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FINANCE & LAW


Falling into the UK Inheritance Tax Net


In the UK, inheritance tax is payable by those that are domiciled in the UK on their worldwide assets and also by everyone else on their UK situs assets. Generally, if an asset is lo- cated in the UK it will be UK situs. However, determining whether a non-tangible asset is UK situs is not always straightforward, but if you have land and buildings in the UK you will certainly be caught.


We are all busy living our lives, so thinking about our own demise and what happens afterwards is probably not high among our priorities. Tere is a lot to deal with follow- ing a death, including tax compliance re- quirements but there are steps that can be taken to make this difficult period a little easier for those left behind.


Some of the most important aspects to consider are covered below.


Last will and testament: Although it will be costly, it is often advisable to have a will for every country in which you hold assets. Tis will lead to a smoother trans- mission of assets to your beneficiaries. In instances where there is just one will, it would need to be administered first in the country in which it was drafted before the process may begin anywhere else. Wills drafted specifically for each country will also be drafted to ensure that they are effec- tive there. In the UK there is no concept of ‘forced heirship’, which exists in certain ju- risdictions to dictate who inherits what on death. Provided this type of flexibility is desired, this is another benefit of having a UK will in place to deal with your UK as- sets.


Your will should be drafted while you have


full mental capacity to ensure it reflects your wishes and is not open to challenge. Tere are circumstances where a will can be drafted for those that lack mental capacity, but this requires an application to the Court of Protection and the court would need to agree the will provisions. For UK wills, you can choose your executors, bene- ficiaries of your estate, preferences for your funeral etc. Once created, you should re- view your will regularly for changing cir- cumstances.


Living will:Tis allows your named repre- sentative to communicate your preferences for life sustaining medical treatment should you suddenly become incapacitated and unable to make those decisions for your- self.


Lasting powers of attorney (LPAs): LPAs are created separately to deal with ei- ther property and finance or health and welfare. Putting both in place now will give you peace of mind that you will be looked after in accordance with your stated wishes should you become unable to make deci- sions for yourself in the future.


Documentation: It is advisable to gather and store safely any deeds, title documents, official certificates, details of important contacts, online accounts and evidence of significant gifts made in recent years. Make sure your executors will know where this information is held so that they will be able to access it readily when required. Also, leave a list of sites and passwords so your heirs can access and close these accounts.


Beneficiaries: If you have life insurance, pensions etc, review your nominated beneficiaries as the transfer of such assets on your death is governed by your stated


32 FOCUS The Magazine November/December 2019


choices in these documents, not by your will.


Personal tax affairs: If you are required to file UK tax returns, it is a great help to your executors if your tax returns are up to date and your tax records for any remain- ing returns to date of death are safely filed together. Tis will assist them in complet- ing your final tax returns.


Your spouse/partner: If you assume you will be the first to die, remember some assets held jointly will pass automatically upon death, not relying on the will or wait- ing for probate (the process of evaluating and organising a deceased person’s estate). Check that you hold property in the right form of joint ownership. If you are worried about your heirs having cash following your death, make some of your accounts joint accounts so they can access funds.


Finally; don’t keep your plans to yourself! Talk to your loved ones, chosen executors and attorneys about your wishes and where to find things when the time comes.


If you have questions on any of the issues featured in this article, please contact Buzzacott at enquiries@buzzacott.co.uk or call Akin Coker, Head of Private Client on +44 (0)20 7556 1332


www.focus-info.org


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