Frequently asked questions

If I die without making a Will, will everything go to the government?

Not if you leave a spouse, children, siblings, parents, grandparents, uncles and aunts or cousins. If you do, the law sets out who gets what.

What's the difference between "Probate" and "Letters of Administration"?

These are both Court Orders which give a deceased person's representatives the authority to administer the Estate. It is Probate when there is a Will, and Letters of Administration when there is no Will.

When is a Grant of Probate needed?

You do not always need a Grant of Probate or Letters of Administration - If all assets are joint then they pass by survivorship regardless of the terms of the Will, so there is no need for Probate of the Will. If the Estate is of very low value, then banks and building societies will often release funds without a Grant of Probate.

My common-law wife automatically inherits my Estate, doesn't she?

No - a "common-law" wife or husband has no rights to inherit if you do not provide for them in your Will, but a spouse or civil partner does. If assets are owned jointly, they will pass to the survivor but otherwise a Will is needed to pass assets to a partner.

I run my own business. When I die what will happen to it?

Your business is an asset of your Estate, and it is a good idea to think about appointing a special Executor to run it or sell it after you die. Otherwise, the Executors will have to employ somebody to continue the business until it can be sold. When it is sold the proceeds are paid to your beneficiaries under the Will.

What's the difference between an "Executor" and a "Trustee"?

This is really a difference of terminology, often without substance. Strictly speaking, an Executor is responsible for the administration of the Estate - taking Probate, making distributions to beneficiaries etc - while a Trustee is usually responsible for the ongoing administration of a Trust set up under the Will - for children or disabled beneficiaries for example. Their duties are, however, very much the same.

If I leave something to my friend but she dies before me, will it go to her husband automatically?

No - not unless you have made a specific provision for that in your Will.

Can I leave monies to my Executors - I thought they couldn't be paid?

Yes you can, it is quite permissible to leave a gift to your Executors provided they do not witness the Will. It should be made clear in the Will that the gift is given to them independent of their office as Executor, otherwise they might not be able to receive the gift unless they actually act as Executor, which may or may not be what you want.

One of the Attorneys named in my Enduring Power of Attorney made six years ago has died - can I amend it to appoint someone else?

No - you cannot amend Enduring Powers of Attorney since October 2007. You can only now make a new Lasting Power of Attorney. This is a straightforward document, although longer than an EPA, and it requires greater detail.

I am thinking of appointing my two children as Attorneys under a Lasting Power of Attorney. Should I make sure they must always act jointly or should I allow them to act independently of each other?

There can be difficulties with a joint appointment - for example if one Attorney is abroad when a decision needs to be made, or if one child dies and there is a joint appointment, the surviving Attorney cannot act. It is often therefore convenient to make a "joint and several" appointment.

Is it worth making a new Lasting Power of Attorney - they seem very complicated?

Yes it is - next to a Will it is one of the most useful and important documents you will ever sign. Lasting Powers of Attorney aren't too complicated either - in fact the forms for Lasting Powers were recently changed so they are about half the length they originally were. Unfortunately, many people don't realise the importance of making an LPA until it is too late - when they have lost capacity but their assets need to be dealt with. In that case the only alternative is a very lengthy and expensive application to the Court of Protection. You would be very surprised at how much of your money would need to be spent on an application to the Court of Protection.

How much will a Lasting Power of Attorney cost?

Typically around £600 plus VAT, but there is also a registration fee payable to the Office of the Public Guardian of £120.

Can I stop my wife inheriting my Estate if she remarries or lives with someone after my death?

This can be a difficult one. A condition in your Will allowing your wife to inherit provided she didn't remarry would probably be void as contrary to public policy, and you cannot generally impose conditions like that. If you wish to preserve assets for future generations, and maintain some flexibility in the distribution of your Estate, the only way to do this is by setting up a trust in your Will. These kind of matters need to be carefully thought through, however, because there are cost and tax implications in setting up trusts which you need to be fully aware of.

Someone said we can make "mutual Wills" - what are they?

Mutual Wills are Wills made by two people, each one being made on the understanding that the other will not be changed. They are usually but not always "mirror images" of each other. They are not ideal documents, and each party should be separately advised before agreeing to make a mutual Will with the other. Difficulties can arise after the death of the first to die, in the event that the survivor should wish to change his or her Will, and litigation can ensue.

What is the Inheritance Tax rate and what does it apply to?

IHT generally applies to assets you leave when you die. It is charged at 0% on your "nil rate band" (presently the first £325,000 of your estate) and 40% on most assets over your "nil rate band". Your nil rate band increases year on year. If one spouse dies and leaves everything to the survivor there is no IHT to pay at all and the surviving spouse can claim a double nil rate band when they die, worth £650,000 in 2009/10. IHT is not charged on some assets, principally businesses and agricultural property that can qualify for relief.

Will we have to sell the family home to pay inheritance tax?

Not necessarily - if inheritance tax is payable on a home, then the Estate can elect to keep the home and pay the inheritance tax on it over ten equal annual instalments. Interest is, however, chargeable on the unpaid tax, as you would expect.

What can I give away in my lifetime without worrying about inheritance tax - I have heard of a seven-year rule - does it always apply?

Generally you can give away the following without worrying about inheritance tax:
- £250 per year to any one person
- Some gifts on the marriage of a child (£5,000), grandchild (£2,500), bride/groom (£2,500) or anyone else (£1,000)
- Any amount out of your disposable income, provided you make regular annual gifts and after giving your usual standard of living is not affected - this is a much undUer used exemption
- £3,000 in any one tax year
- Anything to your spouse or civil partner
- Anything to charity or political parties
Other than those main exceptions, if you make substantial gifts, then they would still be treated as part of your Estate when you die for tax purposes, unless you survived the gift by seven years. If you survive the gift by three years then the amount of tax your estate would pay on the "failed" gifts would start tapering down. Generally the recipient of the gift would have to pay the tax. Some types of property including interests in businesses and agricultural land are not taxed to inheritance tax.

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