Wealden Times | WT184 | June 2017 | Kitchen & Bathroom supplement inside

Legal
What are lifetime gifts and how do they work?
Simon Leney, Cripps
The only downside is that you
make yourself poorer, although
for inheritance tax saving
that is the whole point!
“It’s common knowledge that if you gift money, assets or valuables
seven years before you die, you are free of inheritance tax. There is no
limit to how much you can gift. If you give away more than £3,000
in a tax year (the previous year’s unused allowance can also be used)
and you don’t survive the gift by seven years, the surplus is added
back to the value of your estate at death for the purpose of calculating
inheritance tax. There is no penalty – the inheritance tax is no more
than it would have been had you kept the value in your estate and
actually it will be slightly less due to use of the annual allowance.
Where you as the giver continue to benefit from the gift,
it will be deemed to be a gift with reservation of benefit,
meaning the seven year ‘clock’ does not start. If at a later stage
part of the gift is returned to you or spent on your behalf, the
part of the gift will be treated as a gift with reservation.
Lifetime giving – accelerating inheritance by your heirs for
example – has many benefits, not least the pleasure of seeing your
gift being enjoyed. The only downside is that you make yourself
poorer, although for inheritance tax saving that is the whole point!”
Simon Leney is a Private Client Lawyer and Wealth
Planning Specialist at Cripps 01892 506005 cripps.co.uk
Credit: FreeImages.com/Svilen Milev
Probate
Richard Hearne,Whitehead Monckton
What is it?
“Probate is the legal process whereby the Will of a deceased
person is submitted to Court to be ‘proved’ as a valid public
document, that is the true ‘last Will and testament’ of the
deceased. In the case of an intestacy (when the deceased
died without leaving a Will), there is a similar process but
in this case the applicant is the person or persons entitled
to the estate under the rules of intestacy. In each case, the
Court will issue either a Grant of Probate or (in the case
of an intestacy) a Grant of Letters of Administration.”
When is it needed?
“Probate is not always needed and depends upon the assets held
by the deceased. For example, property held as joint tenants
will pass automatically to the surviving owner. In the case of
cash assets, the need for Probate depends upon the amount
held with the bank. Advice should be sought from a solicitor
at the outset to establish whether or not Probate is required.”
How do you apply for Probate?
“The process of applying for Probate differs depending on
whether the estate is subject to Inheritance Tax or not.
For a non-taxable estate, the Executor will prepare an
HMRC form detailing the assets and liabilities of the
estate. They will also swear an Oath which confirms they
are the executor named in the Will. These documents
are then sent to the Probate Registry and typically
the Grant is returned within one to two weeks.
For a more complex estate, tax papers must be filed
with HMRC and Inheritance Tax paid in advance. The
Executor then applies for Probate including the Oath,
Will and HMRC receipt. This is a longer process and
from submission of papers to HMRC to the issue of
the Grant may take between two to three months.
In either case, timescales will need to include the work
required by an Executor to establish the full assets and liabilities
involved – which in certain cases can take several months.
In the case of an intestacy, the HMRC forms completed
are exactly the same but the applicant will swear an
Oath confirming their entitlement to the estate. In this
case, the applicant is called an ‘Administrator’.”
Can I apply for Probate myself?
“Personal applications, without the assistance of a solicitor, can
be made to the Court directly by an Executor or Administrator.
In very straightforward cases this can be a good option.
However, it is always advisable to consult a solicitor in the first
instance to establish any possible issues. In more complex cases,
it is always advisable to instruct a solicitor to assist, particularly
as an Executor or A dministrator will have strict obligations to
fulfil, both to the beneficiaries of the estate and also to HMRC.”
Richard Hearne is an Associate Legal Executive at Whitehead
Monckton. 01580 767532 whitehead-monckton.co.uk
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