Will planning

poppystar

I’m just in the process of writing a new Will and setting myself up a spreadsheet! So would like clarification on a couple of points as the estates that I have dealt with as Executor have been quite simple with no charitable bequests or IHT liability. 

1. The spreadsheet I’ve created has: Value of estate - funeral costs - professional fees - charity bequests - £325k = Taxable estate
            Is that correct or are any of these included in taxable estate?

2. Then tax is calculated on this figure, deducted from it and then specific bequests (executors, friends) made leaving the residual estate left. Yes?

[it looks easier on the spreadsheet than the explanation so hope it is clear enough]

3. Also I would be interested in how anyone has dealt with specific items - jewellery, family documents etc. I’m not sure which way to go on this, put each in the Will or leave a letter of wishes which I know is not binding. The latter worries me because I get the impression that if the executors choose to use a solicitor to deal with the estate then these items will be treated as part of the estate and anyone wishing to receive according to the letter would have to pay the estate the market value. 

Any advice or comments welcome, thanks.

lincroft1710

I would suggest you consult a solicitor, cheaper in the long run. 


Don't worry about the tax, limit will probably change before you pass

poppystar

lincroft1710 said:

I would suggest you consult a solicitor, cheaper in the long run. 


Don't worry about the tax, limit will probably change before you pass

I most definitely am getting it done by my solicitor! Just trying to get ducks in a row and make decisions at this stage. I want to make job as straightforward as possible for my executors and taking likely amount of tax into consideration will help in doing that as indeed it will in deciding how much to leave to charities. Lots of things may change before I pass - hopefully!

Murphy_The_Cat

poppystar said:

lincroft1710 said:

I would suggest you consult a solicitor, cheaper in the long run. 


Don't worry about the tax, limit will probably change before you pass

I most definitely am getting it done by my solicitor! Just trying to get ducks in a row and make decisions at this stage. I want to make job as straightforward as possible for my executors and taking likely amount of tax into consideration will help in doing that as indeed it will in deciding how much to leave to charities.

To make your executors life MUCH easier, if you wish to leave money to charities, then give specific amounts in your Will e.g I give £1000 to the Murphy Cats Home Charity, rather than I leave 2% of my Estate to Murphy Cats Home Charity.  If you go down the %ge routeto Charity, you're leaving your Executor wide open to a world of aggravation.

poppystar

Murphy_The_Cat said:

poppystar said:

lincroft1710 said:

I would suggest you consult a solicitor, cheaper in the long run. 


Don't worry about the tax, limit will probably change before you pass

I most definitely am getting it done by my solicitor! Just trying to get ducks in a row and make decisions at this stage. I want to make job as straightforward as possible for my executors and taking likely amount of tax into consideration will help in doing that as indeed it will in deciding how much to leave to charities.

To make your executors like MUCH easier, if you wish to leave money to charities, then give specific amounts in your Will e.g I give £1000 to the Murphy Cats Home Charity, rather than I leave 2% of my Estate to Murphy Cats Home Charity.  If you go down the %ge routeto Charity, you're leaving your Executor wide open to a world of aggravation.

Yes, done that, thanks. I’ve known too many people harassed by charities for residual or percentage bequests.  

Keep_pedalling

Professional fees such as for a solicitor to administer the estate are not deductible from the estate for IHT purposes.

poppystar

Keep_pedalling said:

Professional fees such as for a solicitor to administer the estate are not deductible from the estate for IHT purposes.

Thanks that’s really useful to know.

SevenOfNine

Do you have property, if so there's the Residence Nil Rate Band as well.

My mum's will specified that I got 'all her jewellery' (I have 2 brothers). Seemed a bit unfair as value is several thousand, but there has been no bad feeling because her will was clear.

Personally, I'd consider being specific about your most personal, sentimental items (for me that was mum's wedding, eternity, engagement rings & charm bracelet my dad bought her), but perhaps not the rest.

Deal with what's left in a letter of wishes, which hopefully will be followed, because it's less important if it's not.  

Our own current wills refer to our letter of wishes, revised a few times & kept with our wills, to be followed....or not! 

Langtang

Murphy_The_Cat said:

To make your executors like MUCH easier, if you wish to leave money to charities, then give specific amounts in your Will e.g I give £1000 to the Murphy Cats Home Charity, rather than I leave 2% of my Estate to Murphy Cats Home Charity.  If you go down the %age route to Charity, you're leaving your Executor wide open to a world of aggravation.

That's interesting about leaving an amount rather than percentage, thank you. We're also in the process of doing new wills, so am following this with interest.

Just out of interest, let's say we left £1000 to the cat & dog charity and £1000 to Jim, our next door neighbour, but it was found on our deaths that there was only £1000 to our name. Who would get what? Would it be split 50/50 or would the charity go hell for leather?

Keep_pedalling

Langtang said:

Murphy_The_Cat said:

To make your executors like MUCH easier, if you wish to leave money to charities, then give specific amounts in your Will e.g I give £1000 to the Murphy Cats Home Charity, rather than I leave 2% of my Estate to Murphy Cats Home Charity.  If you go down the %age route to Charity, you're leaving your Executor wide open to a world of aggravation.

That's interesting about leaving an amount rather than percentage, thank you. We're also in the process of doing new wills, so am following this with interest.

Just out of interest, let's say we left £1000 to the cat & dog charity and £1000 to Jim, our next door neighbour, but it was found on our deaths that there was only £1000 to our name. Who would get what? Would it be split 50/50 or would the charity go hell for leather?

After funeral costs the charity and Jim would get nothing as the estate would be insolvent. If there was anything left over after the funeral was paid for but insufficient to meet the bequests then the rules of abatement would apply with each of the two beneficiaries bequests being reduced accordingly..

https://www.sleeblackwell.co.uk/legal-articles/abatement

Keep_pedalling

To counter the argument about leaving a percentage to charities there are some very good reasons for doing so in some circumstances. The first being if you have a large estate and want to reduce the amount going to HMRC via a charitable donation then a 10% or higher it going to be needed.

For smaller estates a specified sum to a charity (or anyone come to that) could mean very little or none makes it to your residual beneficiaries. For example if when I write my will I leave £20k to charity (or Joe Bloggs) and the rest of my £300k estate to my children, but then spend 4 years in care without the mental capacity to change my will the charity or Joe would still get the £20k and my children a lot less or nothing.

I think in reality if you leave a percentage and your executor carries out their duty in a competent fashion then they are not going to have problems from the charity, but if you are worried about it do what we do give more while in the land of the living and a small gift in your will.