Laith Khatib, who regularly contributes to The Law Gazette, specialises in Contested Wills, Trusts and Estates. Recently, he was asked by the publication to contribute his advice on settling estate debts. The following is a summary of his article:

Settling Estate Debt

An executor is the person in charge of administering the estate of a deceased person, and one of their key responsibilities is to ensure that all debts and liabilities of the deceased and their estate are, where possible, paid. 

Unfortunately, this is not always a simple task. In some cases, the estate may not be able to settle all of its debts and liabilities in full, and in others unknown creditors may be involved.

To avoid encountering problems when discharging debts and responsibilities, executors should take the following steps:

Be fully-aware of the executor’s duties

Any executor who enters into a contract on behalf of an estate is contractually liable to meet its terms. When this contract involves settling a debt, the cost is recoverable from the assets of the estate. However, if the estate’s value falls short, the executor is then personally liable. More...

What is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax that’s payable on any profit made after selling assets. It is declared and paid through a Self Assessment tax return.

Assets that are subject to Capital Gains Tax if sold at a profit include:

•    Properties – including second homes, buy-to-let properties and agricultural land
•    Business assets
•    Shares
•    Personal possessions worth more than £6,000 which are not classed as “wasting assets”.

A “wasting asset” is one which has a limited lifespan, of 50 years or less.
CGT also applies to any properties that you own and sell overseas, so long as you are a resident of the UK.

What’s exempt from Capital Gains Tax?

More...

Does your will accurately reflect your wishes? Many people write their will and forget about it – even after significant life events have rendered it inappropriate or invalid. If your will is not accurate or up to date it can be a real bone of contention and cause undue stress and worry for your loved ones when you die – perhaps leaving them with not enough to cope financially, or worse, nothing at all.

How often should a will be updated?

Even if you have not undergone any significant life changes, it is advisable to review your will every  five years or so, to check that it still reflects what you want it to say and to find out if there have been any changes to the law which might affect your will. In recent years there has been a major change to inheritance tax laws and for many people that has necessitated a change to their will, even though their ultimate wishes remain the same.  Particular events that should prompt you to seek professional legal advice from a solicitor about your will include the following:

• If you have new children or grandchildren – to ensure they are included in your will.
• If you get married – in England and Wales, getting married will revoke an existing will, unless it was made in contemplation of the marriage.
• If you get divorced – for the purpose of your will, your ex – spouse will be treated as having predeceased you upon finalisation of the divorce. It is therefore important to assess whether you have made substitute provisions, and if so, whether those still reflect you wishes. 
• If someone named in your will dies before you– in such circumstances it is important that you understand what shall happen to the gift left to the deceased beneficiary, and to decide what should happen in light of the death.
• If the executor is no longer suitable or dies– It is important that your executor is able and willing to administer your estate, and to control any trust created by your will. Catastrophic results can arise if there is nobody suitable at the helm of your estate when you die.More...

Inheritance tax, or the ‘death tax’ as it is colloquially known, is one of the most contentious taxes in the UK. It’s also one of the least understood. Many people neglect to think about how their estate will be taxed when they’re gone, but failing to plan ahead with regards to inheritance tax can cause a significant headache for those that are left behind.

Who Pays Inheritance Tax?

Happily for thousands of pensioners, inheritance tax is only payable if your estate is worth more than £325,000. However, your estate will have to pay a hefty 40% on anything above that threshold.

So, if you leave a total estate worth £400,000, your beneficiaries could potentially lose £30,000 to the tax office.

How Can You Limit Inheritance Tax?

If you have an estate worth more than £325,000, there are a number of legal ways to limit your estate’s inheritance bill and help maximise your intended heirs’ inheritance.

Get Married More...

Howells have put together a plain, expert guide to lasting power of attorney. Whether you are considering arranging lasting power of attorney for a family member, friend or solicitor, or have been asked to take on the role of attorney, this complete guide will answer all your questions. In this guide we will be covering:

• The duties of an attorney
• Who can and cannot be an attorney
• Having more than one attorney
• Different types of attorney
• How to choose an attorney
• How to find highly regarded solicitors for the elderly More...