After two years of restrictions, hopefully this Summer we will be able to celebrate weddings as we did before the pandemic. With this in mind, here are a few tips for getting your affairs in order before the summer season takes off.
Wills and succession planning
For those getting married or entering a civil partnership, remember that tying the knot has the effect of revoking your existing will, unless it specifically says that it won’t be. Therefore, it is important to update or put in place a new will in advance of your wedding.
If you have children from a previous relationship, it is particularly important to get this sorted out as the intestacy rules may not adequately protect your new partner or your children and might bring unfortunate inheritance tax consequences.
Make sure that your will is up-to-date. Failing to do so could mean that your nearest and dearest are not provided for as you would want, your estate is open to claims from those who do not benefit adequately or your estate ends up paying more tax. The intestacy rules, which will apply in England and Wales if a person dies without a will, can have adverse results. In some circumstances it can lead to an inappropriate division of the estate – something which can be avoided with a carefully written will.
For business owners, it is also essential to consider whether the governing documents for your business allow you to leave your estate as you wish. It might be necessary for the articles of the company, shareholders’ agreement or partnership deed to be revised to enable your succession wishes to be accommodated. This can require some honest discussions, but resolving issues can prevent problems further down the line.
Including provisions in your will to enable your business to be properly managed while your estate is being administered is also important. Your business might benefit from inheritance tax relief as business or agricultural property and you should explore opportunities to maximise any tax reliefs that might be available.
If you have upcoming weddings or civil partnerships, bear in mind these can provide an opportunity to make tax-efficient gifts. There is a specific inheritance tax-free allowance for gifts made on such occasions. Each parent, including step-parents, can give up to £5,000 to their child.
Wedding gifts to grandchildren and great-grandchildren of up to £2,500 are also exempt, as are wedding gifts of up to £1,000 to other people. Making use of these small inheritance tax allowances along with other planning measures can have a significant impact on inheritance tax exposure.