@@JamesShack Works for me, but one comment, maybe make the email field longer, as someone with a longer email might think have they typed it wrong, as it goes of the screen. Thanks
The most useful finance video I've seen for some time. We'd been quoted over £2000 by the solicitors to set up finance and health powers of attorney for both of my very elderly parents. Just completed all four on the government website for £328! Thank you so much James, you knocked that one out of the park! Brilliant! X
My dad died in January and was a big fan of your channel. Fortunately he had followed many of the tips you've shared in this video. Thanks for the content - it's helped me understand the rationale behind the decisions he made.
Hi Michael, I'm sorry to hear that. I imagine it's not an easy time right now but I'm very glad to hear your father was well organised and thinking about his family. No problem at all for the content. Thanks to you and your father for supporting the channel over the years!
I bought a book "I'm dead, now what?" In which you can list bank accounts, pensions, savings, list people to be contacted, solicitors, executors, even things like which energy suppliers you used etc etc. There's lots you don't think of. I'm sure there are similar publications. Worth getting one to list all these things out.
Or as I did with my mum, appoint one jointly. Myself and a solicitors firm were appointed as joint executors with the intention that I would do most of the donkey work and the solicitor would only step in as required to keep the costs down. When the time came, I found out that it doesn't work like that; you can only have one executor and I had to pay over £200 for the solicitor to resign from being executor. As it turned out, mum's affairs were fairly straightforward and I was sole beneficiary. Some years earlier I had done LPAs, thankfully. Doing them myself online was very easy. The hardest part was getting the financial one registered with every institution as some banks insisted on an in-person meeting. That needs fixing by government; any financial institution or utility company should be able to access a database of lpas.
I think this video has just knocked off the perch your previous one which I stated was your best. Honestly James, this is gold dust, eye opening advice for most of us who only understand the basics and live with the view that 'matters will sort themselves out'......thank you
Thank you so much for this video. My lovely mum died in November and I have learned much of what you have covered here from dealing with her estate. What was clear is that the education that would help people make wise decisions and cope better throughout a very painful period is sorely lacking. This video goes a very long way towards filling that gap and should be on the school curriculum! Thank you for your efforts - much appreciated.
James, this isnt too niche, this is exactly what we are here for. Keep up the good work, I'm sure this video alone has helped a huge number of families make difficult times slightly easier to come to terms with.
My dad passed away in December. He has a new wife as my mum passed away 9 years ago. I am still in my early 40s so not easy. As he had an old will only when my mum was alive of which he wanted 50 % equally between me and my brother. On his death bed a solicitor was there but he couldn't even speak anymore so he died intestate. His new wife who also has another house, is now in his estate (of which is not in her name) and has said she will stay there and has not said of yet she will pass on any of his assets to me or my brother it seems. Legally now I am entitled to nothing now. My point being I wish i had told him to update his will, plus now I will make sure I have an up to date will so my son gets everything from me! any advice too please will help.
Thank you James for posting these videos, my wife and I have been sitting on money we have inherited for far too long. We were just too confused and worried about what to do with it. We also have no will or POA even though we have 2 children, we have talked about it plenty but then never do anything.👋👋😀
Father in law passed away suddenly at the beginning of the year. Two months after my in laws had sold up the family home and moved into a rental before they started building their new house. Turns out there's no will and outside of their joint account which thankfully the proceeds from the house sale went into, the other assets all have to be discovered and catalogue as it wasn't information they shared between themselves. Has meant rooting through countless boxes and added so much needless admin on top of an already awful situation. Would not recommend. It does though mean that my mother in law is looking for some financial advice so I've shared your contact details with her.
Hi Russell, thank you for the comment. A great example of why it helps to keep a list of your assets. The joint account point is a very good one too. Even if you're married you can get locked out of everything unless you have a joint account. Thank you for passing on my details!
A really good video (as always!). We have recently discovered that it's never too early to start planning. My wife and I (both mid-30s) recently prepared wills. We have two young children and felt we should have them in place. Save for the equity in our home, we didn't consider ourselves as having much in terms of assets / an estate, but as a result of us both having life insurance policies, as well as life cover through work, we ended up establishing trusts as well as preparing our wills to ensure any proceeds from the life cover are dealt with in a tax efficient manner.
We are currently experiencing mistake one with our uncle. He now has dementia and we have to apply for a court-appointed deputyship, which can't really be applied for until the person is too far gone, take a long time to get, and is preventable by giving power of attorney to a trusted loved one.
Great video. But i think the real question is why the hell should anyone pay inheritance tax of something we (parents) worked whole life for and we already paid taxes for ?
@@lonpfrb I know that. I was responding to the claim that IHT is a tax on on something that has already been taxed. You make my point for me. The profit arising from the increase in house price has not been taxed. Therefore, IHT on that is not a double tax.
Another big saving is that if your spouse dies before you, you inherit their IHT allowance and Residence allowance. So make a note of this and a copy of a house valuation from the time of the spouse's death and put it with your will, so that your executors can easily claim the allowances, which now could total £1m.
And a copy of your spouse's will. We couldn't find my father's will and neither could the Probate office. It held up the sale of the family home. Wills are kept online now but my father passed just before they started putting them online. It was registered we found that information but the hard copy was never located.
Great video. I do not live in the UK but even living in another country it is wise to know the laws and how it will affect you if your spouse or parents die. I saw this happen with my grandparents and parents. My mother was left having to deal with it all. With my grandparents, she had to fight with her sister's husband who was a very greedy man but she won the battle in the end. My grandmother was protected due to my mother. She had to deal with my father getting Alzheimer's but she got the power of attorney papers she needed to protect herself and my father from social services stepping in. When she got sick she sat down with me and told me how everything was set up and what to do when she died. Simple steps 1,2,3 etc. I followed what she had written down, the final step to see the lawyer. He did not charge me anything as he said I did it all on my own. It took me one week to do it all. He read what she wrote and laughed. Said if all his clients did this life would be very simple when it came to settling an estate.
Great video. What I would say is that an LPA costs £82 online and does take about 45 mins to complete. However once you’ve got all your witnesses together and send the LPA back to the office of the public guardian (Birmingham ) it’ll take them anything upto 6 months to activate it. I’ve been through this process twice and it’s a minefield at its easiest. Good luck.
Ours were close to 5 months, but finally came through last week. There has been extensive media coverage regarding the excessive delays. Also worth noting that the fees for those on low incomes are reduced by 50%.
My mum died in March 2020 there had been a family argument and my sisters disowned me, I still don’t know why this happened as they don’t talk to me at all. My mum had a Will but my sister was an executor, but on my mums death she decided that she didn’t wish to be an executor anymore and this was passed to my brother Inlaw of my other sister. It has taken so long to sort this out now, it’s been 2 years and some of the money from my mums estate has been given out, but we are still waiting for it to be finalised. It’s a nightmare as we can’t move on in our lives.
One aspect that isnt mentioned in this video around IHT, is IHT on property can be delayed and paid in instalments over 10 years. You will get charged interest, but it can give valuable breathing space for paying an IHT bill without having to sell investments, property or indeed take out additional loans to pay it. It massively helped me recently when I had to pay IHT on behalf of one of my parents. You also have the freedom to pay the property IHT down quicker if you wish (e.g. agree instalments with HMRC, but then pay 9/10 instalments in 1 go a year later once you have had the breathing space to allocate the money).
James, your videos are great. Since watching this video, my wife and I have set up mirror trust wills and also about to do both LPA’s. An important subject that is too often overlooked, I’ll be telling friends and family. Keep up the good work 👍
You have to be very carefull when you start leaving money to Charity they have solicitors who can challenge the will and cause major upset on a death yes give them an amount of money but never give them a percentage of your estate they will challange every thing unless you get it 110% right good video I am divorced and have one son and i have given my son my will to keep the reason i have done this is to protect him from my currant wife who could say after i have died there was no will folk can change after a death
An awesome video as always James. Your advice is always great but one to watch with the recommendations. The Guardian Angel one is £120 (plus the £82 government fee per power of attorney) - therefore using them for both medical and financial would cost £284 when you can do it online yourself for £164. Now need to see if I can get a refund as paid £120 when I didn’t need too.
@@JamesShack no worries. They gave me a refund as I emailed them straight away and I’ve done it myself for £82. Keep up the great work, I love seeing your videos. Really informative and well produced 👍
16:56 super useful & interesting, thx! I’m new to your channel but have you done an episode on couple planning? My wife (52) is a civil servant with state pension, so not stocks-dependent, whereas I (53) am stocks- based …
A few questions: When valuing the estate how do you factor in the persona possessions value accurately? Is there depreciation percentage you can apply to the purchase cost or do you have to get the all possessions individually valued? Equally, where they are jointly owned between a married couple how is that factored in to the valuation? With Archie's case how was it determined who the pension pot went to, him or his sister, or do they each get 50% of it? Becasue as you say it is more valuable than cash of the same amount due to the tax wrapper...
There are various low-tax retiree programmes in Europe, eg flat rate 10% in Portugal, 5% in Cyprus, 7% in Greece etc. are there implications to these, eg if you die while non U.K. resident?
Got a quote for power-of-attorney financial and health for me and the Mrs it was about 2400 quid, but apparently there are other ways you can do it that are free, this video reminds me I need to follow that up and look for better quotes
Please could you talk about family investment companies or how to set up a trust.. really need to avoid as much tax as possible.. thanks Also could you do a section on expats and their tax liability
Such a useful video. My son is currently going through hell dealing with his dads estate (no will or deed of wishes for pensions) along with his dads grabby girlfriend who has managed to persuade trustees that they lived together by her friends giving witness testimonies. She’s been awarded £150k as a 100% beneficiary. It’s quite unbelievable. Make a will and do an LPA folks! Your family will thank you for it.
Im going through submission. Its a pain to collect wet ink signature when life is spread around. Keep it simple. Have your witness, LPA, LPA witness and backups nearby.
HI James - On Frank's estate , wouldnt the 300K ISA also be outside the estate so making the total estate worth £700k (rather than £1M). I know this is just an example case study but just wanted to mention the point around ISAs
No. ISAs would fall inside of his estate. However there is a spousal exemption that means if your are leaving ISAs to your spouse they can put that same amount into an ISA and no IHT is charged. All other assets also have that spousal exemption.
No, ISAs are part of the estate and subject to IHT. You might be confusing this with the ability to leave an ISA wrapper in place, so (for example) if a spouse inherits the estate the tax-free element of the ISA remains.
Why did he not use the direct payment scheme and fill IHT423 which pays directly from the bank or building society to HMRC without the need of probate or letters of administration only watched the video the other day ,so you might already know this.
Very informative video! Thank you! I’ve just subscribed to your newsletter too. But what’s the logic behind the law that assets shouldn’t be sold to cover the IHT bill?! Also, could you talk about trusts in a bit more detail? I know your competition (Chris Bourne) touched upon this in one of his videos but I keep wondering why we shouldn’t all ‘live out of a trust’ - would this save any non-IHT?
This isn't really accurate on inheritance tax. You only need to start paying IHT within six months of death and you don't need to have finished valuing the estate to do this. In fact one option HMRC offer is to pay IHT yearly over ten years for things that can take time to sell. Although they will charge interest on any money owed after six months.
I've had to organise 2 deceased estates, one with assets in 2 countries (uk Australia) the other was in the Uk and im based in Australia. I had to get letters of administration once in Australia and twice in the Uk. The worst company to deal was lloyds who during the pandemic insisted on using mail (express one way was approx 4 weeks) yet scottish widows accepted every by a secure message service and guess what it was lloyds secure messenger! Because lloyds owns scottish widows.
Very helpful video James. I'd be interested to have your thoughts on using a Discounted Gift Trust as a mechanism to reduce IHT and provide non-taxable "pension" capital withdrawals, where the initial gift has an assessed portion (the "discount") that is immediately outside the Settlor's estate after creation and the remainder of the gift drops out after 7 years as per any Potentially Exempt Transfer.
Any tips for how to approach this delicate subject with parents? Mine are convinced that as soon as I am granted any sort of access to their affairs, I will sell all of their assets and put them in a home.
It's a tough one. Often it's best if you can get them to speak with a service like www.kinherit.co.uk/ where you get an adviser you can talk to. If they hear it from an independent party its often much easier.
Really interest, and terrifying. I didn't realise you had to pay the tax before selling off the assets. My parents and parents in law are both home owners in expensive parts of the country having bought a long time ago. Can I ask - is the reason that the nil rate band for inheritance of the residence by children wasn't applied (increasing the tax allowance to £500k) because there was no will? And presumably the reason father's £325k nil rate band wasn't rolled into the spouse band was because the ex-spouse had already died and presumably didn't pass hers onto him? I'm trying to work out how this would play out in my family and it doesn't end well - some people are very resistant to having those conversations but their resistance is going to cause so much pain for their kids later!
@@JamesShack brilliant, thanks for clarifying. I've stopped panicking now but I really need to be having some conversations. Tricky stuff but so important, thanks for tackling it. ❤️
Well done James, its a bit different here in Australia but very thought provoking. We have a inheritance Tax on our Superannuation, With planning it can be minimized or avoided.
I think there is a slight error on the visuals when discussing laws of intestacy ( shows spouse with 813k rathe than 270k) Would love to see some content on trusts
Thanks for the comment. That's because the spouse gets the first £270k, and then the rest of the estate is split 50% to the spouse and 50% to any surviving children. So the spouse end up with £813k in total. It was quite a quick series of slides!
i'm a bit lost: the giving 10% to charity to reduce the taxbill just means that actually its just a nice way to give money to charity surely? it doesn't increase the amount the children receive? still nice but it's just a thing to say "lower tax bill" when really its just directing money to a charity more of your choice than HMRC
Hi James, good video as per usual. On the topic of gifts am I correct in thinking there is no limit to the amount you can gift? It's just the 7 year time frame you need to get past? I'm assuming you need to notify HMRC that this is a gift amount or note it on a transfer for transparency sake?
Do also remember gifts from surplus income; these really need to be documented but once established are not PET and no time frame (to be out of IHT) applies.
People must wake up if they are not married to their partner. It doesnt matter how long youve been together, got kids, have a home, or consider yourselves 'common law' partners, of which there is no such thing, your not automatically entitled to anything. Even if your partner is seriously ill in hospital, you have no say over medical decisions, it will be their parents or siblings that will be entitled to make decisions. Be aware.
My Grandad knew somebody who was elderly and his wife had died. They had one Son who wasn't married and had no children. To be clever the Dad handed over all of his estate to his Son whilst he still had 7 years left to live but the Son died after a couple of years and the Dad inherited everything from his Son. So he effectively inherited his own money back and had to pay inheritance tax on it!
James you may want to look into some sound pickup upgrades. The audio on your videos is quite tinny compared to other TH-camrs whose audio sound like they are actually sitting next to you. But other than that fantastic content keep it up!
@@JamesShack very much so. I got signed off today as an IFA and feel overwhelmed by it all! Your videos help me remember the steps to be a good adviser. Thank you
This is amazing advice and things I’d never considered. Thank you. With regards to a LPoA, how could I word my preference so that my Attorneys seek advice from a professional financial advisor to efficiently organise my estate to the benefit of my beneficiaries - i.e. avoid as much tax as possible? Would this likely be accepted in an application?
You should be able to put your estate in a good enough order before you die, or become incapacitated that its ok. Or establish a relationship with an adviser before you lose it. Many people end up working with an adviser as they get older because they know that at some point, they'll die, or be unable to manage, and they want their surviving spouse to have someone they can rely upon.
Clickbait with good intentions. It's a very important video that everyone needs to know more about. But if I called it "Wills & Lasting Powers of Attorney Explained" it won't get in front of the people that need to see it.
Frank was no fool financially so it does seem a little odd that he hadn't done his planning here. I've had LPA for over a decade and nearly finished executing my late parents estate. I've paid no IHT. I had to make a lot of decisions myself. If anybody were to ask me to do this again the answer would be NO.
Mum passed away in December last year - luckily she had already set up a will and lasting Power of Attorney but in October she was fit and healthy and was planning a trip to Japan in 2024. It was less than 4 weeks from hospital admission to passing away and I cannot imagine how to even start sorting her estate if this was not already in place. Go get it sorted and fast!.
2 other resources if your loved one or parent dies. 1. Tell Us Once (Govt service to notify all govt agencies of a death at the same time) 2. Death Notification Service (1 online service that allows you to notify every financial institution in UK of someone's death in 1 go. Each institution will then contact you if they find a record of that person in their records).
Have just gone through these after losing my father in February. Tell Us Once is very good. The DNS service I found a bit limited, especially for insurance and shareholdings. If your loved one's insurance isn't with one of the bigger institutions you will still have to follow up with individual companies separately.
As a 71 yr old this video is a huge wake up call. I do not want to end up like Archie!! Many thanks James, will sign up for your newsletters, Alex in Norway.
That's probably be in a Newsletter because that topic will only be of interest to a small segment of my audience. You can subscribe here: james-shack.co.uk/newsletter
So many people have these issues. I lost my wife when I was 45 and she 46 to breast cancer. Even though she was very unwell, she wanted to believe she wouldn't die and that her treatment would work and after she passed away even though we were married, I did NOT automatically get access to things that were in her name without going through probate. It was an absolute nightmare at a time I was very upset and vulnerable. So James' points in the video are so true, I can tell you that from bitter experience.
Great video James. My parents are worried about deprivation of assets, so don’t give away more than a nominal sum. They both had parents and siblings that spent time in a care home, but they have more than enough to see them through an extended stay. How do people give away enough without being accused of deprivation of assets?
To avoid deprivation of assets, your parents would have to transfer assets off their name and onto child’s name at least several years before they get diagnosed with any health conditions, which could indicate eventual decline into a care home. It has to be way before any diagnosis, when they’re relatively healthy, to avoid the ‘deliberate’ accusation by the council. If they’re not comfortable transferring to children this way, due to the risk it poses to their own financial security, they can put their properties into ‘tenants in common’, rather than joint ownership. So if one of them dies or goes into a care home, at least half the house(s), might be saved for children, as the deceased parent’s half of the house(s) would go to whoever is in their will, e.g. children, or the care home parent’s half of the house(s), only, could be claimed by the council. The problem arises if both need care homes then you’re screwed.@ A C
My understanding is that this need only be a concern if they plan on relying on the state for care. A solicitor would know best, but my understanding is that they could gift away their assets to you, and you then pay the care fees (you must have no obligation to do this otherwise it would be a gift with reservation). If as you say they have more than enough for an extended stay then social care funding would not be required and deprivation not a concern.
You can sign up to my Newsletter here 👉james-shack.co.uk/newsletter
Screen goes black?
@@2000andybaker Hmm. It works for me. Are you on mobile or desktop? What browser are you using?
@@JamesShack Works for me, but one comment, maybe make the email field longer, as someone with a longer email might think have they typed it wrong, as it goes of the screen. Thanks
@@jamesc328 I appreciate the feedback! I’ll update that now.
It works for me x
The most useful finance video I've seen for some time. We'd been quoted over £2000 by the solicitors to set up finance and health powers of attorney for both of my very elderly parents. Just completed all four on the government website for £328! Thank you so much James, you knocked that one out of the park! Brilliant! X
That's great to hear Greg. Yes, there's not much a solicitor can do with an LPA, it's makes for rather expensive hand holding!
My dad died in January and was a big fan of your channel. Fortunately he had followed many of the tips you've shared in this video. Thanks for the content - it's helped me understand the rationale behind the decisions he made.
Hi Michael, I'm sorry to hear that. I imagine it's not an easy time right now but I'm very glad to hear your father was well organised and thinking about his family.
No problem at all for the content. Thanks to you and your father for supporting the channel over the years!
I bought a book "I'm dead, now what?" In which you can list bank accounts, pensions, savings, list people to be contacted, solicitors, executors, even things like which energy suppliers you used etc etc. There's lots you don't think of. I'm sure there are similar publications. Worth getting one
to list all these things out.
That’s a great idea!
Thank you
DO NOT under any circumstances appoint a solicitor as executor 😱
Or, even worse, your bank
Or as I did with my mum, appoint one jointly. Myself and a solicitors firm were appointed as joint executors with the intention that I would do most of the donkey work and the solicitor would only step in as required to keep the costs down. When the time came, I found out that it doesn't work like that; you can only have one executor and I had to pay over £200 for the solicitor to resign from being executor.
As it turned out, mum's affairs were fairly straightforward and I was sole beneficiary.
Some years earlier I had done LPAs, thankfully. Doing them myself online was very easy. The hardest part was getting the financial one registered with every institution as some banks insisted on an in-person meeting. That needs fixing by government; any financial institution or utility company should be able to access a database of lpas.
Myself and my now late brother were appointed as Executers to my father’s estate… without our knowledge…our step mother failed to tell us either…
Why?
@@gelosul If you're a solicitor you'll know why... 😊
If you're not - ask a trusted friend or family member 👍
I think this video has just knocked off the perch your previous one which I stated was your best. Honestly James, this is gold dust, eye opening advice for most of us who only understand the basics and live with the view that 'matters will sort themselves out'......thank you
Haha thank you Mark. I'm glad you're finding them useful!
Thank you so much for this video. My lovely mum died in November and I have learned much of what you have covered here from dealing with her estate. What was clear is that the education that would help people make wise decisions and cope better throughout a very painful period is sorely lacking. This video goes a very long way towards filling that gap and should be on the school curriculum! Thank you for your efforts - much appreciated.
James, this isnt too niche, this is exactly what we are here for. Keep up the good work, I'm sure this video alone has helped a huge number of families make difficult times slightly easier to come to terms with.
I hope so !
My dad passed away in December. He has a new wife as my mum passed away 9 years ago. I am still in my early 40s so not easy. As he had an old will only when my mum was alive of which he wanted 50 % equally between me and my brother. On his death bed a solicitor was there but he couldn't even speak anymore so he died intestate. His new wife who also has another house, is now in his estate (of which is not in her name) and has said she will stay there and has not said of yet she will pass on any of his assets to me or my brother it seems. Legally now I am entitled to nothing now. My point being I wish i had told him to update his will, plus now I will make sure I have an up to date will so my son gets everything from me! any advice too please will help.
James, this is a great video. I am now in the process of setting up our wills and LTA! Thanks, Simon
Thank you James for posting these videos, my wife and I have been sitting on money we have inherited for far too long. We were just too confused and worried about what to do with it. We also have no will or POA even though we have 2 children, we have talked about it plenty but then never do anything.👋👋😀
An exceptionally useful video. I hope lots of people see this and action the mitigation steps (esp. LPA + Wills)
I hope they do. There's no downside to having these in place!
Father in law passed away suddenly at the beginning of the year. Two months after my in laws had sold up the family home and moved into a rental before they started building their new house. Turns out there's no will and outside of their joint account which thankfully the proceeds from the house sale went into, the other assets all have to be discovered and catalogue as it wasn't information they shared between themselves. Has meant rooting through countless boxes and added so much needless admin on top of an already awful situation. Would not recommend. It does though mean that my mother in law is looking for some financial advice so I've shared your contact details with her.
Hi Russell, thank you for the comment. A great example of why it helps to keep a list of your assets.
The joint account point is a very good one too. Even if you're married you can get locked out of everything unless you have a joint account.
Thank you for passing on my details!
A really good video (as always!). We have recently discovered that it's never too early to start planning. My wife and I (both mid-30s) recently prepared wills. We have two young children and felt we should have them in place. Save for the equity in our home, we didn't consider ourselves as having much in terms of assets / an estate, but as a result of us both having life insurance policies, as well as life cover through work, we ended up establishing trusts as well as preparing our wills to ensure any proceeds from the life cover are dealt with in a tax efficient manner.
Yes making sure that your life insurance is written into trust is an important one!
@@JamesShack isn’t life insurance kinda automatically set up to pay beneficiaries when nominated. In a trust format. So outside of IHT
@@SeniorNI Not automatically. THat's an error lots of people make.
We are currently experiencing mistake one with our uncle. He now has dementia and we have to apply for a court-appointed deputyship, which can't really be applied for until the person is too far gone, take a long time to get, and is preventable by giving power of attorney to a trusted loved one.
Thank you for sharing this. I hope others take action to avoid this in the future.
Always make contemporary notes when you take any actions. Easy to check where you are up to.
Can you please expand on this? Do you mean specifically in relation to gifts?
So true James my mom and dad passed away 10 years ago and had everything in order including the burial plots.
Thanks mom and dad!🙏🏽
Kindness from beyond the grave.
I wish there was an Australian version of you. This is gold.
Haha there should be!
Great video. But i think the real question is why the hell should anyone pay inheritance tax of something we (parents) worked whole life for and we already paid taxes for ?
Did the parents pay taxes on the increase in the value of their house?
@@joshua6244 Primary residence is exempt from capital gains tax so they don't owe anything
@@lonpfrb I know that.
I was responding to the claim that IHT is a tax on on something that has already been taxed. You make my point for me. The profit arising from the increase in house price has not been taxed. Therefore, IHT on that is not a double tax.
@@joshua6244 That profit is not subject to tax rather exempt. IHT on that would be inconsistent - just because the owner died.
@@lonpfrb You miss the point. Never mind.
Another big saving is that if your spouse dies before you, you inherit their IHT allowance and Residence allowance. So make a note of this and a copy of a house valuation from the time of the spouse's death and put it with your will, so that your executors can easily claim the allowances, which now could total £1m.
Yes very important advice.
And a copy of your spouse's will. We couldn't find my father's will and neither could the Probate office. It held up the sale of the family home. Wills are kept online now but my father passed just before they started putting them online. It was registered we found that information but the hard copy was never located.
This is so helpful and the story behind the scenarios make it even more interesting. Thank you!
I'm glad you found it useful Mattew!
Great video. I do not live in the UK but even living in another country it is wise to know the laws and how it will affect you if your spouse or parents die. I saw this happen with my grandparents and parents. My mother was left having to deal with it all. With my grandparents, she had to fight with her sister's husband who was a very greedy man but she won the battle in the end. My grandmother was protected due to my mother. She had to deal with my father getting Alzheimer's but she got the power of attorney papers she needed to protect herself and my father from social services stepping in. When she got sick she sat down with me and told me how everything was set up and what to do when she died. Simple steps 1,2,3 etc. I followed what she had written down, the final step to see the lawyer. He did not charge me anything as he said I did it all on my own. It took me one week to do it all. He read what she wrote and laughed. Said if all his clients did this life would be very simple when it came to settling an estate.
That's a great lesson for other to learn, thank you for sharing!
Really useful video. Sadly, some who need their PoA's also forget they created it leading to complications, thence denial.
Great video. What I would say is that an LPA costs £82 online and does take about 45 mins to complete. However once you’ve got all your witnesses together and send the LPA back to the office of the public guardian (Birmingham ) it’ll take them anything upto 6 months to activate it. I’ve been through this process twice and it’s a minefield at its easiest. Good luck.
That seems a long time. I did one recently which took two months. Found it quite a simple process once I'd done some research.
Thanks for the comment Al! Another reason why it's important to get this stuff done well in advance.
Ours were close to 5 months, but finally came through last week. There has been extensive media coverage regarding the excessive delays. Also worth noting that the fees for those on low incomes are reduced by 50%.
Ours took 8 weeks in total. Sent off in December got the LPOA back yesterday. My parents are only in their early 50s but have set them up already.
Thanks James. This will help a lot of people.
Thanks for watching Jonathan. I'm glad you found it useful.
My mum died in March 2020 there had been a family argument and my sisters disowned me, I still don’t know why this happened as they don’t talk to me at all. My mum had a Will but my sister was an executor, but on my mums death she decided that she didn’t wish to be an executor anymore and this was passed to my brother Inlaw of my other sister. It has taken so long to sort this out now, it’s been 2 years and some of the money from my mums estate has been given out, but we are still waiting for it to be finalised. It’s a nightmare as we can’t move on in our lives.
I'm single and I don't have kids, so in terms of myself when I die, I'm not sure who is even going to be around
Another great video on such an important topic.Thanks! And thank you for not saying "myriad of" like so many others do...
Just been thru all of this. Painful. Took months the get access to my dads account. I was £2.5k out of pocket paying bills etc.
very smart advice and so appropriate, I wish I had seen something likethis years ago. keep up the good work.
One aspect that isnt mentioned in this video around IHT, is IHT on property can be delayed and paid in instalments over 10 years. You will get charged interest, but it can give valuable breathing space for paying an IHT bill without having to sell investments, property or indeed take out additional loans to pay it. It massively helped me recently when I had to pay IHT on behalf of one of my parents. You also have the freedom to pay the property IHT down quicker if you wish (e.g. agree instalments with HMRC, but then pay 9/10 instalments in 1 go a year later once you have had the breathing space to allocate the money).
Awesome video! Thank you for all you do for us out here in the confusing world of retirement.
Nice one James ! Presented super clearly as usual
James, your videos are great. Since watching this video, my wife and I have set up mirror trust wills and also about to do both LPA’s. An important subject that is too often overlooked, I’ll be telling friends and family. Keep up the good work 👍
In Australia there are no death taxes. If you inherit money from an estate, it is classed as a windfall. No tax applies.
You have to be very carefull when you start leaving money to Charity they have solicitors who can challenge the will and cause major upset on a death yes give them an amount of money but never give them a percentage of your estate they will challange every thing unless you get it 110% right good video I am divorced and have one son and i have given my son my will to keep the reason i have done this is to protect him from my currant wife who could say after i have died there was no will folk can change after a death
Good tip.
I had been thinking of this issue for a while and will now get it sorted. Really great video as always, thanks James.
You're very welcome!
This is such a valuable channel, James. Thank you.
No problem!
An awesome video as always James. Your advice is always great but one to watch with the recommendations. The Guardian Angel one is £120 (plus the £82 government fee per power of attorney) - therefore using them for both medical and financial would cost £284 when you can do it online yourself for £164. Now need to see if I can get a refund as paid £120 when I didn’t need too.
My apologies, and thank you for raising. I’ve updated the costs in the description.
@@JamesShack no worries. They gave me a refund as I emailed them straight away and I’ve done it myself for £82.
Keep up the great work, I love seeing your videos. Really informative and well produced 👍
Probably the most important video I've ever watched on TH-cam.
Also, your kitchen/diner should be in Good Housekeeping. 😊
Nice try! Oh wait, no it wasn't.
Thanks Francis, I'm glad you found it useful!
great work James .......so so useful and full of wisdoms
Thanks for this essential content James
16:56 super useful & interesting, thx! I’m new to your channel but have you done an episode on couple planning? My wife (52) is a civil servant with state pension, so not stocks-dependent, whereas I (53) am stocks- based …
Nice work, James. Signed up the the newsletter
Quick question - what’s the mechanism you hint at that allows for 0% iht in just 2 years?
You can read about these types of vehicles here: octopusinvestments.com/our-products/business-relief/
@SassySam read about that here: www.ftadviser.com/investments/2022/04/14/how-shareholders-can-benefit-from-100-inheritance-tax-bpr/
A few questions: When valuing the estate how do you factor in the persona possessions value accurately? Is there depreciation percentage you can apply to the purchase cost or do you have to get the all possessions individually valued? Equally, where they are jointly owned between a married couple how is that factored in to the valuation? With Archie's case how was it determined who the pension pot went to, him or his sister, or do they each get 50% of it? Becasue as you say it is more valuable than cash of the same amount due to the tax wrapper...
Great video James - very useful. Many thanks.
I'm glad you found it useful!
There are various low-tax retiree programmes in Europe, eg flat rate 10% in Portugal, 5% in Cyprus, 7% in Greece etc. are there implications to these, eg if you die while non U.K. resident?
Got a quote for power-of-attorney financial and health for me and the Mrs it was about 2400 quid, but apparently there are other ways you can do it that are free, this video reminds me I need to follow that up and look for better quotes
Check the description of the video. You can do it for £82pp.
Please could you talk about family investment companies or how to set up a trust.. really need to avoid as much tax as possible.. thanks
Also could you do a section on expats and their tax liability
My uncle died without a will which meant a load of people got money they shouldn't have got, and then wasted it.
I've already told them to just give me all their cash and house now. They said no.
Enjoyable video and most informative.
Such a useful video. My son is currently going through hell dealing with his dads estate (no will or deed of wishes for pensions) along with his dads grabby girlfriend who has managed to persuade trustees that they lived together by her friends giving witness testimonies. She’s been awarded £150k as a 100% beneficiary. It’s quite unbelievable. Make a will and do an LPA folks! Your family will thank you for it.
Im going through submission. Its a pain to collect wet ink signature when life is spread around.
Keep it simple. Have your witness, LPA, LPA witness and backups nearby.
Another great video. Thanks.
Glad you enjoyed it
I didn't pensions were free from IHT - nice to know
Very informative video, thanks for sharing
You're welcome Brendan.
This is absolute quality 🎉😊
Glad you enjoyed it!
Hi thanks for all these things. Do you know anything about trusts? Would that be better than a Will etc?
HI James - On Frank's estate , wouldnt the 300K ISA also be outside the estate so making the total estate worth £700k (rather than £1M). I know this is just an example case study but just wanted to mention the point around ISAs
No. ISAs would fall inside of his estate. However there is a spousal exemption that means if your are leaving ISAs to your spouse they can put that same amount into an ISA and no IHT is charged. All other assets also have that spousal exemption.
No, ISAs are part of the estate and subject to IHT.
You might be confusing this with the ability to leave an ISA wrapper in place, so (for example) if a spouse inherits the estate the tax-free element of the ISA remains.
Why did he not use the direct payment scheme and fill IHT423 which pays directly from the bank or building society to HMRC without the need of probate or letters of administration only watched the video the other day ,so you might already know this.
Very informative video! Thank you! I’ve just subscribed to your newsletter too.
But what’s the logic behind the law that assets shouldn’t be sold to cover the IHT bill?!
Also, could you talk about trusts in a bit more detail? I know your competition (Chris Bourne) touched upon this in one of his videos but I keep wondering why we shouldn’t all ‘live out of a trust’ - would this save any non-IHT?
This isn't really accurate on inheritance tax. You only need to start paying IHT within six months of death and you don't need to have finished valuing the estate to do this. In fact one option HMRC offer is to pay IHT yearly over ten years for things that can take time to sell. Although they will charge interest on any money owed after six months.
But, if you give away your assets, surely the recipient is liable to tax on that gift?
I've had to organise 2 deceased estates, one with assets in 2 countries (uk Australia) the other was in the Uk and im based in Australia. I had to get letters of administration once in Australia and twice in the Uk. The worst company to deal was lloyds who during the pandemic insisted on using mail (express one way was approx 4 weeks) yet scottish widows accepted every by a secure message service and guess what it was lloyds secure messenger! Because lloyds owns scottish widows.
Gosh your could probably write a book on this stuff by now!
Could be me! I am unable to see the links for LPA & will writing. 🤔
In the description?
Very helpful video James. I'd be interested to have your thoughts on using a Discounted Gift Trust as a mechanism to reduce IHT and provide non-taxable "pension" capital withdrawals, where the initial gift has an assessed portion (the "discount") that is immediately outside the Settlor's estate after creation and the remainder of the gift drops out after 7 years as per any Potentially Exempt Transfer.
IHT why should we pay IHT when Charlie Boy hasn't?
Any tips for how to approach this delicate subject with parents? Mine are convinced that as soon as I am granted any sort of access to their affairs, I will sell all of their assets and put them in a home.
It's a tough one. Often it's best if you can get them to speak with a service like www.kinherit.co.uk/ where you get an adviser you can talk to. If they hear it from an independent party its often much easier.
You do pay income tax on drawing on the pension If death after age 75 . Correct? Not like isa
Yes, if you die after 75 whoever inherits your pension will have to pay income tax at their margin rate when withdrawing.
Wasn’t this video posted yesterday?!
Really interest, and terrifying. I didn't realise you had to pay the tax before selling off the assets. My parents and parents in law are both home owners in expensive parts of the country having bought a long time ago. Can I ask - is the reason that the nil rate band for inheritance of the residence by children wasn't applied (increasing the tax allowance to £500k) because there was no will? And presumably the reason father's £325k nil rate band wasn't rolled into the spouse band was because the ex-spouse had already died and presumably didn't pass hers onto him? I'm trying to work out how this would play out in my family and it doesn't end well - some people are very resistant to having those conversations but their resistance is going to cause so much pain for their kids later!
Frank was divorced so no spouse to pass assets into, the residence nil rate band was used. He had a total of £500k IHT free.
@@JamesShack brilliant, thanks for clarifying. I've stopped panicking now but I really need to be having some conversations. Tricky stuff but so important, thanks for tackling it. ❤️
Well done James, its a bit different here in Australia but very thought provoking. We have a inheritance Tax on our Superannuation, With planning it can be minimized or avoided.
What about transferring Frank's wifes' unused basic threshold for Inheritance Tax?
They got divorced.
@@JamesShack I should have listen properly!
I recommend a trust fund and no its not just for rich people. As well as power of attorney.
I think there is a slight error on the visuals when discussing laws of intestacy ( shows spouse with 813k rathe than 270k)
Would love to see some content on trusts
Thanks for the comment. That's because the spouse gets the first £270k, and then the rest of the estate is split 50% to the spouse and 50% to any surviving children. So the spouse end up with £813k in total. It was quite a quick series of slides!
@@JamesShack thank you for clarifying- makes total sense now 👍🏼
i'm a bit lost: the giving 10% to charity to reduce the taxbill just means that actually its just a nice way to give money to charity surely? it doesn't increase the amount the children receive? still nice but it's just a thing to say "lower tax bill" when really its just directing money to a charity more of your choice than HMRC
Hi James, good video as per usual. On the topic of gifts am I correct in thinking there is no limit to the amount you can gift? It's just the 7 year time frame you need to get past?
I'm assuming you need to notify HMRC that this is a gift amount or note it on a transfer for transparency sake?
No limit. You need to keep a record of the gifts incase HMRC need to see it.
Do also remember gifts from surplus income; these really need to be documented but once established are not PET and no time frame (to be out of IHT) applies.
James, do you accept direct messages
You can book in a call via the link in the description
People must wake up if they are not married to their partner. It doesnt matter how long youve been together, got kids, have a home, or consider yourselves 'common law' partners, of which there is no such thing, your not automatically entitled to anything. Even if your partner is seriously ill in hospital, you have no say over medical decisions, it will be their parents or siblings that will be entitled to make decisions. Be aware.
I plan to watch this video in after life! 😂
My Grandad knew somebody who was elderly and his wife had died. They had one Son who wasn't married and had no children. To be clever the Dad handed over all of his estate to his Son whilst he still had 7 years left to live but the Son died after a couple of years and the Dad inherited everything from his Son. So he effectively inherited his own money back and had to pay inheritance tax on it!
OMG 😮
Too late now, I'm dead
Is this a reupload. Swore I watched this yesterday
Yes, just incase you weren't paying attention the first time! I actually noticed an error in the video, so I needed to re-upload it.
@@JamesShack phew, I was having some existential nightmare looking at my watch history and not seeing this, briefly thought I'd gone back in time 😂
James you may want to look into some sound pickup upgrades. The audio on your videos is quite tinny compared to other TH-camrs whose audio sound like they are actually sitting next to you.
But other than that fantastic content keep it up!
Perhaps I should look into that. It doesn't help that I'm just filming in my kitchen with all the reverb from the walls.
Fantastic video James! valuable information
I’m glad you’ve found it useful!
@@JamesShack very much so. I got signed off today as an IFA and feel overwhelmed by it all! Your videos help me remember the steps to be a good adviser. Thank you
🙏
This is amazing advice and things I’d never considered. Thank you.
With regards to a LPoA, how could I word my preference so that my Attorneys seek advice from a professional financial advisor to efficiently organise my estate to the benefit of my beneficiaries - i.e. avoid as much tax as possible? Would this likely be accepted in an application?
You should be able to put your estate in a good enough order before you die, or become incapacitated that its ok. Or establish a relationship with an adviser before you lose it.
Many people end up working with an adviser as they get older because they know that at some point, they'll die, or be unable to manage, and they want their surviving spouse to have someone they can rely upon.
👍
Why the clickbait title though? You’re better than that
Clickbait with good intentions. It's a very important video that everyone needs to know more about.
But if I called it "Wills & Lasting Powers of Attorney Explained" it won't get in front of the people that need to see it.
Frank was no fool financially so it does seem a little odd that he hadn't done his planning here. I've had LPA for over a decade and nearly finished executing my late parents estate. I've paid no IHT. I had to make a lot of decisions myself. If anybody were to ask me to do this again the answer would be NO.
Mum passed away in December last year - luckily she had already set up a will and lasting Power of Attorney but in October she was fit and healthy and was planning a trip to Japan in 2024. It was less than 4 weeks from hospital admission to passing away and I cannot imagine how to even start sorting her estate if this was not already in place. Go get it sorted and fast!.
Thank you for sharing this Si.
Brilliant video, very useful
Glad it was helpful!
2 other resources if your loved one or parent dies. 1. Tell Us Once (Govt service to notify all govt agencies of a death at the same time) 2. Death Notification Service (1 online service that allows you to notify every financial institution in UK of someone's death in 1 go. Each institution will then contact you if they find a record of that person in their records).
Have just gone through these after losing my father in February. Tell Us Once is very good. The DNS service I found a bit limited, especially for insurance and shareholdings. If your loved one's insurance isn't with one of the bigger institutions you will still have to follow up with individual companies separately.
What a video! This was an absolute masterclass-thank you so much for putting this together James!
You're very welcome!
As a 71 yr old this video is a huge wake up call. I do not want to end up like Archie!! Many thanks James, will sign up for your newsletters, Alex in Norway.
Great video, I would love to see a video on Trusts & Family Investment Companies from you if possible
That's probably be in a Newsletter because that topic will only be of interest to a small segment of my audience. You can subscribe here: james-shack.co.uk/newsletter
@@JamesShackhi James have you had chance to cover trusts and family investment companies yet?
So many people have these issues. I lost my wife when I was 45 and she 46 to breast cancer. Even though she was very unwell, she wanted to believe she wouldn't die and that her treatment would work and after she passed away even though we were married, I did NOT automatically get access to things that were in her name without going through probate. It was an absolute nightmare at a time I was very upset and vulnerable. So James' points in the video are so true, I can tell you that from bitter experience.
James, this is a great video. I am now in the process of sorting our wills and LTA! Thanks again, Simon
Great video James. My parents are worried about deprivation of assets, so don’t give away more than a nominal sum. They both had parents and siblings that spent time in a care home, but they have more than enough to see them through an extended stay. How do people give away enough without being accused of deprivation of assets?
To avoid deprivation of assets, your parents would have to transfer assets off their name and onto child’s name at least several years before they get diagnosed with any health conditions, which could indicate eventual decline into a care home. It has to be way before any diagnosis, when they’re relatively healthy, to avoid the ‘deliberate’ accusation by the council.
If they’re not comfortable transferring to children this way, due to the risk it poses to their own financial security, they can put their properties into ‘tenants in common’, rather than joint ownership. So if one of them dies or goes into a care home, at least half the house(s), might be saved for children, as the deceased parent’s half of the house(s) would go to whoever is in their will, e.g. children, or the care home parent’s half of the house(s), only, could be claimed by the council. The problem arises if both need care homes then you’re screwed.@ A C
My understanding is that this need only be a concern if they plan on relying on the state for care. A solicitor would know best, but my understanding is that they could gift away their assets to you, and you then pay the care fees (you must have no obligation to do this otherwise it would be a gift with reservation). If as you say they have more than enough for an extended stay then social care funding would not be required and deprivation not a concern.
Speak for yourself, I ain't dying. Not now, not ever.
Amen to that.