Insight Wealth Preservation Ltd

28/12/2023

03/11/2023

Understanding Business Relief

Are you a business owner? If so, you will likely need to consider business relief when thinking about your Inheritance Tax (IHT) planning.

What is business relief?

Business relief is an Inheritance Tax relief for business owners where you can claim certain types of businesses or assets owned by the business for more than two years as being relievable from IHT. The relief is either at 100% or 50%. As a result of this relief, the overall value of the estate is reduced and. in turn, so is your IHT bill.

There is no fool-proof method to ensure you will be able to benefit from business relief because both the law and HMRC’s methods and attitudes are always changing. There are, however, key steps you can take to improve the chances of securing business relief.

Step 1: Keep your paperwork up-to-date, detailed and accurate.
One of the best things you can do as a business owner is to routinely evaluate your finances and keep records of assets that could qualify for business relief. Firstly, this benefits you by ensuring your affairs are being run in the most effective manner possible, but it also creates a body of proof to back up your claims for business relief – whether these are made by yourself or your executors after you’ve passed.
The two-year ownership criteria for business relief is unambiguous. You cannot change the truth regarding who actually owns the company’s assets. However, it might be more difficult to determine when your business started if you began it on your own. Where is your supporting evidence for this? As a business owner, you should keep track of such documentation proving the establishment of the firm business and the acquisition of its assets.

Step 2: Write and review your will
If you are a business owner, it is especially important for you to create a will and estate plan for how you wish to distribute your assets after your death. Who do you want to inherit your business after your death? Would your intended beneficiaries be up to the task of making important business decisions? Perhaps you wish for the surviving shareholder/s to inherit the business. All questions of which should be considered when preparing your will.
In addition to this, you should also frequently review your will, such as after significant life events like marriage, divorce, and the birth of children and grandchildren. In fact, marriage revokes your will, so you will need to make a new one! You might think that goodwill should be functional regardless of your assets after death, but it is always best practice to evaluate your will following a substantial change in the amount, kind or location of assets or even possibly after a change in the legislation.

Step 3: Write a partnership and/or shareholder agreement
Do you have a partnership or shareholder agreement in place?
A partnership that does not have a written agreement between the partners is essentially a ‘partnership at will’ and is subject to the consequences of the law rather than any expressly written agreement.
This is significant when thinking about estate planning since, without a specific agreement to the contrary, the death of a partner dissolves the whole company. The majority of written partnership agreements do not include this clause and instead contain other provisions that let the surviving partners carry on their business.
You may wish to consider a separate cross/double option agreement, which gives the option of purchasing interest to any surviving partners or shareholders, and it also allows the executors of the deceased to ‘force’ a sale if that would be beneficial. This is accepted by HMRC and is often a preferable arrangement when considering business relief.

Step 4: Keep specific records of the ownership and use of assets
If there is a business asset such as a property, it is not enough to simply have a shared understanding between the partners that they jointly own the property. The paperwork must specifically outline the ownership of the property for business (or between partners) in order for it to be applicable for business relief. The land registry title should reflect that the partners or the business owns the property as opposed to one individual.
The best approach is to state how future capital gains and losses from the property will be divided and to document that the company premises are owned as partnership property (or maintained for the partnership).

Step 5: Consider the Alternative Investment Market
A recognized and acknowledged IHT planning tool is buying Alternative Investment Market (AIM) shares. According to HMRC’s advice on the Disclosure of Tax Avoidance Schemes, the act of acquiring shares to be eligible for business relief after two years is not a notifiable scheme.
For business relief purposes, shares listed on the Alternative Investment Market are actually considered unlisted. As a result, they will be eligible for relief at 100%, provided that the shareholding was held for at least two years prior to sale or death.
You may wish to speak to a financial adviser or estate planner about adding AIM shares to your investment portfolio.

Step 6: Gather evidence of your trading activities
As a business owner, you probably understand what your regular business activities are. However, it might not always be clear within the documentation.
Only businesses that trade more than 50% are eligible for business relief. You must have sufficient evidence to prove this to HMRC in order to secure relief.

Step 7: Get professional guidance.
To learn more about how Insight Wealth Preservation can help you benefit from business relief, and to ensure that your paperwork and affairs are in order, get in touch with us today : [email protected]

20/06/2023

Funding Adult Social Care

Up to half a million adults in the UK receive social care, such as staying in a care home, or assisted living situation. Nearly 50% of them are deemed to be self-funded - they pay for their care privately - while the others are state-funded.

Should you or your loved ones ever need social care as an adult, it is important to understand the options for funding that care.

The rules that are in place are complex and differ across England, Northern Ireland, Scotland and Wales. In this guide, we explain what to expect and which funding-related rules will apply to you.

What happens when you move into a care home?

If it is determined as part of your ‘needs assessment’ that you require a level of care which requires you to move into a care home then next, it must be determined how your care will be paid for.

A financial assessment sometimes referred to as a ‘means test’, will be performed if you need to transfer into a care facility. The evaluation establishes your financial situation and if the local authority will contribute financially to your care. The council will take into account both income and capital including your earnings, pensions, benefits, savings, and real estate.

For the first twelve weeks that you are in care, any property you own that is part of the financial assessment will not be taken into account. However, after the initial twelve weeks, you may need to take responsibility for paying your care fees yourself. There are also other disregards which may apply due to your circumstances, such as a property disregard if your partner still lives there.

When the assessment is complete, the local authority will certify in writing the cost of the care you require and the amount you must pay. It is always expected that you will put most of your income towards the cost of your care, but you can keep a small personal allowance for other expenditures.

It is feasible to set up a deferred payment agreement if you don’t want to sell your home to cover the cost. Costs associated with care can be postponed and the money needed to pay for the care is effectively lent by the local authority who is then reimbursed with money from the sale of your home later down the line.

What are the adult care funding rules depending on where you live?

If you reside in England and Northern Ireland, you will not be eligible for assistance from your local council with the cost of care if your capital or assets exceed £23,250. However, if your net worth is less than the £23,250 cut-off, the local authorities will contribute to your care costs.

Those who reside in Scotland will not be eligible for care funding if their capital exceeds £28,750. If your capital is less than £18,000 you will be entitled to the maximum amount of support.

If you live in Wales, you can be required to cover the full cost of your residential care if you have assets worth more than £50,000. The amount you contribute towards your care will depend on your qualifying income.

It may be tempting to lower your asset level if you require care so that it’s beneath the lower threshold but you must proceed with caution. It can be categorised as a ‘deprivation’, meaning you will have to make care arrangements as though the assets were still part of your estate anyway.

Do you need help with Adult Social Care?

At Insight Wealth Preservation LTD, we understand that arranging care and dealing with the associated financial administration can be complicated and daunting. Sometimes local authorities’ decisions on funding may seem unfair. That’s why our team are on hand to support you with completing or challenging financial assessments.

For support or information, get in touch at [email protected]

22/03/2023

IS YOUR WILL DIVORCE PROOF?
If you have a Will, you have probably considered who your beneficiaries will be and where you want your money to go. You assume that your children will inherit everything, and then after that, it will be passed down to your grandchildren.

But with around half of all marriages in the UK ending in divorce, this may not be the case.

In the event of a divorce, your child / chosen beneficiary will have to split half of their inheritance with their ex-partner. The money you intended for your children and grandchildren will go to someone else instead, which is clearly not what you had in mind!

You can’t spare your child from the pain of a divorce, but you can stop them from losing half of their inheritance to their ex-partner.

Setting up a simple Trust alongside your Will means that your children’s inheritance will be protected, and you can have peace of mind that your money is going to the right place, even after you are gone.

Contact us today for more information or help with setting up a Trust : [email protected]

14/03/2023

Planning a wedding? Don’t get caught out!

You have planned every last detail of your dream day, and now you think all that’s left to do is have your dream wedding and get married! But there is one thing you may not have previously considered, that could have a significant impact on your future happiness.

Many people don’t realise that marriage or a civil partnership automatically revokes any Will you have in place unless the Will was made in contemplation of the marriage.

If you don’t establish a new Will, then on your death, your assets will be subject to the rules of intestacy and will not pass to whom you had intended. The actual distribution will depend on the makeup of your family, but your new spouse will not automatically inherit the whole of your estate.

If you are getting married and want to ensure that your estate will be distributed according to your wishes, contact us today! We can help you put a new Will in place so that you can enjoy your big day and your new life, safe in the knowledge that your new spouse and loved ones are provided for.
[email protected]

09/01/2023

A Guide to Lasting Power of Attorney

Why is a Lasting Power of Attorney important?
A Lasting Power of Attorney, formerly known as “Enduring Powers of Attorney” before legislation changed in 2007, enables your loved ones to manage your affairs if you are unable to.
If you anticipate losing the ability to make choices for yourself and want to make sure that your money and well-being are managed by someone you can trust, an LPA is a crucial document to take into account. It can give you reassurance that if and when you need it, someone you can rely on will be there to make decisions for you.
Making preparations in advance might also benefit your family and friends. It can make the process of getting you the help you need far smoother and quicker than if no LPA were in place.

Do you need a Lasting Power of Attorney?
You might believe that since your spouse would take care of you in the worst-case scenario, you won’t need an LPA. Unfortunately, that is not necessarily true; a Lasting Power of Attorney is still essential.
If an LPA is not in place before you lose the mental capacity, your loved ones will have to petition the Court of Protection for a deputyship. Your loved ones may go through a time-consuming, expensive process called a deputyship during an emotionally challenging time.
Take charge by making your Lasting Power of Attorney while you can still do so. This will not only help your family in the future but also give you peace of mind in the present.

The Responsibilities of an LPA?
There are two types of LPA.
A Property and Financial LPA enables the person or people you select to manage your financial affairs, including bills, assets, compensation, and bank accounts.
A Health and Welfare LPA gives your designated person or people the authority to choose your care, including where you reside and what treatments you get.
It is important to note that the people you select are only able to utilise their “powers” if you are unable to handle these issues on your own.

How can I appoint a Lasting Power of Attorney?
Making an LPA does not necessarily require the services of a solicitor. Estate planners will also be able to support you with this.

How long can the LPA Registration take?
LPA Registration currently takes 20 weeks; however, if an error or unanticipated circumstances arise, the application may be further delayed.
The registration fee is £82 per person and per power, but if you meet the requirements, you could be entitled to a discount or an exemption.

At Insight Wealth Preservation LTD we are on hand to help you put in place your Lasting Power of Attorney, and help plan your estate for the future. Get in touch with us today, and we help you through the process.

24/12/2022

To all our clients have a wonderful Christmas!
We are now closed and will reopen 3rd of January!

13/12/2022

Unconventional Trust Clauses

According to some law firms, there has been an increase in the number of unconventional trust clauses in Wills that specify when and how inheritance is to be paid to beneficiaries. This has demonstrated a rise in demand for greater control over estates and assets after the testator has passed away.

The rise in these kinds of clauses could have many origins. The value of property is increasing, meaning people might be taking more care when passing on their wealth. It could also be caused by a rise in more complicated family arrangements and relationships stemming from second and third marriages.

It’s possible that the rise in these unconventional clauses is due to DIY will writing websites, where individuals can craft their own will and include whatever demands they wish. However, this is not just limited to DIY wills; some will writers say they are being asked to include unconventional clauses in their client’s wills as well.

We can provide advice on all areas of Will writing. If you are looking for advice on how best to distribute your estate, contact us today!
Email [email protected] for your Will requirements.

26/11/2022

You may think writing your own Will is the best and safest way to record your wishes. However, DIY Wills are not always the best approach.

12/11/2022

There are common misconceptions on why a Lasting Power of Attorney may not be necessary which this article explores further.

07/11/2022

A mobile home is a tricky area under succession law and this article takes a quick glance into dispensing of a mobile home by the Will.