Estate Planning
It is estimated that over 50% of the people who die in the UK will not have made a valid will. At PSA Financial Services , we believe that this is a crucial step to make when deciding who should inherit your estate. If you don’t have a will, we can refer you to an experienced will writer who would be happy to visit you in your own home to arrange your affairs. Planning can include making an effective Lasting Power of Attorney in case capacity is lost prior to death. At PSA Financial Services we work with a large number of solicitors and will writers who can assist you to make sure that the legal paperwork you may need is in order.
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Many people are concerned that Inheritance Tax (IHT) that may be payable on death. If you are have been married but are now widowed, there is a nil rate band on estates up to £650,000. If you are single, the nil rate band is £325,000. If you have an estate in excess of the nil rate band, tax is set at 40% on the remaining amount. If you are married and have not made any substantial gifts within the last 7 years prior to your death, then there is no tax to pay on your estate. There is also no tax to pay if your partner inherits everything. Further information can be found on the HMRC website.
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There are other factors including residence nil rate band, to mitigate Inheritance Tax (IHT) and as this is not a straightforward tax, advice is always required.
A Basic Example
Mr and Mrs Smith are married and have an estate valued at £750,000. Mr Smith dies and leaves his entire estate to his wife. Mrs Smith then dies and leaves her estate to their 2 children. The first £650,000 has a nil rate band, the remaining £100,000 is taxed at 40%, resulting in a bill of £40,000.
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With effective planning, IHT liability can be eliminated by the use of trusts and life insurance. We can refer you to Chartered Accountants and tax advisers who can offer expert advice in tax mitigation. One area that is often neglected is to plan for the possibility of long term care. With people now living longer,up to one in three people will need care at some point in their lives. Currently care costs on average £35,000 per year and it is estimated that an average stay in care will cost £208,000 (Source; Partnership Assurance). PSA Financial Services can offer expert advice on care planning, both ahead of time and for those already in care. Each year 50,000 people are forced to sell their homes to pay care costs.
All allowances are constantly reviewed by H.M Government