- July 2016
Common Misconceptions 2
“I can only give away £3,000 a year without paying inheritance tax”
This depends upon your circumstances. If you are a married couple or in a civil partnership you and your spouse or partner currently have inheritance tax free allowances of £650,000. If you are single your allowance is £325,000. Any gift over £3,000 is called a Potentially Exempt Transfer. If you live more than seven years after the gift, then it will be exempt from tax. If you die within 7 years it will count towards your taxable estate. But if your estate isn’t large enough to be taxable then the amount you give away is not relevant.
There is also a ‘normal gifts out of income’ allowance. In a nutshell, provided that you are not using all your income each year, you can make regular gifts out of the surplus income. In order for your executors to make use of this provision though you must keep a record of your income and expenditure showing that you do not need it.
“We own our house jointly”
There are two ways in which property can be owned jointly. What matters is whether you own your house as “Joint Tenants” or “Tenants in Common”. If you are joint tenants, then when the first person dies, the second person inherits the house automatically. You don’t have a specific share and you are not free to leave “your share” (because you don’t have one) in your will. If you are Tenants in Common you have “your share” whether it be 1% or 99% and may leave it to whomever you like in your Will. Choosing which status of ownership should apply when you are buying a property is important and you should seriously consider making Wills or reviewing existing Wills during the property purchase. This way, you can avoid making the wrong choice.
“I’m young. Why do I need a Power of Attorney?”
Like with wills, people often think they can leave Powers of Attorney until they are older. However in order to complete a Power of Attorney, you must have mental capacity. Life can be unpredictable, anyone can have a sudden and debilitating stroke, or be involved in a car crash or some other unforeseen event. At that stage, having Powers of Attorney in place can be of great benefit for your relatives and friends who can immediately set about looking after you and your affairs. Without it, the Court of Protection may have to become involved and that is often a stressful inconvenience for those seeking to look after you and your interests.
For further information contact Martin Banwell on 01473 255591 or by email at firstname.lastname@example.org.
This article provides only a general summary and is not intended to be comprehensive. Special legal advice should be taken in any individual situation.back to articles...