Navigating the intricacies of Wills and Inheritance Tax (IHT) can be a daunting task, especially in the emotionally charged aftermath of a loved one’s passing. The admin of death is the last thing your loved ones will want to have to think about, so getting your affairs in order sooner rather than later is the best way to make the process seamless.

What happens to my assets?

When someone dies, their estate, which includes everything they own, must be distributed according to their wishes as outlined in their Will. If there isn’t a Will, or if it is wholly or partially invalid, it becomes subject to rules of intestacy, which are set by law.

It is crucially important to put a Will in place with a professional. They can ensure its validity and make sure that it can be distributed exactly according to your wishes. If not, your intentions may not be able to be carried out. If you do not already have one, talk to us about getting a Will in place.

How does my Will get distributed?

The Executor (or Executors) of the Deceased’s will (or an Administrator if there is no will) is legally responsible for handling the estate. This involves identifying all assets and liabilities, such as property, savings, investments, and debts. Often, an Executor will choose to enlist the help of a professional third party to either assist or to completely take on the responsibility of distributing the Will.

The Executor then values the estate and applies for a grant of probate. This is a legal document that confirms their authority to deal with the estate. Once probate is granted, the Executor can begin the process of distributing the assets according to the instructions laid out in the will. This may involve selling property, closing bank accounts, and transferring ownership of assets to beneficiaries.

Where does Inheritance Tax come into play?

Before the beneficiaries can receive their inheritance, any Inheritance Tax owed to the government must be settled. Inheritance tax is calculated on the value of the estate above a certain threshold, which is currently £325,000. Anything above this threshold is subject to a tax rate of 40%.

There are, however, various exemptions and reliefs available, such as the spouse or civil partner exemption and the residence nil-rate band, which can reduce the tax liability. We can help you and your family to plan so that you are not paying more IHT than is necessary – speak to us about how this works.

It’s worth noting that IHT must typically be paid within six months of the end of the month in which the person died. If it’s not paid within this timeframe, HMRC may charge interest on the outstanding amount.

What can I do to be prepared?

Get your Will in place and, importantly, review it regularly. Life throws all sorts of twists and turns our way, so it’s good practice to make sure your Will continues to reflect your wishes. Big life events such as a marriage, a divorce, grandchildren being born, or sale of property might affect the intentions laid out in your existing Will. Many people do not realise that, when they marry, their Will becomes invalid and they must make a new one.

The rules and thresholds around IHT change often. Get in touch so we can help with your estate planning, so you can get plans in place for mitigating the amount of tax due upon your estate after your death.

It’s not the most pleasant subject to think about, but it’s just as important to consider what will happen to your wealth in death as it is in life – after all, you can’t take it with you.