• Stroke, Heart-attack, Car crash or simply getting older incapacity can happen at any time
  • There’s no time like the present to set up your Power of Attorney documents

So what to do at the onset of Incapacity

Imagine not being able to manage your own finances any more whether through mental or physical incapacity. Life for those around you will be doubly difficult to help you, so why not make it easier for then and appoint the people you trust.

Without LPAs in place friends or family will have to apply to the Court of Protection. The Court appoints a Deputy, it takes 6 months to get in place making life in the mean time very challenging, it is far more expensive and the Deputy is then legally obliged to record everything they’ve spent on your behalf every year and submit a report to the Court.

There are two types of LPA, one relates to the money (Property & Financial Affairs) and the other to the individual (Health and personal Welfare). Without both in place your family or carers ability to help you will be severely limited.

It makes sense to have Wills & LPAs in place, now.

A Health & Welfare LPA is different to a Living Will (Advanced Medical Directive by another name) and you can have both. A Living Will is a crystal clear statement of your right to refuse medical treatment at a time when you won’t be able to make such a decision yourself. It should set out exactly which treatments you don’t want in the future, such as life-saving or sustaining treatment at a time when you may already be suffering from any kind of dementia, lasting brain damage, motor neurone disease, cancer or any other condition of comparable gravity.

The alternative is to make a Health & Welfare LPA and give the power to your Attorney(s) to make decisions about your treatment, when you cannot.

Top 10 Inheritance Tax Tips

  1. The Annual Exemption – you can give away £3,000 each year, so a couple can give away twice this amount. If you don’t use this allowance one year, you can use it in the next year.
  2. Gift Assets to your Children – these are known as ‘potentially exempt transfers’ (PET’s) and provided you survive 7 years then the job is done. Who should make the gift? Will you lose control of the asset that you’ve gifted? Well, you can protect the gift in the hands of the recipient so you don’t need to lose total control of it.
  3. Gift part of your house to your children – after 7 years it is out of your estate for IHT. The trouble is you have to pay full market rent to your children. They in turn have to pay income tax on the rent received. If they sell it they will be liable for Capital Gains Tax (CGT) on the gain on their share, and if you get it slightly wrong the gift will fail entirely. The better solution is for one spouse to sell their half share of the house to the other spouse in exchange for an IOU, which is then gifted to the children as a 7 year PET. After 7 years, half the ‘value of the house’ is out of the estate for IHT, but the married couple still owns the entire house.
  4. IOU Scheme – as tip no. 3 above but it can be done with any asset, e.g. a share portfolio, second property and so on. When set up properly, the value of the asset will be taken out of the estate after 7 years.
  5. Deed of Variation (DoV) – say a relative dies and leaves you an inheritance that creates you an IHT liability. Use the DoV procedure to vary that Will after death and set up a Trust to receive the inheritance for the benefit of you, and your family. There are time limits but this works very well if set up correctly.
  6. Gift out of regular income – if you have an IHT estate and your income is higher than your expenditure, the problem will only get worse as time goes by. Gifting the excess out of regular income to your children is immediately exempt from IHT. The rules can be tricky to implement but this is a very significant exemption if used correctly.
  7. Business Property Relief (BPR) Scheme – if you hold investment assets in a BPR scheme for only 2 years they will be 100% exempt from IHT. You need to retain these assets until you die but you can get an income and, since you have not given these assets away, you can cash them in at any time if you need to.
  8. Settlor Excluded Trust – if you want to gift an asset to your children to avoid your IHT after 7 years, but the asset has gone up in value (like a house) and would trigger a CGT liability if you sell it, you could instead set up a Settlor Excluded Trust and transfer the asset to that trust. As you are the Settlor and a trustee you therefore retain control of the asset, but as you will have no benefit from it, given 7 years it will be out of your estate for IHT and you will get holdover relief for CGT as well.
  9. Discounted Gift Trust – can seem attractive and you can get an immediate IHT exemption for part of your initial investment. The trouble is the portion that is exempt is based on your age and health so it may not be as great as you had wished for.
  10. Family Protection Trusts (FPT’s) – avoid the problem in the first place. If inheriting from your parents is going to give you an IHT problem, get them to set up FPT’s because with their assets ‘in trust’ you will have the option of borrowing your inheritance from the trust in exchange for a valid IOU so that you get the full benefit of the inheritance without incurring an IHT liability.

What Our Clients say

Rob took the time to explain the ins & outs of the technical terms so that we felt comfortable with how our estate was to be dealt with. He has a very relaxed manner in dealing with clients which helps when discussing a subject we all wish to ignore.
Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans

Peter & Janet Houghton 

Satisified Client


See how Rob Abell can help you and your family plan for the future.

Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans
Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans

Rob Abell

Wills & Estate Planning


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Family Asset Protection Trusts
Inheritance Tax