DON’T INHERIT TAX MISERY
Friday, September 17th, 2004
on behalf of PSM Law Group
Legal PR experts help tell legal firm’s experienced tax advice
SCOTLAND’S soaring property market is set to see thousands of homeowners unwittingly fall victim of the inheritance tax trap.
The PSM Law Group believes many families are unaware that future inheritances are at risk because the value of homes have risen so spectacularly in recent years.
The company is now urging people to ensure they minimise swingeing tax penalties by writing a Will, or if they already have one, to ensure it is reviewed to take into account the likely increased value of their estate.
Anyone who is UK-domiciled and has worldwide assets worth more than £263,000 is liable to Inheritance Tax at 40 per cent on the excess. That means if all assets – the value of the house and things like pensions, savings, jewellery, cars – total £500,000, the tax man would grab £94,800.
There is now increasing evidence that while house prices are now slowing, thousands of properties have crept way above the inheritance tax threshold – without their owners realising it. In a number of areas – such as Edinburgh, East Lothian, Stirling and East Renfrewshire – more than one in 10 properties are valued above £263,000.
Mike Maloco, a founding partner of The PSM Law Group, said it was important for people sitting on a high value property to be aware of the consequences of doing nothing.
He said: “Inheritance Tax is something that most people think is confined to the rich. But the boom times in the property market in Scotland is set to see many people, who will consider themselves far from rich, fall victim of the inheritance tax trap – unless they take action now.
“There will be people who bought homes years ago in what are now hugely desirable areas whose values have shot up out of all expectations. If they do not take action, they face having their families pay tens of thousands of pounds to the Chancellor, money they have worked hard to earn and put in their property.
“The really galling thing is that this is a tax on an asset which has already been bought with money that the homeowner has already paid tax on.”
The PSM Law Group has just strengthened its Wills and Executries Department to try to demystify and ease the process of writing a will and to ensure sensible tax planning is put in place.
Mr Maloco said: “By completing or reviewing a Will, it not only will allow you to exploit the various ways to reduce the inheritance tax burden, but it will ensure that you have a say in what happens to your assets when you die. The problems that an individual or family can face if someone dies without making a Will (intestate) are wide, varied and very confusing. For example, the law does not recognise co-habitees, so there is no provision for a partner to inherit all assets, even if they had lived together for many years. There is also much potential for stress, conflict and delay if there is a need to sell a deceased’s house quickly or if the property was a former council house which was bought by one of the deceased’s children but the other children are demanding a stake.
“By seeing a solicitor you will be able to benefit from expert advice to smooth out any potential difficulties over an estate, gain by taking advantage of tax planning and utilise services such as Power of Attorney to facilitate certain instructions over an estate.”
Mr Maloco said the PSM Wills and Executries Team have devised a unique software package to both speed up and simplify the process of writing a Will. A range of helpful factsheets have also been put together to provide useful and informative advice.
Mr Maloco added: “There is a misconception that making or altering a Will is an expensive or complicated process. But that is simply not the case, particularly with our new Team. It is possible to have a will drawn up within a few days of visiting our office, at a cost of £50.
“We all know that death and taxes are the only certain things in life, but it is time for people to realise that they will increasingly have to endure both at the same time.”
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