CHRISTMAS GIFTING
MAKE A WILL T O D AY
By Ha n na h Lisseter DI RECTOR , GL A N V I L L ES
By Si mon Noble CONSU LTA N T, ROACH PITTIS
It seems like we are in for a very different Christmas this year; whether through financial hardship or government restrictions, it is very hard to make any firm plans. Thank goodness Santa has been declared a keyworker or there would be a lot of disappointed faces on Christmas morning!
If you own your own home, have pets, live with your partner, have children, or own your own business, then it is always going to be advisable to make a Will.
I am known for preparing for Christmas early (August onwards!) as I like to spread the cost and the work. I have also purchased more online in recent years as it has been more convenient. This year though, more people seem to be doing likewise for many reasons. Gifting money this Christmas may seem like a great way to help family members or friends financially, but while there’s no limit to how much you can give, there are other implications to consider. Giving someone cash at the wrong time – or in the wrong way – could mean they end up being chased by the tax man at a later date. It could also lead to you being accused of deliberately depriving yourself of assets that should have been used to pay for your care in later life. Any gifts made less than 7 years before death count towards the Inheritance Tax threshold. If you give away more than your allowance in your final 7 years, tax is due on everything over that threshold. The rate of tax is reduced for gifts made between 3 and 7 years before the person died. This is known as ‘taper relief’. There are some additional exemptions and allowances that enable you to gift money without the threat of Inheritance Tax. For example, the annual gifting allowance stands at £3000 for the tax year 2020/2021, which means you can gift up to £3,000 in total this tax year without any inheritance tax implications. However, if you haven’t used last year’s allowance you can gift £6000 this year and still avoid inheritance tax issues. Small cash gifts are also exempt and each year you can give up to £250 to as many people as you like without any inheritance tax liability in addition to your £3000. You can also give away normal gifts out of your income, for example Christmas or birthday presents as long as you are able to maintain your standard of living after making the gift.
In fact, it is only by making a Will that you can be sure that those you care for will be protected and secure on your death. Unmarried partners have no automatic right to inherit, and therefore if there is no Will, there is no guarantee that they will be provided for. Also, if you own your own home in which your partner resides, then on your death there is no guarantee that your partner will be able to continue living there. The uncertainty caused by this situation can prove extremely stressful for loved ones, but can be completely avoided if a Will is made that provides for your partner or other persons who you wish to inherit. If you die without having married or entered into a Civil Partnership, but have children, then your children will inherit your estate. If you have no children then your parents would inherit. If you have no parents living, then your brothers and sisters inherit. In fact, none of the persons who are eligible to inherit include an unmarried partner. Without a Will that provides for your partner, he or she may be left in a position whereby they need to go to Court to continue living in the property. All of this potential stress can be avoided where a Will is in existence. Now, more than ever, is the time to make a Will. Call us today. Telephone 01983 524431 or visit www.roachpittis.co.uk
You should also consider the deprivation of assets rules. This is where a person intentionally deprives or decreases their overall assets in order to reduce the amount they will be charged towards their care and support. There is no time limit on how far back the Local Authority can go, unlike the 7 year rule for inheritance tax. So, think carefully before you give generously this Christmas. Hannah Lisseter is a Director specialising in Wills, Probate, Powers of Attorney and Court of Protection matters. Hannah.lisseter@gdlegaservices.co.uk 01983 527878 November and December 2020
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