Whether it’s making sure that the right people inherit from your estate when you’re gone, or that someone you trust can look after your affairs if you’re no longer able to, or that your nearest and dearest don’t lose their inheritance to the taxman or other unwanted attackers; here at Maplebrook Wills® we don’t just live, sleep and breathe estate planning… we positively love it! And we’d like to share our love for it, with you!
So, welcome to our inaugural monthly newsletter…
Royle Family Star Caroline Aherne Died Without a Will
Every day we hear stories of people from all walks of life who find themselves burdened with years of laborious work, emotional distress and financial hardship because of a loved one’s failure to make plans for the future. Plans which, at the very least, should include making a will, but could extend to registering lasting powers of attorney and diverting assets into a trust.
So, in this, the first edition of Maplebrook News, we’d like to focus on the case of the late comedy luminary Caroline Aherne – writer and star of the brilliant and unforgettable Royle Family – who, through dying without a will, accidentally left her mother with a whopping £70,000 Inheritance Tax bill.
To read the story in full and learn how to avoid a similar situation happening to you and your family, click here.
After Caroline Aherne died, in 2016 aged just 52, because she was single with no dependents, intestacy rules (the rules that apply when there is no will) dictated that her next of kin – her mother – should inherit her entire estate. Thankfully, Caroline and her mother were very close, so it’s likely she wouldn’t have minded that her mother inherited everything. But imagine if Caroline and her mother hadn’t been close or, worse, they didn’t get on at all. What then? Nobody would want their estate to go to someone they didn’t want it to go to!
Inheritance Tax liability
Caroline’s estate was valued at £500,000. As she was single, a £325,000 Inheritance Tax nil-rate band applied, meaning her mother could inherit £325,000 tax-free. Lucky her, you might think. But, as far as the £175,000 residue was concerned, it was subject to a 40% tax liability equating to an eye-watering £70,000! And as if this wouldn’t have been burden enough for Caroline’s mum, to satisfy HMRC, she will have had to pay it within 6 months of her daughter’s death!
No sympathy from the taxman
Some banks, under what’s called a small balance exemption will release funds from a deceased customer’s account to their family up to a certain level, but such a large sum as £70,000 may well exceed the amount that a bank is willing to release. Whether or not that was the case with Caroline’s bank, we don’t know. But inevitably, because there was no will, Caroline’s mother would have had to apply for a Grant of Letters of Administration in order to access her daughter’s assets, but this could only have been issued once the Inheritance Tax was paid.
So, unless Caroline’s mother had sufficient funds of her own, or the bank or a generous relative or friend had been willing to help, she may have had to take out a short-term loan – at an additional cost in the form of interest – in order to pay the IHT due on her daughter’s estate.
‘Shoulda Woulda Coulda’
So, what could Caroline have done during her lifetime that would have spared her mother all of this unnecessary extra complexity?
- Make a will. A properly executed, up-to-date will is the foundation of a good estate plan. In making a will, Caroline would have had to appoint an executor who could have helped her mother during the lengthy and complex probate process.
- Divert assets into a trust. Had Caroline done this, her assets would belong to the trustees and not Caroline, meaning this could have reduced or removed the Inheritance Tax liability on Caroline’s estate. Furthermore, time consuming probate would have been avoided meaning the trust assets could have been transferred to Caroline’s beneficiaries immediately, not 18 months or so later as is usually the case.
- Take out life insurance. Very sadly, Caroline died of cancer so wouldn’t have qualified for life insurance once she’d been diagnosed. But she could have taken out insurance prior to her diagnosis and set it up to pay a lump sum to her executors who could have used it to pay the Inheritance Tax and start the probate process.
Make Sure Your Will Works Effectively
Avoid these common problems when making your Will…
Maplebrook Wills can help you with Wills, Lasting Powers of Attorney and Trusts to make sure that your loved ones receive their inheritance quickly and efficiently.
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