The COVID-19 pandemic has changed our lives in many ways. The pandemic has had a wide-reaching impact: from restrictions on how we live our lives to our attitudes towards wealth and finances. Estate planning has also been affected by the pandemic, with many of us being forced to consider what would happen if we were to lose a loved one suddenly. However, it has also brought into focus the importance of assessing your own circumstances with a view to planning for your future security and the security of your loved ones. In this article, we look at some of the things you may wish to consider in light of current circumstances.
Estate planning attitudes in the post-COVID world
We have suffered a devastating loss of life as a result of coronavirus, with many people losing loved ones unexpectedly and in extremely difficult circumstances. As private client solicitors, we often see clients suffer a sudden and painful loss, and it is crucial to ensure that you are adequately prepared. There are several things we ask clients to consider in the context of estate planning, namely:
- Do you have a Will that is valid and up to date?
- Do you have a Power of Attorney in place to protect you should you lose capacity?
- Would your loved ones be able to access your online accounts if anything were to happen to you?
- Would your estate be liable for inheritance tax? If so, would you consider taking steps to mitigate the amount due?
These are just some of the things you should think about as part of the estate planning process.
Wills and Power of Attorney
If the pandemic has proven anything, it is that we simply do not know what is around the corner. Now is the time to ensure your Will is up to date and accurately reflects your assets and wishes. Similarly, everyone over the age of 16 in Scotland or 18 in England should consider having a Power of Attorney in place to ensure that if they lose the capacity to manage their affairs, their appointed attorney can do so on their behalf.
If you own a family business, now might be a good time to consider succession planning or even passing on the business to the next generation. The pandemic has caused unprecedented disruption for businesses, and the economic impact may mean that shares in your company may not be as valuable as they were previously. As a result, now might be the right time to consider a plan for the business should anything happen to you, or another family member.
In normal circumstances, gifting a significant asset may not be tax efficient due to the Capital Gains Tax (CGT) it might incur. However, given the financial impact of the pandemic, it may be an opportune time to consider gifting such assets that do not qualify for any Inheritance Tax reliefs. Where an asset has reduced in value, it may be possible to avoid incurring what would ordinarily result in a large Capital Gains Tax charge. It is also important to appreciate that as a result of the sizeable level of Government borrowing, it is inevitable that, at some point, the Chancellor will be looking at ways to recoup funds. It is thought likely that one possible way of achieving this will be to target the existing “potentially exempt transfer” rules (whereby there will be no charge to Inheritance Tax on a gift to an individual provided you survive the date of the gift by seven years). It might, therefore, be worth looking at gifting assets sooner rather than later.
Specialist Estate Planning Lawyers, Edinburgh
Murray Beith Murray are experts in asset protection and estate planning. If this article has raised any questions or you would like to discuss your personal legal affairs, please complete our contact form or call us on 0131 225 1200 to speak to one of our specialist solicitors.
Murray Beith Murray was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day as does our commitment to be here when you need us.