October Newsletter

Tuesday, 10 October 2017

Newsletter October 2017

Back to Work!

Whether you have been enjoying the school holidays with your children or enjoying the warm weather that the UK, or your chosen holiday destination, has blessed us with the past couple of months, summer is a time to relax, enjoy the extra daylight hours and most importantly to recharge those batteries for the rest of the year.

Holidays provide you with that little extra time to consider all those niggling chores that have been set aside due to work or personal commitments. Whether it’s changing the car, decorating the house, reviewing the finances, you know it has to be sorted before the year is out.

Reviewing and revising your Wills should also be a consideration for you each year. We pride ourselves at James McKenzie in writing Wills that factor in as many eventualities as possible, but still life goes on and throws many a curve ball to upset the steady path you may have walked this year.

Maybe you have seen your family situation change and it has prompted you to consider amending your chosen guardians? Possibly a close sibling or friend has moved further away and now may be unsuitable to fulfil the role of Executor/Trustee for you. Could your thoughts or feelings have changed towards benefitting family or friends to a greater or lesser degree? Hopefully your wealth will have increased and that too may have you thinking as to whether more protective provisions should be factored into your Wills.

In any event, you may find that a review of your Will is required and amendments may be needed. Wills should be reviewed on a regular basis and the team at James McKenzie are available to discuss your existing Wills and assist you with any questions or revisions that you may wish to consider. Give us a call or drop us an email and we can schedule in a time to review your Will for you.

Do you have the Power?

Lasting Powers of Attorney (LPAs) have been in the limelight again in recent weeks and a noticeable rise in meetings to arrange LPAs for our clients or their close family has ensured this as a key aspect to address in our October Newsletter.

If you are not aware of LPAs, or have heard of them but felt they are not something to concern yourself with, I suggest you keep reading –

What is a Lasting Power of Attorney?

Mental and physical incapacity can hit at any time, which is why it is recommended to plan ahead to ease the potential burden on loved ones.

A lasting power of attorney  gives another individual the legal authority to look after specific aspects of your financial affairs or health and welfare should you lose the capacity to do so. It's not just for the elderly; younger people may become incapacitated through accident or illness.
If you do not have an LPA in place and later become mentally incapacitated, relatives may face long delays and expense in applying to the court of protection to get access and take control of your assets and finances.There are two types of LPA; Health & Welfare allows your appointed attorney to give or refuse consent to health care which can include medical treatment decisions, whether you should continue to live in your own home, or if you are in need of social service support or residential care. They also have the power to make decisions about ‘life-sustaining treatment’. By contrast a Property & Financial Affairs LPA ensures your attorney(s) can manage your finances and property when you lack capability allowing them to carry out tasks such as buying and selling your property, dealing with bills, running bank accounts and investing your money or collecting your benefits.

However these are not just for those who lack capacity; you might be working or living abroad for long periods of time and need to give authority to family/friends to assist with your UK affairs.

Should I arrange an LPA?

Whether it is for yourself or for a loved one, an LPA is an essential addition when financial planning is considered as without one involves thousands more in potential fees and ongoing costs. All of this at a time when you would wish for a smoother and straightforward approach to care for the finances and wellbeing of a potentially vulnerable individual could easily be remedied.

Make an appointment with us to discuss Lasting Powers of Attorney and whether you should be considering them for you or your family.

The new £1Million Inheritance Tax Free allowance.

Did that one escape you in April? If you blinked you would certainly have missed it, although it is not exactly as it initially sounds.

From April 2017 the current Nil Rate Band (NRB), presently £325,000, remains unchanged and is still transferrable between spouses on death if unused.

However, a new Residential Nil Rate Band (RNRB) has taken effect, providing anyone owning a primary residence with an additional £100,000, also transferrable between spouses also if unused on first death.

This band rises between now and 2021 to a total amount of £175,000, and thereafter with inflation (CPI), so combine this with the current nil rate band (and double it if you are a married couple), and you have the golden £1 Million IHT free figure promised, although all is still not quite so straightforward.  As always, the devil is in the detail.
Subject to Status, Terms and Conditions apply…

Far from being clear and simple, the additional band is dependant on owning a property with sufficient equity, and to whom and how an estate has been gifted. A badly drafted Will could see any additional allowance be unclaimable by executors due quite simply to an incorrect age being specified, or because a specific Will trust has been established in the Will which the new legislation does not allow for.

Furthermore, should your estate exceed the value of £2 Million then the additional RNRB starts to decrease by £1 for every £2 over the maximum threshold, so there is a ‘sweet spot’ for a married couple which is a combined estate of £1-£2 Million from 2021.

This makes planning for any large sum lumps payable on death such as lifeassurance and Death in Service essential so they do not form part of any taxable estate, and thus removing any additional RNRB that may otherwise have been utilised.

Death & Taxes

To borrow the words of Benjamin Franklin, ”nothing in this world can be said to be certain, except death and taxes”. It may well be a case of needing to put a little effort in before this year is out to review your existing Wills and trusts as, although death is unfortunately guaranteed, with a little financial planning and utilising the new legislation within your Wills (if applicable), Inheritance Tax may be avoidable.

So, if you would like to have a further conversation on how this may affect you now or in the future, or if any of this has been a topic of conversation with your family, friends, or work colleagues, then please do not hesitate to contact us or recommend us for additional advice.

Kind Regards
Andrew Buchan