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Heir trigger

I have just realised that my assets are well over the inheritance tax threshold of £325,000. Can you advise my wife and I how to avoid our family from paying 40 per cent tax on our estates upon our deaths?

You can give away assets during your lifetimes to reduce the value of your estates but it is not always possible to do this. The tax savings resulting from having an efficient will can be considerable.

According to research from www.unbiased.co.uk, which provides a find a solicitor service, the number of UK adults without a will is as high as 30 million. Dying without a will or intestate means there is a strict order of who gets what, including the spouse and children, and if no one comes forward, the Crown gets the estate.

There is no provision under the intestacy rules for unmarried partners, which could cause problems.

If there is no will or no executors appointed when someone dies, a letter of administration needs to be applied for. Another problem is that when dying intestate, inheritance tax can fall due before the estate is released. Be aware that Scottish law on inheritance is different.

Dying with a valid will means a grant of probate is sought by the executor through the probate office which is controlled by the courts service www.hmcourts service.gov.uk) which runs the probate service. Seeking probate is generally a quicker process then seeking a letter of administration.

The IHT rules contain a provision that allows transfers between spouses and registered civil partners to be exempt. Recently, the legislation has been reinforced to create what is known as the transferable nil-rate band.

When the first spouse dies, they can leave all their estate to their surviving spouse, which will be an exempt transfer. When the survivor dies, their estate can claim the benefit of any nil-rate band not used at the time of death of the first spouse. The rules apply to any couple, irrespective of when the first spouse died.

As you have a business, there is an important relief called business property relief which can be up to 100 per cent of the value of the business assets.

This relief is only available when a chargeable transfer arises for IHT purposes and so if you pass the business assets to your wife or sell the assets, the relief is lost. Is it possible to pass the business to your children upon your death to gain this IHT relief?

As you are both in your 70s, I would like to make you aware of living wills. You can use a living will, known as an advance decision or advance directive, to indicate your wish to refuse all or some forms of medical treatment if you lose mental capacity in the future.

A valid advance decision has the same effect as a refusal of treatment by a person with capacity – the treatment cannot lawfully be given or the doctor might face civil liability or criminal prosecution.

Everybody has different IHT planning needs due to us having different family situations and this is where professional advice comes in. You can write a straight-forward will with a solicitor for as little as £150.

Kim North (kim@ techandtech. co.uk) is founder of Technology and Technical

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