The year is nearly over, and you might be reflecting on 2024, thinking about what’s changed and what you might do differently next year. Your circumstances may be different. We’ve had a new government and a budget that could change the provisions you include in your will.
If you’re reflecting on the year gone by, here are a few things to think about to help you decide whether you need to make a new will.
Do you have new family members?
If you already have a will, you should check if it has provisions for new grandchildren. If so, you may not need to change your will; if not, an update will be required.
However, if you’ve formed a new blended family with a new partner, you should review your will. If you die without making a will, your spouse or civil partner will inherit, potentially to the detriment of your own children, and if you want to make provision for your stepchildren, they are not automatically included under the intestacy rules. If that isn’t what you want, consider making a new will to ensure they’re provided for.
Have your circumstances changed?
Our finances can fluctuate, and this can affect our wills and the amount of inheritance tax we pay. If you’ve downsized, got a new job with a higher salary or come into some money, it’s wise to get professional advice to see how it affects your tax affairs.
It’s also worth thinking about how things have changed for your loved ones. For example, if you plan to leave money to someone who is now on means-tested benefits, an inheritance could affect the support they receive and impact their cash flow both in the long and short term. A trust in a will can assist them in managing their inheritance at the right time and reduce the money stress at an already emotional time.
Inheritance tax on inherited pensions
We have a new Government, and their budget introduced Inheritance Tax (IHT) on inherited pensions. We’re waiting for more details, but it should only affect people who leave some of their pension as a lump sum rather than buying an annuity to provide a regular income. Spouses’ pensions that continue to be paid after you die should also be OK.
Your pension pot will form part of your estate, and you’ll pay IHT on the lump sum over and above your tax-free allowance.
Think about your pension and financial planning
The changes to IHT mean you may want to change how you distribute your pension and your approach to leaving money to your loved ones. Some people pay more into their pension, planning to leave a lump sum for their family. The new rules mean you could pay more tax, so it’s worth considering how much you need to retire and what inheritance tax planning you might want to undertake. A joined-up approach with your financial planner and estate planner will give you the best opportunity to plan for the future.
There haven’t been any changes to the rules on gifting, so you could start giving your family cash gifts to enjoy during your lifetime.
Changes to Capital Gains Tax
Capital Gains Tax (CGT) rates have increased, and you must pay CGT when you sell an inherited property. We have a client who has waited almost two years for probate. The property’s value has increased during that time, meaning they may need to pay CGT.
The rules are complex and depend on your circumstances, so getting proper advice is essential.
If you need advice on estate planning, want to write your will or create a Lasting Power of Attorney, we can help. Get in touch using the form below or call us on 0116 380 0752.