This is another common misconception we hear from clients. They have made a Will, or a specific type of Will, in the belief that it will prevent their loved ones needing to obtain Probate or pay any tax on their death.
Unfortunately, this is not true.
Just because you have a valid Will in place, it does not mean that your Executors won’t need to get a Grant of Probate. This will depend entirely on the composition of your estate at the time of your death and the requirements of the bank and building societies, amongst other things. Probate is a legal document issued by the Probate Registry confirming that the Executors have the authority to deal with a person’s estate. Many asset holders will want to see this, so that they can close or transfer assets.
It is not possible to say whether a Grant of Probate will be needed until you have died and a qualified professional has advised your Executors on the specific circumstances.
In terms of the inheritance tax position, again, this will depend entirely on the specific circumstances of your estate and the terms of your Will. In most cases, if you leave your whole estate to your spouse or civil partner, for example, then your estate will not pay any inheritance tax. Likewise, if you leave your whole estate to charity, there will be no inheritance tax to pay. In other cases, whether inheritance tax is payable will depend entirely on the value and composition of your estate, together with any exemptions or reliefs available.
Inheritance tax is usually paid when a person’s estate is worth more than £325,000. This threshold is called the ‘nil rate band’. The nil rate band is frozen at £325,000 until 2020/21. The rate of tax is 40% on anything above the nil rate band, though the total amount can be reduced in some cases where certain exemptions and reliefs apply.
For deaths on or after 6 April 2017, an additional ‘residence nil rate band’ may also apply so that less inheritance tax may be paid when the family home is left to children, grandchildren and some other individuals (called ‘direct descendants’). However, this additional threshold will gradually reduce, or taper away from an estate worth more than £2,000,000. The additional threshold will reduce by £1 for every £2 that the estate is worth more than the £2,000,000 taper threshold.
For more information about inheritance tax and the residence nil rate band, visit our factsheet page.
Need further help?
If you would like any further information about the effect and validity of your current Will, making a new Will, your inheritance tax liability or any other estate matter, from a qualified, authorised and regulated Solicitor, contact the reassuring experts at Roche Legal.