Has Covid made you think about writing a will?

Since 2011 the death rate in England and Wales has grown steadily, with provisional figures for 2019 of around 530,000 according to the Office for National Statistics. 

2020 is sadly predicted to be significantly higher, with a greater proportion of surplus and unpredictable deaths.

Based on recent data it is anticipated that around 41% of these deaths will result in returns being submitted to HMRC. With a predicted less than 5% paying inheritance tax, many feel the odds are low of a liability.

However, the number of estates paying tax is increasing year on year, with a total revenue collection anticipated of around £5.5 billion. For those who do end up with an inheritance tax bill, the amounts can be significant. 

Whilst proposals have been muted for radical changes to the IHT system, for the time being it remains as it is.

The estate value at which IHT becomes liable has been frozen for more than a decade, at £325,000.   If the government were to freeze income tax bands in the same way, the impact would be much more widely felt, and popular opinion would quickly turn against the idea, as pay rises crumbled under extra tax. 

This fixed figure is to blame for more estates each year breaching the limits.

Many people write a will and ‘tick’ it off the list of things to do and forget about it. In the meantime, they will spend considerable time searching for the best electric or gas tariff to buy into – or search online for the cheapest large domestic purchase.

If people were to take as much concern over their assets and undertook regular reviews of asset values, this could allow for informed decisions to be made about potential IHT liabilities, with appropriate courses of action taken to mitigate exposure to the tax. 

Decisions could be taken on whether to make lifetime gifts of assets surplus to anticipated needs, or consideration could be given to how particular assets may benefit from IHT exemptions, or even how assets should be held between spouses and civil partners.

Fine tuning of the wording of a will can often result in estates benefiting from other reliefs too. 

Even if you chose to do nothing, it is better to make an informed decision in the knowledge of potential liabilities.

For those who have chosen not to write wills whose estates fall to be dealt with under the intestacy rules, where those estates are of significant value and there is a surviving spouse or civil partner, there will almost certainly be an IHT bill that if not avoidable has certainly be accelerated. 

If you would like to undertake a review of your assets, please feel free to contact one of the Probate team direct or via your usual Bishop Fleming contact.