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Where there’s a will
Q:
My husband and I made our wills in February 2007, with a will-writing company. We asked for their advice regarding inheritance tax and they advised us to include a will trust and to change joint ownership to tenants in common.
We have no children and our trustees are my niece and nephew.
With the inheritance tax threshold being increased to £600,000, would it be in our interest to have the trust taken out of our wills? And can you tell us what is best – joint ownership on the deeds or tenants in common? Does it make much difference? We would appreciate your advice.
Diane Lloyd, Birmingham
A:
Donna Bradshaw replies:
The rules for inheritance tax have changed since you made your wills last year, to your advantage.
The Chancellor announced the changes in the Pre-Budget Statement last October, with the changes becoming effective immediately. The changes allowed any unused inheritance tax nil rate band to be passed on to the surviving spouse or civil partner; meaning that the maximum nil rate band on death of the survivor would be double the nil rate band; i.e. £600,000 for the tax year 2007/08.
The change was introduced to help those couples who were caught by inheritance tax due to the rise in value of their home, which was their main asset, and took away the need to take out a will trust and alter the ownership of one’s home to make use of both nil rate bands.
If your affairs are very straightforward and your main asset is your home, there isn’t really any need to do a will trust and change ownership to tenants in common as all it will really do is give you more expense and paperwork for no benefit.
If, however, you have significant liquid assets and/or your affairs are complicated, there may be benefit in writing a will trust.
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22 August 2008 [0 comments]Q:
I currently hold shares in an AIM-listed company and was about to sell these to realise losses (to offset against gains elsewhere), but the shares have since been suspended and I think the company is now in administration.
The current value based on the suspended price is around £1,400, and the realised losses based on that value would be around £12,000.
The losses are more valuable to me at the moment than the actual value of the shares themselves, and I need those available by the end of this tax year. I assume it’s not possible to roll gains forward?
Is there any way that I can now realise these losses given that I cannot sell the shares? I am wondering if gifting them might be a way of releasing the losses? I’m thinking perhaps either to my brother (but am not sure what tax implications this might have for him) or to charity (and whether I could then claim tax relief on the value gifted)?
Is any of this possible, or are there any better alternative routes? Any advice would be very much appreciated.
Mrs K Hall
Kent
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