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Make a will to protect your family

Paul Horton reminds GPs it can be crucial for your relatives to document who will inherit from you.

GPs are no better or worse than the rest of the population at getting around to writing a will. None of us enjoys contemplating our own demise, but if you have dependants, delaying this crucial step could be to your family's detriment.

A properly drafted will means that after you die your heirs can utilise the inheritance tax rules favourably

Rules of intestacy
It is easy to assume that under the rules of intestacy the right person will inherit. Many married couples and registered civil partners believe that, without a will, when one spouse dies the survivor on the first death receives everything, so why should they bother with a will? But this is not always the case.

The intestacy rules for England and Wales differ from those in Scotland and Northern Ireland.

Under the intestacy rules for England and Wales for example, this is what could happen in the case of a married couple with two children.

If the first spouse to die has an estate worth £925,000 (comprising their interest in the family home, savings, stocks and shares and so forth) an outright legacy (or gift) of £125,000 will go to the surviving spouse together with the deceased's personal items and effects.

Half of the remaining estate - £400,000 in this case - will pass to the two children. The other £400,000 half share will be held in trust for the benefit of the surviving spouse during their lifetime. They will get any income this generates but not the capital. When the surviving spouse dies, the children will inherit the capital.

All assets passing to the surviving spouse will be free of inheritance tax (IHT) but the £400,000 held in trust for the children will give rise to an immediate IHT charge of £35,200. This is calculated at £400,000 less the current IHT nil rate band (no tax payable) of £312,000 leaving £88,000 to be taxed at 40 per cent.

Surviving spouse
Where would this leave the surviving spouse? Would they inherit enough to maintain their standard of living?

What about the family home? What about the children? Are they too young to deal with their inheritance?

You can avoid all this uncertainty by having a will providing (possibly) that, on the first death, your entire estate passes to the surviving spouse or registered civil partner.

A properly drafted will means that after you die you can leave your children and grandchildren with IHT saving opportunities and protection in the event of, say, a future divorce or financial difficulties.

Properly structured wills can also be used to save IHT if you own an interest in a partnership or company.

There is a specific relief from IHT (provided certain criteria are satisfied) called 'business property relief' and if your will is drafted with this mind, significant tax savings can be achieved.

Paul Horton is a solicitor at George Davies Solicitors LLP.

Dying intestate

  • In England and Wales, a legacy (or gift) of £125,000 goes to the surviving spouse (or civil partner) plus deceased's personal items/effects.
  • Half the remaining estate is held in trust for the benefit of the surviving spouse during their lifetime, passing thereafter to the couple's children if any. Otherwise it goes to other relatives.
  • The other half share of remaining estate passes to the children, if any (otherwise it goes to other relatives).

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