Living abroad can be a boon for those seeking relief from UK weather, and sometimes, UK taxes. An increasing number of people, like the Daily Mail reader who moved to Australia 18 years ago, seek to understand how their relocation impacts their liability to inheritance tax, pondering whether moving overseas spares their estates from this tax or not.

Making the Move: A Reader’s Query

The reader, like many others, emigrated to Australia in 2005, stimulated by the prospect of sunny weather. Today, their primary income comes from UK-based pensions, taxed locally. The reader’s predicament revolves around their long-held belief that by owning property solely in Australia, limiting ties to the UK, and residing in Australia for an extended period, their estate would evade any inheritance tax imposed by the UK Government.

Although not exceedingly affluent, their estate surpasses the prevailing UK inheritance tax threshold and is destined to be left to children and grandchildren, who all reside in the UK. After living overseas for nearly two decades, the reader seeks clarity on whether their estate is indeed exempt from UK inheritance tax.

Understanding Inheritance Tax Limits

To help answer their question, it is important to understand the inheritance tax thresholds in the UK. Assets over £325,000, often referred to as the nil rate band, are typically subject to a 40% inheritance tax. Individuals can bequeath an additional £175,000 in assets, including their home, without tax implications, provided they leave it to their direct descendants, which include adopted, step, foster children and those children’s linear descendants.

This additional amount is termed the residence nil rate band and applies to deaths on or after 6th April 2017. If an individual dies with these protected amounts unutilised, they can be transferred to their surviving spouse or civil partner, totaling to £500,000 per person exemption.

Disentangling the Concept of ‘Domicile’

The primary factor that determines how an estate is taxed is not merely a person’s residency but their domicile. Domicile is a legal concept that broadly refers to where a person considers their permanent home to be. It can contribute significantly towards deciding an individual’s tax status, including income tax, capital gains tax, and inheritance tax, in both the UK and the country of their domicile. It also has vital implications on how an individual’s estate is passed on after their death.

Everyone is assigned a domicile of origin at birth, usually determined by their parents’ domicile. However, a person can establish a domicile of choice by relocating permanently to another country. It’s important to note that despite having moved permanently to Australia and residing outside the UK for 18 years, the reader still could have a UK inheritance tax liability if they hold UK assets. The other fact to consider is that pensions are often exempt from inheritance tax.

Given these circumstances, it’s recommended that she consults a professional tax accountant, preferably with experience dealing with UK expat clients, in Australia for individual advice on their situation.

Deciphering Domicile for Expat Tax Matters

Residence and domicile, though used interchangeably, mean different things for tax purposes. Tax residence typically depends on a person spending a majority of their tax year in the UK. Domicile, on the other hand, reflects a person’s long-time home and influences their tax position.

Importantly, holding a UK passport alone does not necessarily confer the status of being domiciled in the UK. Even where you anticipate spending the rest of your life matters. Domicile is different from one’s nationality.

How is Inheritance Tax Applied on Non-UK Domiciles?

For individuals domiciled outside the UK, inheritance tax must be paid on UK assets, excluding certain assets such as foreign currency bank accounts, overseas pensions, and certain authorised investments and unit trusts. However, non-UK assets deriving their value from UK property are considered UK assets for inheritance tax purposes.

A non-domiciled individual is eligible for a standard nil rate band currently at £325,000, and additionally, if their main residence is in the UK, they may claim the residence nil rate band of up to £175,000.

However, specifically in the reader’s situation, if they were to return to the UK anytime within three years of their death, they would be deemed domiciled in the UK. The responsibility falls on the estate’s executors to prove that the deceased person was non-UK domiciled at death by demonstrating their physical presence and tax residency in their new country and their permanent living status with no intention to return to the UK.

Given the complex nature of such cases, obtaining professional legal and tax advice is advised.

Maintaining a meticulous record of cash gifts given during one’s lifetime can ease the administrative load for executors and potentially reduce those inheritance tax bills, a guide in The Telegraph explains.

Inheritance Tax’s Expanding Reach

The UK government has set the inheritance tax-free allowance, also known as the nil-rate band, at £325,000. This threshold will remain unchanged until 2028. Predictions from the Office for Budget Responsibility indicate that, due to this static limit, almost 47,000 estates will be liable for inheritance tax each year by that date – that’s nearly double today’s numbers!

Originally intended to target the ultra-wealthy, inheritance tax is now a looming concern for Britain’s homeowners and middle classes. Calls have emerged, including campaigns by publications like The Telegraph, for the scrapping of this ‘death duty,’ especially since bereaved families are currently paying an unprecedented £7.1 billion annually.

However, it’s not just about the money. Many underestimate the administrative maze that awaits families when a loved one passes on.

Executor’s Role in Reporting Gifts

The executor, a person you assign in your will, takes charge after your demise. Their tasks involve collating and presenting data about your estate. Crucially, if your estate owes inheritance tax, the executor must complete the IHT400 form and potentially other paperwork, providing HMRC with a comprehensive view of your assets and gifts.

In the past, nearly half of all estates required the completion of an IHT form. Thanks to a 2022 rule change prompted by the Office of Tax Simplification, only estates exceeding the inheritance tax thresholds or those with specific circumstances need to undergo this process.

The Importance of Recording Gifts

There are gifts your executor doesn’t need to report:

• Small gifts up to £250 for each recipient yearly.
• Annual gifts under £3,000.
• Wedding or civil partnership gifts under set thresholds: £5,000 for a child, £2,500 for a grandchild or great-grandchild, and £1,000 for anyone else.

However, for larger gifts made within seven years of your passing, inheritance tax could be levied. Some gifts within this period might be entirely exempt, while others might benefit from reduced tax rates.

If you’ve gifted someone a property but continue to live there without paying rent, HMRC might still deem this as taxable, barring certain exceptions.

Navigating Complex Cases: Trusts & Extended Records

Trust-related gifts complicate matters. Typically, a seven-year rule applies to gift records. But, when a trust is involved, this doubles to 14 years, primarily because gifts into trusts are viewed as “chargeable lifetime transfers.” To simplify the process for your heirs, especially if trusts are involved, keeping a detailed record of gifts spanning back 14 years is a wise move.

Documenting Income-related Gifts

Certain regular payments, like those that come from your income and don’t impact your standard of living, are exempt from inheritance tax. But proving these gifts often requires a higher documentation standard. Hence, it’s recommended to maintain clear records, detailing not just the gifts, but also your annual income and expenses.

Conclusion

Inheritance tax can be daunting, but clear record-keeping can shield your loved ones from unnecessary burdens and potential financial pitfalls. Ensure you document your gifts, be aware of tax rules and exemptions, and consult financial experts if you’re unsure. Taking these steps can offer peace of mind that your family will be taken care of when you’re no longer around.

When life brings you an unexpected windfall, like an inheritance, it can be both a blessing and a cause for confusion. Whether it’s a small sum or a massive amount, understanding how this will affect your finances, especially if you’re on benefits, is crucial. Inews published a summary.

The Benefits Impact of Inheritance

Not all benefits will be affected when you inherit money or property. However, if you’re on means-tested benefits, which consider your income or savings, then your eligibility might change.

Universal Credit: For single individuals on Universal Credit, if your savings exceed £16,000, you won’t qualify. For couples, the limit is £24,000. Plus, any savings over £6,000 will affect the amount you receive.

Pension Credit: There’s no strict savings limit for Pension Credit, but if your savings are over £10,000, they could be seen as an income. This could affect how much you’re eligible for.

Understanding Capital in Benefits Terms

Often, when we discuss savings in the context of benefits, the term “capital” is more fitting. Capital isn’t just the cash you have in your bank. It covers a broader range: from investments and premium bonds to properties you might own but don’t live in. So, when considering how inheritance impacts benefits, it’s essential to remember this broader perspective.

Does Inheritance Boost My Income?

While you might think of inheritance as an income, it’s not classified as such. The good news? It’s not taxable. By the time you get your inheritance, any inheritance tax should already be settled by the estate.

However, there’s a twist. If your inheritance boosts your savings beyond certain thresholds, it can affect your benefits. For instance, Pension Credit recipients with savings over £10,000 are seen to have an added income of £1 a week for every extra £500. Consequently, their Pension Credit amount gets adjusted.

Inheriting Property: A House of Questions

Inheriting a house brings its own set of considerations. If the house becomes your primary residence, its value won’t affect your savings or capital. Even if you haven’t moved in yet, the property’s value will be disregarded for six months, assuming you plan to live there eventually.

However, if you choose not to move into the inherited property, its value will count towards your capital. If you decide to rent it out, the rental income will be considered when determining your benefits eligibility.

Based on a study carried out recently by the Council for Licensed Conveyancers (CLC), around 70% of probate practitioners revealed that they’ve had to endure a wait of over 10 weeks for probate to be granted. A startling 57% amongst them also stated that the waiting period extended beyond 19 weeks.

Compared to data from May, the average wait period has increased noticeably. HMCTS data showed that the average wait between the time of submitting an application for probate and getting the grant issued was just over eight weeks.

The Backdrop to the Increase in Wait Times

To those within the industry, these findings seem predictable. Over the past couple of years, increasing delays have raised cries of alarm, with staff reductions and new system glitches notably being held responsible.

In fact, 60% of those surveyed expressed their concerns about the inability of the online probate service to handle challenging or technically complex cases. Apart from this, 53% reported that they can no longer connect with the HMCTS staff to acquire guidelines for intricate cases. Furthermore, about 62% don’t believe that HMCTS effectively communicates any ongoing changes to those in the profession.

The State of the Probate Market

The biennial survey aimed at assessing the existing state of the probate market rendered a few more noteworthy finds. Approximately 71% of the practitioners participating in the survey supported extending the current 12-month claim window for loss relief on share price falls for inheritance tax.

This sentiment is in tune with the increasing pressure on ministers as had been recently reported by Financial Times. An overwhelming consensus of 88% of survey participants demand that the banking sector should implement a standardised procedure to deal with probate. This standardisation mainly addresses the needs of law firms that require access to the deceased’s finances or assets during the estate administration.

The Impacts on Clients

It’s not just practising lawyers or those in the profession feeling the pinch. The clients are feeling it too. Almost half of the respondents revealed that as much as 25% of their clients had to resort to loans to cover inheritance tax bills.

Alarmingly, over a third of practitioners reported that up to half of their clients discover their executor appointment only after the will-writer has passsed away. This underscored the importance of full transparency at the point of writing the will about the responsibilities and expectations towards potential executors.

Words from the Director of Strategy at CLC

Stephen Ward, Director of Strategy at the Council for Licensed Conveyancers, acknowledges the challenges involved in dealing with a loved one’s probate affairs. The conditions imposed by the Covid-19 pandemic have made this even more complex.

He emphasized, though, that despite long waiting times, the recently introduced online system does seem to manage straightforward cases efficiently. Ward expressed hope for future improvements to expedite the processing of more complex cases.

Our financial climate is changing significantly, including the way we approach inheritance. There is a rising trend among families to gift their inheritances earlier rather than later. According to Richard Bate, writing in Mondaq, this trend is shaped by various factors including the soaring cost of living, concerns about inheritance tax regulations, and the economic hurdles now facing younger generations.

The Emergence of Early Inheritance

The new tendency towards early inheritance gifting has become particularly noticeable amidst the cost of living crisis of 2023. Younger generations, facing an increasingly volatile economic climate, are finding early inheritance is a much-needed safety net.

Barclays’ recent research presents compelling statistics: around 75% of people aged 40 have received some form of inheritance from their parents, with this quite often going towards savings and investments, starting a business or home purchases. Data from the Institute for Fiscal Studies (IFS) shows us that the 25-34 age group most frequently receive these early gifts or loans, with parents being the generous benefactors in two-thirds of instances.

A Boost for Homeownership in Rising Costs

In the face of escalating property prices, the financial support from families has become an essential stepping stone for many to enter the housing market.

Research from Schroders shows the average UK house price is around nine times the average annual income. This stark difference highlights the growing affordability gap between generations. Though many still rely on their savings for the initial deposit, a recent survey revealed that 56% recognised the crucial role of family financial assistance in achieving their homeownership dreams.

Marriage Amid Economic Instability

Weddings are another area where these early inheritances are proving helpful. In 2022, the staggering average cost of a wedding in the UK was £18,400. One would need to bring substantial financial resources to the table to foot this bill. In most cases, newlyweds can rely on their parents with research from Wealthify showing that over 35% of UK parents plan to contribute to their children’s future weddings.

The Many Faces of Inheritance Gifts

While most commonly put towards major life events, early inheritance can also help with immediate needs. This includes savings and investments, non-cash gifts, living expenses, major family expenses, and buying a car or investing in education. Interestingly, receiving such gifts does not seem to correlate with negative life events like losing income or facing unemployment.

The Increasing Concerns About Inheritance Tax

The issue of inheritance tax has become a growing concern for many, resulting in over 60k searches for the term in the UK each month. It’s clear from HMRC figures that rising fines and tax receipts are making more individuals consider early inheritance gifts to safeguard their relatives against hefty tax bills.

The Double-Edged Sword of Early Inheritance Gifting

Despite the security it can provide, early inheritance gifting does come with its potential risks and complications.

The Upsides

By gifting assets before their death, individuals might keep their estate’s value below the UK’s IHT threshold of £325,000, thereby potentially avoiding inheritance tax. Moreover, early financial support can provide the younger generation a timely leg up in tricky financial environments, helping them to buy a house, further their education or even start a business. Received early, these inheritance gifts have the potential to grow if invested wisely.

The Downside

However, there are pitfalls to watch out for. Givers must ensure they maintain enough assets to manage potential future expenses, especially as care costs rise across the UK. There are complex tax implications, such as a potential Capital Gains Tax on gifted properties that are not their primary residence. Additionally, once the assets have been transferred, taking them back is legally complex and can lead to emotional distress.

Richard Bate, who is a Partner and Head of Private Wealth at Weightmans, advises that everyone, regardless of their financial circumstance, should seek professional advice on early inheritance gifting. It’s important to consider the why and how of the gifting process, and above all, to ensure the safety, security, and wisdom of the gifts you give.

Inheritance Tax delivered a significant revenue of £644 million for the UK government in August. This figure is a notable increase compared to the £576 million accumulated in August of the previous year, showing a growing trend of the tax’s returns.

The period ranging from April 2023 to August 2023 has seen the government receipts from inheritance tax reach a staggering £3.2 billion. This accumulation stands £300 million higher than the same time frame one year prior.

How much is the Inheritance Tax expected to generate in coming years?

The Office for Budget Responsibility, often referred to as the OBR, has provided forecasts that suggests the Inheritance Tax revenues are on an upward trajectory. The tax is projected to yield £7.2 billion in the current financial year, and the OBR estimates that by 2027/28, the Inheritance tax might add as much as £8.4 billion to the Treasury’s coffers. Yet, despite these substantial figures, there are whispers that the tax might be scrapped altogether. Some rumours suggest that the government is considering this move to gain favour with the public ahead of the looming General Election.

What are experts saying about the Inheritance tax?

Stephen Lowe, the group communications director at retirement specialist Just Group, shed some light on the Inheritance Tax’s trajectory. According to Lowe, “Inheritance Tax receipts continue to swell the Treasury’s coffers as it generates record sums year on year. Frozen thresholds and property price increases are catching thousands more estates in the Inheritance Tax net.”

Earlier this Spring, the HM Revenue and Customs (HMRC) took the unprecedented step of significantly increasing its estimates for how many new estates will be liable for Inheritance Tax from 2021 to 2028. The tax authorities now believe that close to 50,000 new estates will find themselves facing the daunting reality of paying the tax, which represents an almost four-fold increase from their previous estimate in November 2022.

Advice for handling the Inheritance Tax

Reflecting on these increases, Lowe advised individuals to keep a close eye on the full value of their estate, including keeping up with the current valuation of their property. He suggested that professional and regulated advice could be invaluable for people looking to understand the total value of their estate, compute the potential tax they might face, and then explore available options to manage their bill effectively. This advice becomes even more pertinent as the tax net widens and captures more and more estates.

A Telegraph reader, Roger, raised a pertinent issue that often baffles executors. It’s a chicken-or-egg type of situation, whereby executing a will becomes complicated due to IHT requirements. Executors need to pay due IHT to obtain probate, but they need the probate to sell assets necessary for paying the tax.

In simpler terms, probate is the legal stamp that allows executors to access and distribute the deceased’s assets. However, when a sizeable IHT bill is involved as in Roger’s case, things can get knotty. Unfortunately, a loan from a bank cannot always be an answer due to financial complications.

Exploring The Direct Payment Scheme

In response to this quandary, the Government brought in the Direct Payment Scheme, a system sanctioning banks, building societies and NS&I to make payments directly from the estates. This capacity aids in enabling the grant of probate but there’s a catch – they have a limitation on the amount that can be disbursed.

If you’re single with no children, just like Roger, your nil-rate band is capped at £325,000, ruling out the possibility of a Residence Nil Rate Band. Roger’s anticipated IHT liability far overshadows these constraints.

Possible Solutions for The IHT-Paying Conundrum

Although waving a magic wand and making banks more compliant isn’t possible, there are measures you can take to avoid this predicament.

Asset Sales with Fund Managers

If your assets are primarily in shares or unit trusts, these can be managed through a fund manager. These managers can sell shares on your executor’s instructions, thus generating enough cash flow to pay the IHT.

Proceeding with Joint Bank Accounts

Alternatively, your savings in a bank or building society can be held in a joint account with your appointed executor. Following your demise, the other account holder becomes the legal owner and can utilise those funds to pay IHT.

Setting up a Living Trust

Another method is to establish a ‘living trust’ with the aid of a solicitor. You maintain control and reap the benefits of the assets placed in trust, while ceasing to be the legal owner. The trust assets factor into your estate for IHT calculations, but aren’t relevant to probate, giving your executor access to them.

Expatriate Assets and Probate

Offshore investments are another wrinkle in the probate process. If you hold such investments, remember that you might require probate in the country where they’re held.

IHT Payable in Instalments

The executor can also break up the IHT costs over ten years if most of your wealth is tied up in your home or other property.

Keeping Things Organised with a “Dying Tidily Log”

It’s a good idea to set up a log for your executor containing crucial information needed after your death. A ‘Dying Tidily Log’ can include details about the location of the will, bank accounts, insurance and pension arrangements, and lifetime gifts.

In summary, dealing with the complexities of IHT can be overwhelming as an executor, but hopefully, by considering the options outlined above, this task can be a little less intimidating.

When you’re planning your will, you may be focused primarily on ensuring your family and loved ones are well provided for. However, Investor’s Chronicle writes, by leaving a part of your estate to a charity close to your heart, you could both support a cause you care about and gain some tax relief in the process.

In the UK, approximately £3.9 billion is gifted to charities through wills each year. Through such legacy giving, vital organizations can continue their work, particularly in challenging times such as during pandemics or cost of living crises.

In the year leading up to March 2023, one of the UK’s leading charities, Cancer Research UK, received over a third of its £719 million income from gifts in people’s wills, with one incredibly generous individual donating an awe-inspiring £44 million.

The Benefits of Donating in Your Will

Inheritance tax (IHT), often dubbed the “death tax”, is a charge on the estate of a deceased person, typically paid out of their assets before the remainder is distributed among their heirs. Gifts to charities are exempt from this tax, meaning they can be a useful way to reduce the total value of your estate for tax purposes.

Furthermore, if you leave at least 10% of your net estate to a charity, the IHT rate chargeable on the rest of your estate decreases from 40% to a more palatable 36%.

Stefanie Tremain, partner at Blick Rothenberg, advises keeping this 10% threshold in mind. If you are already planning to make a donation, it pays to ensure you reach this threshold to fully utilise the tax incentive.

Consider donating to charities during your lifetime too. You can receive income tax relief, and if you opt into Gift Aid, your chosen charity will receive a further boost of 20%, courtesy of HMRC.

How to Leave a Legacy

It might seem complex, but leaving a gift to a charity in your will is a straightforward process. There’s no obligation to part with a substantial part of your assets. Many individuals opt for a ‘residual’ legacy, leaving only what is left in the estate after all other gifts, expenses and taxes have been paid.

To facilitate this process, some charities offer free will-writing services, especially during Free Will Month, which is held in March and October each year. If you’re over 55, this could be an excellent opportunity to update your will without incurring the expenses of a solicitor.

Communicate with Loved Ones

It’s important to discuss your intentions with your family. As Shaun Moore, a tax and financial planning expert at Quilter, points out, “Familial relations can get strained if family members are unaware of or disagree with your charitable inclinations.”

The Impact of Your Donation

Your donation can leave a lasting legacy. Even if you can’t afford to donate millions, every contribution is valuable. Your donation, whether to a small local charity or a well-known national organisation, can have a significant impact.

However, it’s crucial to clearly specify in your will which charities you wish to support by including their registered number. Charities evolve over time, and the one you select may not have the same focus at the time of your passing as it does now.

Exploring Different Ways of Donating

Another increasingly popular option for donors with more complex needs is setting up a “donor-advised fund” with the Charities Aid Foundation (CAF). This offers an easy way to distribute your assets to numerous charities, in the proportions you choose, and can include organisations that are not registered charities.

The minimum investment required to establish such a fund with CAF is £25,000, but to enjoy the most bespoke services, a donation of £250,000 or more is preferred.

No matter how you choose to donate, whether in your will, while you’re still alive, through cash or assets, remember that every gift can go a long way towards supporting the vital work of charities all over the UK. And who knows, you might be able to reap some tax benefits along the way!

In the UK, more than half of adults, a staggering 55%, haven’t written up a will. This alarming statistic extends to nearly a third of individuals aged over 55, according to wealth manager Brewin Dolphin. Furthermore, two-thirds of unmarried couples haven’t prepared their wills, posing a grave concern as unmarried partners don’t automatically inherit from each other unless they have joint property.

Therefore, whether you’re an unwed couple, a retiree or an average Joe, it’s important to write up a will. Doing so will ensure your loved ones are taken care of in the event of your untimely demise. But how can you craft a will without burning a hole in your pocket, or better yet, for free?

Free and Affordable Options for Making a Will

You’ll be glad to know that every October and March, a Free Wills Month promotion unfolds. The initiative presents anyone aged 55 and above with the chance to have a basic will drawn up by a lawyer for free. The only catch? You’ll be encouraged to make a donation to charity.

Similarly, charities like the Stroke Association (for those over 60) and Cancer Research have collaborated with solicitors across the UK to provide zero-cost will-writing services. These offerings are also open to IDDT members regardless of their ages.

An alternative path to affordable will writing presents itself every November with Will Aid. This wonderful initiative partners with lawyers who dedicate their time towards charitable causes. Although they recommend donations of £100 for a single will or £180 for mirror wills, you’re under no obligation to pay anything.

Guiding Your Decisions: Understanding Complex Matters and Selecting a Will Writer

To keep any complications at bay and ensure your will is watertight and legally sound, it’s generally advisable to engage a lawyer. Their expertise can effectively guide you through complex matters such as Inheritance Tax while assuring there are no errors in your will.

However, solicitor fees can vary with typical costs falling between £150 to £200. If you find that too steep, consider hiring a will writer. Remember, they’re not necessarily qualified or regulated like solicitors. Therefore, it would be wise to verify that your will writer is a member of a recognised trade body, such as the Institute of Professional Willwriters or The Society of Will Writers.

If your financial matters are straightforward, you could opt for the DIY will-writing approach. Stationers offer affordable kits, available from as little as £10. Spending a bit more, around £30, will afford you more benefits, like access to customisable templates and offers for free online storage.

Nonetheless, it’s important to remember that DIY wills can be intricate to fill out, and any inaccuracy can render your will void. Thus, unless you’re confident your needs are elementary, seek advice from organisations like Citizens Advice before taking the DIY route.

Essential Components of A Will

Before you embark on writing a will, give a thought as to what you want it to include. Take stock of your money, property and other possessions. Your life insurance policies, shares, savings, and pensions should all be taken into consideration.

Next, list out all your intended beneficiaries – those who you wish to bequeath your wealth and possessions. Make sure not to use nicknames and be as specific as possible. You might also wish to leave some money to charity.

If you have children aged under 18 (or under 16 in Scotland), ensure your will stipulates who will care for them after your passing.

Recent Legislation Changes for Wills: Witnessing Made Easier

Having a will properly witnessed is crucial for its validity. However, the ongoing pandemic has necessitated new legislation allowing for wills to be witnessed remotely via video conferencing platforms like Zoom or FaceTime.

This legislation, introduced in September and backdated to 31 January 2020, will stay in place at least until 31 January 2022, or longer if necessary. After this period, in-person witnessing will be the norm again.

Even with this change, the Ministry of Justice recommends using video witnessing as a last resort, urging individuals to arrange physical witnessing where it’s safe. Wills viewed and signed through windows, for instance, are considered legitimate provided the viewers have a clear sight of the person making the will.

Government guidelines are available on Gov.uk detailing how to execute the signing and witnessing of a will via video link. These include recording the will-making process, ensuring the witnesses are remotely present at the same time and delivering the will document to the witnesses within 24 hours for their signatures.

However, this new legislation does not extend to allowing electronic signatures on wills, due to concerns over potential undue influence or fraudulent activities.

Organising Your Affairs: Executors and Will Storage

When it comes to handling your affairs postmortem, you ought to name your chosen executors in your will. These can be relatives or friends, or even your solicitor. However, be aware that solicitors will charge for their services as executors, and you are not obliged to appoint them.

Usually, two executors are appointed, though you can have up to four. If you’re unsure about the role of an executor, information is readily available to guide you through the process.

Securing your will is as important as crafting one. Keep it safe at home – if you do store it at home, ensure someone knows its location – or store it with your solicitor, bank or at a storage facility like the Principal Registry of the Family Division.

Updating the Will: Circumstances Change and So Should Your Will

Remember, your will should be written voluntarily by someone of sound mind, aged 18 and over (or 12 and over in Scotland). It must be signed by both the maker and two witnesses, who also sign in the presence of the will maker. Note that these witnesses cannot benefit from the will.

Given that your circumstances can change over the years – marriage, divorce, the birth of children, or purchasing a home – it’s important to review your will regularly. Substantial changes, especially marriage, can invalidate an existing will. Amendments, or codicils, have to be witnessed in the same way as the original will.

Moreover, you should declare that all previous wills and codicils are null and void if you decide to write a new will.

Visit the Dying Matters website for more on will-writing, dying and bereavement. If you reside in Scotland, keep in mind that Scottish law on inheritance differs from English law; you can find further information on the Citizens Advice Bureau in Scotland.

Misleading Cheap Wills: Check the Fine Prints

While affordability is desirable, beware of cheap wills with hidden costs lurking in the fine print. Several banks have previously enticed customers with seemingly affordable wills, subsequently burdening them with significant fees upon closer inspection.

It’s crucial to read your will thoroughly to ensure no institutions unjustly benefit from your estate. Keep your finances and estate plans in order, thus protecting your loved ones and securing their financial future. With everything in place, you’ll have peace of mind, knowing that your loved ones won’t be burdened with legal complications or financial hardship when you’re gone.

A reader asked The Guardian’s financial expert about the risks and rewards of transferring property to their children.

The Big Question

“My wife and I own a rental property, which once was our family home. We’re thinking of adding our adult children, aged 26 and 31, to the mortgage. Can we? If not, what’s the best way to hand over the property without hefty fees?”

To Add or Not to Add?

Good news! Yes, you can add your children to your buy-to-let mortgage. But, before you make that move, here’s what you need to know:

1. Debt Responsibility: By adding them to the mortgage, they’d be on the hook for the mortgage debt, just like you. If something happened and you couldn’t keep up with payments, they’d need to cover it.
2. Affecting Their Future Home Dreams: If your kids haven’t bought their own place yet, this move could make things trickier for them later on. It might mess up their chances of securing their own mortgage down the line. Plus, they would lose out on a great benefit meant for first-time home buyers.

First-Time Buyer Perks

For first-time property buyers in the UK, there’s a relief from stamp duty land tax (SDLT). It means they wouldn’t have to pay this tax on the first £425,000 of a property that’s priced up to £625,000. Anything above £425,000 and below £625,000 attracts a 5% SDLT. By joining your mortgage, your children would give up this perk.

Already Homeowners? Here’s the Catch!

If your kids already own their homes, there’s another twist. Being added to your buy-to-let mortgage might count as them getting a second property. And when that happens, they’d be hit with a higher SDLT rate. This isn’t just the standard rate; it’s the standard rate plus an additional three percent. This is based on the amount they’d be responsible for on your mortgage.

The Simplest Solution

If the end goal is to ensure the home remains in the family after you’re gone, why not leave it to them in your will? This way, you don’t complicate their financial matters now. And here’s another thought: maybe sit down with them and chat. You might find that they’d be happier if you sold the house and divided the cash between them. By doing this, if you live for another seven years after gifting them the proceeds, it could help them save on inheritance tax.

Conclusion

Adding your children to your buy-to-let mortgage has its pros and cons. It’s essential to weigh these up, consider their future financial health, and maybe even have a family chat about what everyone wants. Whatever you decide, make sure it’s in everyone’s best interest.