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It is imperative to make a will if you have assets such as a house and/or you have people who you want to be looked after following your death. It is possible to write your own will if straightforward however you should get legal advice if this is not the case, such as having children from another partner or if you are an unmarried couple.

If you die intestate (without a will) there are strict laws about to whom and how your estate is allocated. This causes two problems. First, the money may not go where you want, and secondly, it's likely to be inefficient for inheritance tax purposes.

The legal situation is you pay 40% of any assets worth over £325,000 that you leave, so those with valuable houses or larger estates could pay a considerable amount. However, there are many legal ways you can plan to lessen this.

Individuals with direct descendants now also have an additional residence nil-rate band (RNRB) on top of the £325,000 when a residence is passed on death to a direct descendant.

This will be:

  • £100,000 in 2017 to 2018
  • £125,000 in 2018 to 2019
  • £150,000 in 2019 to 2020
  • £175,000 in 2020 to 2021

This increases in line with Consumer Prices Index (CPI) from 2021 to 2022 onwards. Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

The maximum RNRB is subject to tapered withdrawal if your estate exceeds £2m. This will be at a withdrawal rate of £1 for every £2 over the threshold. In effect, this means that the relief is unavailable once the net estate exceeds £2.35m.

The existing nil-rate band will remain at £325,000 from 2018 to 2019 until the end of 2020 to 2021.

For more information on making a will, please contact us.