Financial Matters

With David Frederick FCCA | Marcus Bishop Associates | marcus-bishop.com

Three Steps to Take Charge of Your Estate

Taxpayers are drifting into the web of inheritance tax (IHT) as the IHT threshold remains unchanged at £325,000. As such taxpayers may want to consider three basic estate planning tools to retain more of their wealth for their loved ones.

Making a Will

A will is a key tool that should be in every adult’s estate planning toolbox. However, research shows that less than 50% of UK adults have written a will. This is despite the growth of blended and cohabiting families. A commonly held misconception is there’s no point making a will if you’re married or in a civil partnership as your surviving spouse/civil partner will get everything anyway. This is not necessarily the case, particularly if you have children and hold joint assets with other individuals. The absence of a legally-valid will at death leaves your estate subject to distribution according to intestacy rules and not with your preferred wishes. This may result in HMRC receiving a greater share of your estate. Is this what you really want? Pre-planning will therefore result in your estate being distributed according to your wishes and much less being consumed by the clutches of inheritance tax, which currently sits at 40%. In its most basic form, a will is a legal document setting out your wishes on death. This includes your choice of executors, who will carry out your wishes; names of guardians if you have any children under 18; funeral wishes; and the named beneficiaries of your estate. A valid will requires that you have capacity to make a will and two people who are not beneficiaries and are aged over 18 to witness your signing of it.

Trusts

Placing assets in a trust is one of the simplest ways to protect your estate. Assets placed into a trust fall outside of your estate when you die. However, before rushing out to place assets into trusts, taxpayers should be mindful and seek professional advice. Why? Trusts may incur a tax charge at set-up stage; periodically and at winding up stage. This is wholly separate from the annual accounting and reporting of trusts to HMRC. If that is not sufficient, trusts are now required to be registered on the Trust Registration Service. Setting up a trust involves appointing trustees, and this is a decision that requires careful thought by any taxpayer seeking to create a trust. Trustees are responsible for managing trusts and the distribution of funds to the beneficiaries in accordance with the terms of the trust. Trusts are an effective tool for passing on intergenerational wealth.

Gifting Assets Over Time

At present every taxpayer has an annual £3,000 gift exemption that they may use without this being added to their estate. The good news is that if it is not used this year it may be combined with next year’s £3,000 allowance. Gifting gets better, if you’re a married couple or in a civil partnership and neither of you used your exemption in 2020-21, you can give £12,000 away in 2021-22. The money immediately sits outside of your estate for inheritance tax purposes, so it can be an effective way to reduce your estate’s value over time. Smaller gifts of up to £250 per annum may be given to individuals of your choice. In addition wedding gifts may be given to certain relatives; or you may leave 10% or more of your net estate to a charity, which might make you eligible for a reduced inheritance tax rate of 36%. All gifts require that you survive seven years from the date of the gift and you do not retain any benefit from any gifts made. Should you die within seven years of making a gift, it will be taxed on a sliding scale known as taper relief.

Friday 12 November: LMP at the Crystal Palace Tango Café

7:30pm-9pm. Tango! Argentine composer Astor Piazzolla reinvented the genre of his homeland into ‘tango neuvo’, and in his centenary year, London Mozart Players and tango dancer Leroy Tango Cat, bring Piazzolla’s Latin infused rhythms and melodies to their ‘Tango Café’ at St John’s, Upper Norwood – for one night only! Join the London Mozart Players at SE19’s cosy and atmospheric pop up Tango Café for a night of hot and cool music that will have you reaching for your dance shoes, and a dancing partner!

St John the Evangelist, Upper Norwood, Sylvan Road, SE19 2RX.

Saturday 13 November: LK Christmas Artisan Craft & Gift Fayre – Christmas Market

11am-4pm. A time to have a fabulous Christmas Shop in a wonderful location right in the heart of Dulwich Village. Over 40 amazing individual stalls showcasing their wonderful craft and bespoke gifts. An event for the whole family, from a treat for the children to something special for a loved one you will find it all under one roof. Free Entry https://www.lkpopupfayres.com St Barnabas Parish Hall, 23 Dulwich Village, SE21 7BT

Monday 15 November: EC Local Meeting: Dulwich

6pm-8pm. (Registration from 5.30pm). The Best Networking Event in Dulwich! Join your fellow Dulwich business owners for our Entrepreneurs Circle Local Meeting. https://eclocal.co.uk/ Dulwich/join/. If you are already member you can register here: https://eclocal.co.uk/Dulwich/

Thursday 18 November: Online Wine & Cheese Tasting in aid of local charity

7pm-8pm. Local charity, Link Age Southwark have partnered with GreatWineOnline to bring you an exclusive online wine and cheese tasting event in aid of the charity's work to support older people and people living with dementia. Join them for this fun and informative tasting experience, where you'll be guided by the GWO experts in the comfort of your home. It's the perfect opportunity to get your friends and family together and begin the festive celebrations early! For full details go to

https://www.linkagesouthwark.org/.

Tuesday 23 November: Lev Parikian: A British Year Through Japan's 72 Seasons

7pm-8pm. Join Lev Parikian - bird-watcher, nature writer and conductor- as he discusses his wonderful new book, Light Rains Sometimes Fall: A British Year through Japan’s 72 Seasons. Don't miss this fascinating event that will make you see the British year afresh and experience a new way of connecting with nature. Dulwich Books, 6 Croxted Road, SE21 8SW.

www.dulwichbooks.co.uk.

Wednesday 24 November: Cooking with Scissors

6.45pm-8pm. An opportunity for local business professionals to meet, make new contacts and gain new business. The last Wednesday of every month. Free Admission. To find out more or register your interest visit:

www.cookingwithscissors.co.uk.

The Lordship Pub, Lordship Lane, SE22 8HA.