Financial prudence

Financial prudence

It’ll take longer to sort out your affairs if you don’t have a will

Itís easy to put off making a will. But if you die without one, your assets may be distributed according to the law rather than your wishes. This could mean that your spouse receives less, or that the money goes to family members who may not need it.

If you and your spouse or registered civil partner owns your home as joint tenants, then the surviving spouse or civil partner automatically inherits all of the property.

If you are tenants in common you each own a proportion (normally half) of the property and can pass that half on as you want.

Planning to give your home away to your children while youíre still alive

You also need to bear in mind, if you are planning to give your home away to your children while youíre still alive, that:

gifts to your children, unlike gifts to your spouse or registered civil partner, arenít exempt from Inheritance Tax unless you live for seven years after making them

if you keep living in your home without paying a full market rent (which your children pay tax on) itís not an outright gift but a gift with reservation, so itís still treated as part of your estate, and so liable for Inheritance Tax

following a change of rules on 6 April 2005, you may be liable to pay an Income Tax charge on the benefit you receive from having free or low cost use of property you formerly owned (or provided the funds to purchase)

once you have given your home away, your children own it and it becomes part of their assets. So if they are bankrupted or divorced, your home may have to be sold to pay creditors or to fund part of a divorce settlement

if your children sell your home, and it is not their main home, they will have to pay Capital Gains Tax on any increase in its value

If you donít have a will there are rules for deciding who inherits your assets, depending on your personal circumstances.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. WILL WRITING IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

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