The inclusion of pensions, farms and small businesses in the inheritance tax net for the first time has thrown death admin into the spotlight. <\/p>\n
From April farms with assets of more than \u00a32.5 million and small businesses worth over \u00a31 million will be liable for a reduced 20 per cent inheritance tax on the portion of their value above the thresholds, while pension pots will be considered part of your taxable estate from April 2027, liable to the usual 40 per cent inheritance tax. <\/p>\n
Paul Attridge from the London accountancy firm Gerald Edelman said: \u201cWith the usual complexities of administrating an estate, combined with numerous shifting legislations, it is more important than ever to manage and record your financial affairs and assets in a way that will make it easier for your executors when you die.\u201d<\/p>\n
These are the nine key documents you need to sort out. <\/p>\n
Your will <\/p>\n
This is the most important document to complete before your death. It lays out your wishes for how you would like the assets you leave behind to be dealt with. Dying intestate, without a will, can cause complications for your family, especially if you do not have a clear beneficiary.<\/p>\n
You can create your own will, which will be valid as long as two adults, ideally not beneficiaries, witness you signing it. In Scotland you need only one witness, who must be over 16. Solicitors advise seeking legal help if your affairs are complicated and to avoid errors.<\/p>\n
Attridge said: \u201cA simple will is inexpensive to draft, however, considering the issues that can arise if you die intestate, it is money well spent.\u201d<\/p>\n
Creating a simple single will with a solicitor can cost \u00a3125 to \u00a3260. Mirror wills, where a couple create almost identical wills, usually leaving assets to each other and their children, can cost between \u00a3200 and \u00a3400, according to the comparison site Compare My Move. During March and October solicitors offer their services to over-55s for nothing as part of Free Wills Month. It is done on a first come, first served basis so get your inquiries in early.<\/p>\n
A letter of instruction<\/p>\n
A letter of instruction (ideally signed by you and witnessed) is often included in a will to help to clarify your intentions. It is not legally binding, and your personal representative or executor \u2014 the person dealing with your will \u2014 does not have to follow the instructions, but it helps to reinforce your wishes.<\/p>\n
The letter can be particularly useful for detailing issues such as who you would like to care for pets and your wishes for your funeral. <\/p>\n
Ian Dyall, the head of estate planning at the wealth manager Evelyn Partners, said: \u201cLeaving these expressions of wishes alongside a will ensures that the administration of the estate is as simple as possible and that all the assets of the deceased can be found and accessed. <\/p>\n
\u201cHowever, it is also the opportunity to address issues that may cause family arguments. For example, if one beneficiary appears to have benefited more than another it is an opportunity to explain why that was the case.\u201d <\/p>\n
A pension expression of wish form<\/p>\n
Pensions can become valuable assets, especially if someone dies after a lifetime of saving but before they have the chance to withdraw much of their money. <\/p>\n
An expression of wish form<\/a> can ensure that the beneficiary of a pension is made clear to your executor, who can then make sure inheritance tax payments and gifts to beneficiaries are made. This can help to avoid disputes after your death. <\/p>\n A pension expression of wish form can be found on your pension firm\u2019s website, or the online portal for a workplace pension. You can usually get a copy by contacting the company or the department that manages pensions at your work.<\/p>\n Pension and life insurance documents<\/p>\n Keep up-to-date details of your pensions and life insurance policies along with your will so that an executor can track down the pots in your estate and work out what needs to be paid out to the relevant beneficiaries. <\/p>\n Some life insurance policies can be taken out specifically to cover an expected inheritance tax liability, so they need to be easily accessible to avoid the possibility of HM Revenue & Customs charging late-payment interest. HMRC starts charging interest on unpaid inheritance tax bills six months after someone has died.<\/p>\n Power of attorney <\/p>\n Power of attorney gives a trusted loved one, or a professional, the authority to make decisions on your behalf in case you become physically or mentally unable to. An attorney can liaise with third parties including banks, the taxman, lawyers, pension firms and doctors on your behalf. <\/p>\n These documents are becoming more important and common as the population ages. To register a power of attorney application with the Office of the Public Guardian<\/a> costs \u00a392.<\/p>\n Anyone with complex needs or who is unsure of the process might benefit from seeking professional advice. Solicitor fees can vary between \u00a3120 to \u00a31,000 depending on the number of power of attorneys and the level of advice given. Approach several firms for quotes. <\/p>\n An IHT400 <\/p>\n The IHT400 form is an official inheritance tax document used to report the details of a person\u2019s estate to HMRC. Part of this form, the IHT403, can be filled out in your lifetime to record all gifts made to family, friends and charities. The form is free to download from the HMRC website<\/a>. <\/p>\n