We asked our experienced Private Client team, led by Karyna Squibb, to tell us about the questions they get asked the most. Here’s what they had to say!
- We’ve got children but we’re not married – will this affect my financial security if we split up?
This depends on whose name your assets are in, and who the children will live with if you split up. If the assets, especially the house, are in your name or jointly owned then marriage is unlikely to improve your financial security.
If, on the other hand the assets are owned in the other parent’s name, then marriage will give you better claims. Importantly, it will give you occupation rights in the house which can register to ensure the home cannot readily be sold or re-mortgaged without agreement, especially if you split up.
You should also think about writing a will to protect your wishes if the worst should happen to you or your partner. Contrary to popular belief, common law marriage does not exist in UK law and unmarried couples do not have all the same rights as married couples. You might be surprised to find out what would happen to the things you care about if either of you died without a will.
- I helped my son or daughter to buy a house and now they’re getting married. Would a pre-nup protect my investment?
A prenuptial agreement can only be entered into by the two people getting married. You could consider having a declaration of trust drafted. This will show the amount paid towards the purchase price by both parties and any other individual, and the shares in which they hold the property, and will secure their individual shares in the event of one of the parties dying.
If you’re thinking about gifting or lending large sums of money to your children, take time to have an upfront conversation about your wishes or expectations. It’s always better to have the conversation before rather than after the event!
- I want to protect my children’s future assets. Is there a good age to sign over my wealth to them, or should I wait until I become ill?
We would never suggest ‘signing over’ your property of other assets. In fact, this is something we would always advise against doing.
If you relinquish the legal rights in your property, there is no legal entitlement to have these returned in the future. By doing this you would therefore lose any financial securitying and choice over how the property is dealt with.
Many people look at this as a way of reducing the value of the estate for Inheritance Tax purposes, or for reducing the amount which can be considered for care home fees. However, the government can look into the reason why a property has been ‘signed over’ and if it is considered to be primarily to avoid care home fees or tax any transfer can be reversed.
- Ok, so how can I reduce my Inheritance Tax liability?
This is one of the questions we get asked most frequently by clients. Some options which you may consider include:
Potentially Exempt Transfers: any gift you make in your lifetime will be exempt for Inheritance Tax purposes if you survive seven years from the date the gift was made. If you do not survive the full seven years from the date of the gifty you may be eligible for taper relief which will reduce the amount of Inheritance Tax payable on the gifts.
Annual Gift Allowance: you can give away assets or cash up to a total value of £3000 in each tax year without incurring Inheritance Tax.
Charitable Gifts: any gifts made to charity are exempt from Inheritance Tax. If you pass 10% or more of your estate to charity, the total Inheritance Tax due on the rest of your estate reduces from 40% to 36%.
Creation of a Discretionary Trust: money transferred into a Discretionary Trust is exempt from Inheritance Tax, up to the current allowance of £325,000. However, there are other tax implications relating to Discretionary Trusts which should be considered.
- I already have a pension – what else do I need to plan for my retirement?
Planning for your retirement and the associated legal issues should be undertaken well in advance, and there are many factors that will impact on that planning such as whether you have children or are a homeowner, and how you would like to spend your retirement.
Life planning can involve a number of complicated areas of law and we would always recommend seeking advice from an expert.
Who are we?
Our Private Client team is led by Karyna Squibb, Head of the Private Client department, who is supported by Ros Davies, Jenna Street, Daniel Smith and Katie Rendell-Martin.
What do we do?
We can assist in giving you peace of mind with a variety of ‘life planning’ services. This may be assistance with drafting your Will, dealing with Probate, providing advice on Inheritance Tax Planning or information about Lasting Powers of Attorney and dealing with the Court of Protection. We are also able to give support on a range of other services relating to elderly people.
For more information, contact Daniel Smith on 01392 256854 or e-mail firstname.lastname@example.org.