years ago. It’s particularly
important following major
life events such as the birth of
children or divorce.
Issue 24 – December 2016
CONTROLLING WHO
INHERITS YOUR PENSION
If you want more control over
who inherits your pension,
don’t delay in completing your
Beneficiary Nomination. It
is now possible to pass your
money purchase pension pot on
from generation to generation,
just like other assets, but it’s
essential to obtain professional
advice. If you require more
information, please contact us.
INFORMATION IS BASED
ON OUR CURRENT
UNDERSTANDING OF
TAXATION LEGISLATION
AND REGULATIONS. ANY
LEVELS AND BASES OF, AND
RELIEFS FROM, TAXATION ARE
SUBJECT TO CHANGE.
A PENSION IS A LONG-TERM
INVESTMENT. THE FUND
VALUE MAY FLUCTUATE
AND CAN GO DOWN. YOUR
EVENTUAL INCOME MAY
DEPEND UPON THE SIZE OF
THE FUND AT RETIREMENT,
FUTURE INTEREST RATES AND
TAX LEGISLATION.

2. 02
No one likes to think about what
will happen when they die, but
planning ahead will save your
loved ones a lot of heartache.
Bucket lists have become
increasingly popular in recent
years. They take the form of a
number of things you want to
do before you die (or ‘kick the
bucket’).
Our nine-step financial bucket
list plan isn’t complicated or
time-consuming, but it will
ensure that your loved ones
won’t have to struggle with a
complicated estate or financial
uncertainty after you’re gone.
1. WRITE A WILL
This is the most important thing
you can do. If you die without
writing a Will (known as ‘dying
intestate’), it can lead to all sorts
of complications and means that
THE FINANCIAL
BUCKETLISTA nine-step plan to ensure your loved ones aren’t left struggling
your estate may not go to the
people you want it to.
If you die intestate, your assets
are divided up according to the
law. If you are married without
children, then your spouse gets
the lot. If you are married with
children, then the spouse gets
the first £250,000 and 50% of
what remains, with the rest
going to your children. If
you are unmarried, then
your parents will receive your
estate or other blood family
members if your parents are
deceased.
The laws of intestacy are
particularly important if you are
in a long-term relationship but
are unmarried. Your partner will
get nothing if you die, which
can lead to a very complicated
situation if you own a property
together.
Once you have a Will, make
sure your family know where to
find it. If you get it drawn up by
a solicitor, they should keep a
record of it on file. Finally, make
sure you keep it up to date. If you
divorce, separate, marry or any
other major change happens in
your life, be sure to update your
Will. Otherwise, you may end up
leaving your money to someone
you really didn’t want to leave it to.
2. LOOK AFTER YOUR PETS
Who would look after your pets
if you weren’t around anymore?
Choose someone and ask them
if they would be prepared to do
it. If you don’t have anyone who
could help, the RSPCA can. You
can sign up to its free Home for
Life service, which means it will
take in any animals you leave
behind after your death and
endeavour to find a new home
for them.
Simply sign up and make a note
of your decision in your Will.
Alternatively, you could leave
all your money to your pet with
details of how they are to be
looked after.
3. CREATE A FINANCIAL
FACT FILE
Does your partner or family have
details of all your accounts? This
WHEN YOU ARE
MAKING A NOTE OF
ALL YOUR ACCOUNTS,
DON’T FORGET
ABOUT YOUR DIGITAL
ASSETS. OVER THE
PAST DECADE, MANY
OF US HAVE BUILT
UP SUBSTANTIAL
ONLINE ESTATES. FOR
EXAMPLE, IN 2011 IT
WAS ESTIMATED THAT
THE AVERAGE ITUNES
LIBRARY CONTAINED
7,160 SONGS.

3. 03
seems like such an insignificant
thing, but trying to hunt down
savings accounts or work out how
to pay the gas bill can cause great
heartache for grieving family
members. This is easy to avoid.
Simply set up a spreadsheet
that lists all your bank and
savings account details (account
numbers and sort codes will do),
credit cards and any household
accounts such as the gas or
telephone provider.
4. DETAIL YOUR
DIGITAL ESTATE
When you are making a note of
all your accounts, don’t forget
about your digital assets. Over
the past decade, many of us have
built up substantial online estates.
For example, in 2011 it was
estimated that the average iTunes
library contained 7,160 songs.
At a typical cost of 79p per song,
that means most of us have more
than £5,500 of music sitting in
our iTunes accounts.
Digital assets, such as music
and e-books, cannot form part
of your estate and be formally
handed down when you die. But
make sure your partner or family
member knows your login details
if you’ve shared your music or
e-book libraries, so they can
continue to enjoy them.
Also, include details of your
social media accounts so these
can be closed down.
5. DON’T FORGET YOUR
PENSION
Many people don’t realise that
they can pass on their pension
pot as well as their savings. The
new pension freedoms allow even
more flexibility with pension
pots, so be sure to review what
you’ve got.
The rules on pensions have
changed a lot this year. One of
the big differences is that you can
now pass your pension savings
down to your beneficiaries after
your death without the taxman
taking the bulk of it.
When it comes to pensions, the
new rules mean people can treat
their pension as a tax-efficient
family pot. If you die before you
are 75, your family can inherit
your pension pot as a tax-free
lump sum or income. If you are
75 or over, tax only becomes
liable once your beneficiaries
start taking an income.
These changes mean it is
important you stipulate in your
Will who you want to inherit
your pension, and include details
of where they can find it.
6. THINK ABOUT
INHERITANCE TAX
If your estate is worth more than
£325,000 when you die (including
the value of any part of your
home that you own), then 40%
of your estate above that will be
taken by the taxman.
To reduce that, you need to start
Inheritance Tax (IHT) planning.
This can mean giving away
money within the IHT gifting
rules – you can give away up to
£3,000 a year, wedding gifts and
small amounts without being
liable for IHT. But anything you
give away outside of the gift rules
will be liable if you die within
seven years of making the gift.
The Capital Taxes Office work on
the basis of ‘guilty until proven
innocent’ when it comes to gifts.
In other words, if the executor
cannot prove a gift should be
exempt, IHT will be charged on
the value of the gift. Therefore, it’s
important to keep good records
of all gifts; the IHT Form 400 –
the form used by executors to
claim gifts that have been made –
is a good starting point.
7. POWER OF ATTORNEY
Beyond thinking about what
would happen when you die,
it also makes sense to consider
what you would want to happen
if you could no longer make
decisions for yourself.
Trying to cope with a situation
where someone can’t make the
big decisions anymore because
they have been badly hurt in
an accident, had a stroke or are
suffering from dementia can be
incredibly hard. Make it simpler
by setting up a Lasting Power of
Attorney. This is a legal document
that nominates someone of your
choosing to handle your affairs
if you lose the mental capacity to
do so. A good idea is to set it up
at the same time as getting your
Will drawn up.
8. CONSIDER LIFE
INSURANCE
If you have financial dependants
such as young children or an
elderly relative, you should
consider life insurance.
Taking out a policy while
you are relatively young can
be inexpensive and provide
invaluable assistance if the worst
happens.
Level-term life assurance
guarantees a lump sum payout
if you die within a set period
of time, so you could arrange
for a £150,000 payout if you die
within 15 years. This can be a
great choice if you have children,
as you can take it out to last the
length of time until your children
would be financially independent.
Also, think about putting
your policy into a trust, as the
proceeds will not form part of
your estate so won’t be subject
to IHT, and there’ll be no need
to wait for probate to be granted
before your loved ones can
receive a payout.
9. PLAN YOUR FUNERAL
Set aside some money to cover
your big send-off. Funerals are
the fourth biggest expense of
your lifetime – well, just beyond
your lifetime – so it is well worth
thinking about.
Making a note of what you would
want in terms of flowers, songs
and ceremony types can really help
your family. But you can also cut
costs, too. If you leave no clue as to
your wishes, your loved ones could
end up overspending in an effort
to show how missed you are –
leaving instructions that you don’t
mind having a cheap coffin, or
arriving in a hearse rather than a
horse-drawn carriage, can make a
big difference. Make a note of your
wishes and keep it with your Will.
How can we help?
With regular reviews, we can
help you to ensure that you make
the most of your estate planning
requirements. Contact us today to
find out more.

4. 04
The content of this publication is for your general information and use only, and is not intended to address your particular requirements. The content should not
be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely informa-
tion, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual
or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We
cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content. Thresholds, percentage rates and tax legislation may change
in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the
investor. The Financial Conduct Authority does not regulate Will Writing, Inheritance Tax Planning or Taxation Advice. All figures relate to the 2016/17 tax year,
unless otherwise stated.
Gifts made within the last seven
years are not included in the
calculations but may be liable to
IHT on a sliding scale.
The calculation for valuation of
your estate is for your general
information and use only and
is not intended to address your
particular requirements. It should
not be relied upon in its entirety
and shall not be deemed to be, or
constitute, advice. No individual
or company should act upon such
information without receiving
appropriate professional advice
after a thorough examination of
their particular situation.
If IHT is due on the estate, you
would need to complete HM
Revenue & Customs (HMRC)
form IHT400. You may also need
to send other forms at the same
time.
If no IHT is due, you’ll need to
complete form IHT205 to tell
HMRC that no IHT is due on the
estate.
You or your solicitor will need
to send the forms with your
application for probate (‘grant
of representation’). This is called
‘confirmation’ in Scotland.
The grant of representation
(confirmation) gives you the
right to deal with the estate as the
executor or administrator.
DEADLINE FOR PAYING
INHERITANCE TAX
The executor of a Will or
administrator of an estate usually
has to pay IHT by the end of
the sixth month after the person
died. After this, the estate has to
pay interest.
PAYING INHERITANCE TAX
Usually the ‘executor’ of a Will or
the ‘administrator’ of the estate
pays Inheritance Tax using funds
from the estate.
An executor is a person named in
the Will to deal with the estate –
there can be more than one. An
administrator is the person who
deals with the estate if there’s no
Will. Trustees are responsible for
paying IHT on trusts.
WORK OUT IF
INHERITANCE TAX IS DUE
ON AN ESTATE
To estimate how much IHT you
could have to pay, add up the
value of all your wealth, subtract
your liabilities and the £325,000
nil rate band allowance, and then
multiply the remainder by 40%.
If you are married or in a
registered civil partnership, add
up your combined estates and
reduce these by two nil rate
band allowances of £325,000
each (£650,000) before applying
the 40% rate to estimate your
potential liability to IHT.
Married couples and registered
civil partners are allowed to pass
their possessions and assets to
each other tax-free, and, since
October 2007, the surviving
partner is now allowed to
use both tax-free allowances
(providing one wasn’t used at the
first death).
Estimating how
much liability
you could leave
behind for your
loved ones
You can make early payments
before you know what the estate
owes. Interest isn’t due on this
amount.
You can pay IHT in instalments
over 10 years on things that may
take time to sell, for example,
property and some types of
shares.
There are different deadlines for
paying IHT on a trust.
How can we help?
With regular reviews, we can
help you to ensure that you make
the most of your estate planning
requirements. Contact us today to
find out more.