When contacting the companies concerned do you know what you are going to say to them? For example, when contacting the house insurance company, you may have to close down the current policy and start a new one as the house could now be empty and that presents a different risk under a different policy, which may well be in your name as Executor. You need to know what your options are before you approach each organisation as you will quickly learn not everyone is trying to help you regardless of what they say to you. To get a more detailed understanding, download our Executor Training course.

If you are an Executor and want to know more follow me for more insights or just get in touch for a one to one.

Yes, I know you all would like to put your hand out to help them out.

Actually, if they knew you then you probably could.

Sometimes there are genuine reasons why this may need to be done as circumstances may have changed since the Will was written but often a little more communication between people could have got the result in a much simpler and cost effective way.

This is why I always say if you can talk to the people you are planning to benefit from your Will you should as the results normally improve because of it. In most cases this isn’t too hard as you are related to them!

As they don’t want or need the money they are being left they have a choice to vary the Will that they are benefiting from and direct the money to anyone else they want. Variation of Wills are perhaps more common than you may think and many people change things to suit what they want and not what the donor wanted.

So if you find yourself in this position give me a call.

There is no fail-safe way to guarantee BR will be available upon disposition (either on death, in life or on certain occasions within trusts). This is because the law and HMRC’s approach and attitude are always subject to change.

However, there are strategies you can use to improve the probability of securing BR.

Review paperwork and establish the facts

Periodically reviewing your affairs and maintaining a BR ‘paper trail’ is one of the best things you can do. Not only does this ensure that your affairs are organised in the most efficient way, but it provides a body of evidence to support any claims for BR (either by yourself or by your executors).

The two-year ownership requirement for BR is usually clear-cut ― little can be done to alter the facts regarding ownership of shares in the business. However, where the client is a sole trader or partner, it can be more challenging to establish when the business began. What evidence is there to support this?

We encourage you to retain such evidence demonstrating when the company started and the business assets were acquired. This is a much easier job (as many are) for you to undertake rather than your executors after death.

Wills

A Will is a document that determines how your assets will pass when you die. You are encouraged to put a Will and estate plan in place.

Taking this further, it has long been good practice to ensure that a Will is reviewed periodically. Reviews should take place after certain life events such as marriage, divorce and the birth of children or grandchildren. Although a good Will should be effective regardless of a testator’s assets at death, it is always wise to review the Will after a significant change in the size, nature or location of assets or perhaps a change in the law.

Does the Will effectively deal with any business assets that may attract BR?

Some questions to ask are:
• Are the BR assets left to the spouse or a charity (possibly via residue)? This will not make the most of the relief, which could be used more efficiently.
• Are the BR assets being allowed to fall into residue? Again, this may result in dilution of the relief, which could be avoided by gifting the asset in lifetime (s39a IHTa 1984).
• Could the BR assets be gifted to a discretionary trust? This would give more flexibility for succession and IHT planning. A Memorandum of Wishes should accompany discretionary trusts. It can be reviewed and amended regularly, with no formal execution necessary.
• Are the executors aware of the extent and nature of the business assets? Keeping clear records is always sensible. Do the executors know they have been appointed, and do they have the necessary expertise to deal with HMRC?
• Does the Will/trust documentation give the necessary powers to enable the executors or trustees to carry on the business after death?

Partnership and shareholder agreements

The first thing to ask: Is there an agreement in place?

A partnership with no agreement is merely a ‘partnership at will’ and is subject to the effects of the law, rather than any specifically drafted agreement between the partners.

This is important when estate planning is contemplated because the death of a partner dissolves the whole business unless there is an agreement to the contrary. Most written partnership agreements exclude this provision and make alternative arrangements allowing the surviving partners to continue trading.

S 33(1) Partnership Act 1890

If you have an agreement, what are the other terms?

A buy-out provision requires the deceased’s partner’s executors to sell the interest to the surviving partner(s). This can be fatal to the BR availability of the deceased partner’s share of a partnership.

It is advised (and accepted by HMRC as effective) that a separate cross/double option agreement is put in place, where the surviving partners have the option to purchase the interest, and the executors of the deceased have an option to ‘force’ the sale.

These points regarding cross/double option agreements are equally relevant for shareholders of limited companies, of course.

Ownership and use of assets are often key

An important example of this is a property owned by an individual but used by their business. Such a property can attract 50% BR. However, if ownership is transferred to the business itself, this will increase to 100%. Does the  paperwork and documentation reflect this distinction? Does the Land Registry title show this?

Generally, HMRC’s view is that the business balance sheet is not a record or evidence of the property being owned by the business as opposed to an individual – even if the balance sheet is signed by all the business owners each year and it was their understanding that they all owned the property as an asset of the business.

The best practice is to record by a declaration of trust that the premises are owned as business property (or held for the business) and to specify how future capital profits and losses from the property will be shared.

Investment portfolio

The rule is that quoted shareholdings will not attract BR unless the owner is a controlling shareholder. However, shares listed on the Alternative Investments Market (AIM) are treated as unlisted for BR purposes. Therefore, they will qualify for relief at 100%, subject to the shareholding being held for two years or more before disposal/death.

Purchasing AIM shares is a recognised and accepted IHT planning tool. HMRC’s Disclosure of Tax Avoidance Schemes guidance states, ‘the act of purchasing shares in order to qualify for business property relief after two years … is not a notifiable arrangement’.

Evidence of trading activities

It is probably clear to you what your day-to-day business activities are. However, is there paperwork to evidence this to HMRC as and when required?

BR is only available for ‘wholly or mainly’ trading businesses. This means more than 50% trading. Whether or not this is the case may not always be obvious. HMRC will consider this question by looking at the business ‘in totality’.

Again, there are questions to ask that will help you prepare for BR:

• What proportion of the business activity is letting property as opposed to, say, selling goods? What profit is derived from each activity? What about the turnover derived? While not a determining factor, good records and accounts will help support any BR claim.
  • What do you actually do? Can you time-record or keep logs demonstrating how many hours you spend pursuing trading activities?
  • What do the employees do? Are there appropriate employment contracts to evidence this? A good employment contract can detail the worker’s activities, potentially supporting a BR claim.

Many investment-based businesses will not easily attract BR. Some BR could be secured by running two (or more) separate businesses. One business ‘trades’ receiving fees in return, while a separate business (perhaps run as a small limited company) provides other ancillary services.

Excluded property

An asset not used or required for future use in the business cannot attract BR. This means that a company holding such ‘excluded property’ will have a reduced amount of BR.

This rule can be a problem where a company has more cash than is deemed necessary for its present needs. If this problem is to be avoided, there must be plans to use the cash in the business in the future (perhaps to buy a new plant or machinery). This is an area, therefore, where evidence is key.

Asking important questions of yourself, gathering evidence and reviewing documentation is thus crucial to helping your chances of securing Business Relief.

If you have questions regarding Business Relief, Kept Assets Ltd. is here to support you.

Get in touch  today.

www.keptassets.com

contact@keptassets.com

Tel:  01635 959111

Best Foundations mission is to educate and inform the public to the benefits of making a Will.  Their aim is to improve the estate planning industry by accepting only the Best estate planning professionals as their members and promoting them to the general public so that they can be assured they are instructing an ethical, reliable and suitably qualified estate planning professional.

Refreshments will be available.

To book please contact us at contact@keptassets.com or call us on 01635 959111.

Bloodline planning

Bloodline planning is about your family and the way they take part in the plan, know what it contains and why. As ever with these sweeping statements an example can sometimes get the message over more quickly than anything else.

It will come as no surprise that we often have to explain what Bloodline planning is to people but when they get it they really are on board with the difference between Bloodline planning and writing a Will and the benefits of what we are trying to do. I was explaining what we do to a lady (let’s call her Mrs A) when suddenly she interrupted me, as the penny dropped about what I was saying. “If only I had met you last year I might still be talking to my mother!”

An example

Well, that stops you in your tracks. It turns out that Mrs A’s aunt had decided to make her executor to her Will, without telling her. After the aunt’s passing they retrieved the Will and Mrs A’s mother had assumed that she herself would have been made the executor and was less than impressed that she had been sidestepped for her daughter. It is a very emotional time and the last thing anyone needs is a shock discovery. I can imagine that things were said that are not easily “unsaid” and a rift in their relationship was formed, which it would appear is not getting fixed easily or soon.

Click here to request a free Bloodline planning assessment.

Keep the family informed

What has this to do with Bloodline planning? Well, quite a lot as it happens. The logic of what the Aunt had done is great. She had realised that her sister, who was of similar age, was just as likely to die as she was therefore, she thought it would be much more sensible to pick a younger person who based on the law of probability was much more likely to be alive when she needed an executor (not guaranteed but much more likely than her sister). The mistake and where Bloodline planning would have helped was that she did not tell either of the people involved. Had she done this I am sure her sister would have understood the logic of the decision and after a little bit of pride massaging, would have supported her daughter (Mrs A) in the role.

Share the planning process

When you start to put a Bloodline plan together, we encourage you to involve as many generations of the family that are available, not so they can help you make decisions (as I am sure we all know committee decisions are not the fastest) but to make sure that everyone is aware of what you are trying to achieve. If they know what your plan is trying to achieve, not only can they help achieve it, they can point out if it is likely to fail because of information they know that you don’t. Sharing the planning process by sharing information also gives people the chance to understand their role in your plan and you are much more likely to get Executors and Attorneys for your estate that know what they are doing for you and why they are doing it.

A Bloodline plan has one other significant difference from a Will in so much as the Bloodline plan may involve multiple generations of the same family with coordinated ideas, thus ensuring that the greatest number of benefits are accrued and delivered to future generations of your Bloodline.

Will writing

Of course, a Will is a part of the Bloodline plan and it will be written to reflect what the plan is trying to achieve, but the major difference between the Bloodline plan and writing a Will is that everyone will be aware of what the plan is trying to achieve and the chances of surprises when emotions are high are reduced dramatically. One would also hope the chances of your family having a bad situation made worse will have been removed.

Difference between Bloodline planning and writing a Will.

If you would like to avoid some of these problems and have some guidance on Bloodline planning, please get in touch with us via email or phone. Or you can request a free Bloodline planning assessment.

About Kept Assets

We are a specialist advisory firm that can provide you with Bloodline Planning, comprehensive Will Writing and Estate Planning services. We are based in Newbury, Berkshire and cover the Newbury, Basingstoke, Reading and Oxford areas. During the Covid lockdown we are holding online video consultations with clients so please get in touch if you’d like to talk to us about how we can help.

Your Will needs to match your current circumstances

If any of these have changed since your Will was produced, you need to revisit it now:

• New life partner
• Recently divorced
• New baby
• New home

Changes like these need to be updated in your Will, otherwise your dependents could suffer financially, causing stress at an already stressful time. Understanding tax implications and the distribution of newly acquired assets all lead to the need to re-write your Will. Don’t lose pounds with an out of date Will!

Life changes

It’s a sad statistic, but these days around 45% of UK marriages end in divorce. If you’re part of this number, it’s time you redid your Will. This is even more essential if you’ve re-married and now have children in your new marriage. The situation becomes even more complicated with a blended family, and you will need professional help from experienced will writers to make sure your assets go to the right people, in the right amounts.

Or are you co-habiting? The number of couples co-habiting has doubled in the last ten years to over three million. If you are co-habiting, your partner will not automatically inherit your estate when you die, if you don’t leave a Will. Therefore it’s vital that you take advice on how best to set out your wishes.

Inheritance tax

The government likes to collect taxes, and this doesn’t stop when you die. Inheritance tax or IHT is payable from your estate on any assets over a certain amount. The standard rate is 40%. The good news is that with simple planning, you can reduce this.

During your life, if you give an annual gift to your chosen beneficiary, you can save your estate some inheritance tax. Wedding gifts up to a certain value also avoid IHT. Inheritance planning will save you from losing unnecessary pounds.

Beneficiaries

If you die and don’t have a Will, your spouse gets your estate, right? Not necessarily. Children and other family members may have a claim. To make sure this doesn’t get nasty during the probate process, it’s vital to choose your beneficiaries wisely, and name them in the document.

Estate planning

Estate planning is crucial. You must be sure to include everything to be distributed in your Will. These include bank accounts, stocks, foreign assets and pensions. One more thing many people overlook is their digital legacy. Access to social media profiles, websites, blogs, and even pictures needs to go to the right people.

Out of date Will – where to find out more

If you think you have an out of date Will, we are currently offering a free Will assessment – if you’ve already got a Will but you’re not sure if it still does what you want it to, we’ll evaluate it and offer comments and suggestions, entirely free of charge. If you’re interested in taking advantage of this offer, please visit our Free Will Assessment page.

Wills can be complicated. If you want to avoid losing valuable pounds, and are unsure about anything, please call us on 01635 959111 to talk to our Will writing experts, they’ll make sure everything is current and covered.

You can also fill out the form on our Contact Us page or email us at contact@keptassets.com.

The government also has some online advice about updating your Will.

About Kept Assets

We are a specialist advisory firm that can provide you with Bloodline Planning, comprehensive Will Writing and Estate Planning services. We are based in Newbury, Berkshire and cover the Newbury, Basingstoke, Reading and Oxford areas. During the Covid lockdown we are holding online video consultations with clients so please get in touch if you’d like to talk to us about how we can help.

The Will

Ideally you need a copy of the Will when you are made an Executor and you should make sure you are given copies at any point after that while you remain an Executor and changes are made. You should ideally have a conversation with the person that appoints you about what they are looking to achieve with their Will as the mechanics of a Will do not always cover the spirit of what is trying to be achieved and a conversation will illuminate this. After their death, you will need to file the Will with the probate court, if it’s applicable. It’s also possible that you’ll need to read the Will to the deceased’s inheritors.

Funeral plans

It’s highly likely that you’ll be the one to organise the funeral, so make sure you have read the Will prior to making the funeral arrangements as the Will often carries details of what the deceased wants to happen at their funeral, for example, the music, prayers or readings, plus the type of funeral they wish to have.

Maintain properties

The Executor is responsible for all assets until they are distributed to the beneficiaries. It could be some time before this process gets finalised, so in the interim, it’s up to you to ensure any assets or properties are maintained, so they remain at “sale-value”, should that be the final decision. If there are other valuable assets stored in locked boxes, they must be located and kept secure.

Debts and taxes

Before any of the assets can be distributed, all debts must be paid. You may even need to lodge tax returns from the beginning of the year until the date of the decedent’s death.

Dispose of property

The remains of the estate need to get distributed as per the instructions in the Will. If there is contentious probate, this task can prove to be drawn-out and time-consuming.

Role of an Executor – where to find out more

Contact us today so we can guide you in how to create a Bloodline Plan that involves your Executors from the start.

Or you can download our free guide: “What is the role of an Executor?“