[vc_row][vc_column width=”1/1″][vc_column_text]One little-considered effect of today’s difficult financial and economic situation is the impact it may have on how people choose to pass on assets to their children and other heirs.
We are probably all thoroughly tired of hearing how property and share prices have declined in value in recent months. But this otherwise regrettable situation does mean that it may now make better sense for people to pass assets on to their chosen inheritors straightaway (in a so-called ‘lifetime gift’), since doing so will not expose the recipients to such large Capital Gains and Inheritance Tax bills.
Increasing numbers of people have been holding off making substantial gifts during their lifetimes, because of the rules that expose people receiving assets to potentially very large payments, if the giver dies within seven years of making the gift.
Now that values are not sky-rocketing any more, this risk is reducing. In increasing numbers of cases it makes sense to act now. This can be particularly important in families where the younger members cannot find the loans they need to get on the housing ladder, even though they need their own home now.
It is also appropriate to highlight an important change to the amount of security that surviving partners receive when their spouse dies without making a will. From 1 February, if there are children from the marriage or civil partnership, the surviving spouse will automatically receive up to £250,000 from the estate, a rise from the former threshold of £125,000. Where there are no children, the spouse will receive up to £450,000, up from £200,000. This is always on the assumption that the estate is of sufficient value.
It is crucial to remember however, that this increase in thresholds is not a reason to decide against making a will. When announcing the change last summer, Justice Minister Bridget Prentice said: ‘Married couples and civil partners should not assume that when their spouse or civil partner dies, they will automatically be entitled to everything. It is up to individuals to make sure that their wishes are respected by making a will. My message to people is, don’t leave it to chance. Make sure your loved ones are properly provided for by leaving a will.’
We would urge anybody who has not made a will to do so as a priority. To discuss this, and to find out if a lifetime gift is appropriate for your circumstances, call one of our estate planning experts at your nearest Gamlins office.[/vc_column_text][/vc_column][/vc_row]