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From April 2017 an individual can pass on an estate which includes their main home tax free, providing the value is £425,000 or less. This allowance will increase each year up to 2020 when it will reach £500,000. On top of this you can pass on your allowance to a surviving partner if you are married or in a civil partnership – so the surviving partner can leave up to £1m in their will free of IHT.
However, if the total value of the property, money and possessions is over £1m then the excess will normally be taxed at 40% IHT.
The new rule only applies to a single dwelling under £2m you have actually lived in and only applies if you are leaving the estate to direct descendants – your children, grandchildren, stepchildren, adopted and foster children.
Single and divorced people and couples who are not married or in a civil partnership will be limited to the individual £500,000 allowance.
What if you don’t have a will?
If you’re not married or in a civil partnership, your partner has no automatic entitlement to receive a share of your estate – so having a will is really important. If you are married and have surviving children, grandchildren or great grandchildren and the estate is valued at more than £250,000, your partner will inherit:
There are special arrangements for jointly owned property. Couples may have joint bank or building society accounts. If one dies, the other partner will automatically inherit the whole of the money.
Couples may jointly own their home in two different ways – “beneficial joint tenancies” and “tenancies in common”. If the partners were beneficial joint tenants at the time of the death, when the first partner dies, the surviving partner will automatically inherit the other partner’s share of the property. However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person’s share.
A will is also important to spell out arrangements for any children.
It is not mandatory for a will to be drawn up or witnessed by a solicitor, and if you wish to make a will yourself, you can do so. However, you should only consider doing this if the will is going to be straightforward, and it is advisable to get a solicitor to check your will. There are some circumstances when it is particularly advisable to use a solicitor:
If you’re not sure what to do or need help finding a solicitor, you can get help from us at Citizens Advice Surrey Heath.