Wealth does not come easy: for most of us anyway.
You may have spent your entire life building your wealth fund.
Perhaps you have considered where your wealth will go when your days run out?
“Total expenditure on adult social care rose in 2021/22 to £26.9 billion” This make IHT look like pocket money and where Inheritance Tax (IHT) affects the better off, care fees will certainly affect almost everyone if you do not plan.
Good estate planning is about ensuring none of the above happen: We can help you make this a reality.
Below are some true heartbreaking examples which illustrate bad estate planning. Names have been changed to protect those involved.
Mr Jones was an elderly man who had three grandchildren. He lived in a beautiful family home in Henley. The home had been in the family for over 100 years. His youngest grandson kept telling him he must put the property into trust: advice the grandfather sadly ignored.
When the grandfather died the family home was valued at £1.8 million and over half a million pounds was paid to the government and, of course the family home, after five generations had to be sold.
Paid to HMRC £500,000 Labour chancellor of the exchequer Roy Jenkins back in March 1986 said in the House of Commons: “Death duties are an extremely haphazard and weak tax. If people die at an old age, it is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.”
Last year that ‘levy’ was £7billion paid to HMRC, so Mr Jones was not alone!
This is important!!!
You may well say: “I don’t need to worry about estate planning as I am nowhere near the IHT threshold”. However the IHT threshold is not the killer here, it is something very few people know about called: “The lower threshold limit”
These are words that should strike fear into those of a certain age. Consider what is ‘The lower threshold limit’ and why is it so bad?
With IHT, you may have assets of £350k or even £500k (double if married/civil partner) before you will lose 40% of your wealth (or your descendants will).
With ‘The lower threshold limit’ you can lose 100% of your wealth over just: £14,250. It may not be IHT that affects you and your family………….. but ‘The lower threshold limit’.
True story two:
Mrs D lived in Thames Ditton and at one point was concerned that she may stray into IHT territory. Her house at the time was worth circa £500k. Sadly, she developed Alzheimer’s disease and had to go into a home, at £2,000 a week. Her daughter applied to the local government for help with the costs, however this is classed as ‘social care’ and local government will not cover care fees, unless you have assets that are under the ‘The lower threshold limit’:£14,250. When she died, the house had been sold and what was left in her estate was £15,000. Over half a million pounds had been paid in care fees and her daughter, who visited every day, ended up with nothing. The £15k covered the funeral and other costs.
Alzheimer’s ALONE affects: 1 in every 20 people with Alzheimer’s disease are under the age of 65 and Will affect 1 in 14 people over the age of 65 and Will affect 1 in every 6 people over the age of 80.
This is devastating lives in so many different ways and eradicating our inheritances!
Are you aware that it is the ‘self-funders’ in care homes who subsidise those whose fees are paid by the local council? If you have savings and assets you are paying the care fees of those who don’t!
These are not real figures but as an example: Mr X, a self-funder pays £1,000 a week. Mr Y who is under ‘The lower threshold limit’ has his fees paid by Local Government at £500 a week.
This is because the ‘cost’ is £750 a week. The council will only pay £500 so Mr X has to subsidise the local council effectively also paying for someone else’s care. How fare is that! This is partly why, for self-funders, care home fees are so high. They are subsidising the local council. If you have over £14,250, not only will you pay your own fees, you will also effectively pay the council to fund other people’s fees.
ACT NOW to make sure this does not happen…….
This is a worst-case scenario but remember the proverb: “Hope for the best and prepare for the worst.”
Mr and Mrs Smith have two sons; an estate of £2million and leave a million to each son. Son A is single and a “wild child” while Son B is married with two children. Son A suddenly dies in a diving accident and leaves his share of £1m to his brother Son B.
Sadly a few yeas later Son B also dies leaving everything to his wife.
His wife then remarries Stranger A and has children with Stranger A. She too then dies and the whole £2m passes to her new husband Stranger A.
This is an unusual scenario true, but it does happen. There is a very easy and unintrusive way to make sure it does not / cannot happen.
If any of the above scenarios worry you, we can help.
Simply click here for more information:
Pricing
Off the shelf solutions (for the majority of clients)
- For the investments there is also an ongoing advisor fee of 0.0275% per month.
- We also offer an independent trustee service of £250 p.a.
- Also a document storage service : £50 p.a.
Where the estate planning is complex and or where assets are in excess of current IHT limits, a bespoke fee will need to be calculated.