The Coronavirus pandemic has, sadly, increased the demand for people wanting to put their financial lives in order. Solicitors have seen an upsurge in demand for writing wills, for example.
I must admit that I feel uncomfortable writing this article, but we are being asked for advice on what clients should do in the knowledge that they might die sooner than they anticipated. So, I’ve decided to set out some of the issues that we would highlight as financial planners to a client who is close to death – often referred to as ‘deathbed’ planning.
Here’s a very simple list of things that should be thought about in those difficult circumstances:
If you haven’t written a will, write one now; and if you have a will, make sure that it is reviewed by a suitably qualified solicitor.
Review letters of wishes in relation to any discretionary trusts that you may have settled. These should be lodged with the trustees but not made available to the beneficiaries of the trust.
Consider the exempt gifts, such as the Annual Allowance (£3,000 2020/21) and the small gift allowance (£250 2020/21).
If you have a life expectancy of at least 2 years, you might want to consider investments that qualify for Business Property Relief or in agricultural land that attracts Agricultural Property Relief.
Including a legacy in your will of at least 10% of the value of your net estate to a registered charity, reduces the inheritance tax (IHT) rate from 40% to 36%.
Investing in woodlands may open up Woodlands Relief on the value of any trees or underwood growing on the land.
Life assurance and pensions should be checked to make sure that trust deeds and nominations are in place to ensure that any benefits fall outside the estate.
Check the joint ownership of assets, in case the equitable interest needs to be severed to ensure the disposition passes under the will to maximise IHT savings.
Where the estate exceeds £2m, it may be worth making gifts to capture the ‘additional threshold’ available on a main residence. Even if the gift is a Potentially Exempt Transfer (PET) there may still be an advantage.
Transfer assets owned by a spouse to take advantage of the Capital Gains Tax (CGT) uplift upon death. Make sure the will is reviewed though to ensure they are transferred back to the surviving spouse to ensure they receive the asset back at the uplifted probate value.
Consider investing in buildings, land, works of art and heritage chattels that qualify for the ‘Conditional Exemption Tax Incentive Scheme.’ These are exempt from CGT and IHT as long as the owner agrees to look after them, allow public access and keep them in the UK.
Anyway, I hope the helps anyone who may be concerned about the current situation and would like to know what practical steps are available. Stay safe and stay healthy; and I’ll see you on the other side!