When it comes to sorting out a Will, there’s an awful lot of jargon to try to make sense of. Here are some of the most common terms you’ll come across, and what they really mean.
- Assets: These are the valuable items you own and cover your possessions, property, cash, etc.
- Attestation: This is the signing and witnessing of a will.
- Beneficiary: This is a person or organisation to whom you leave something in your Will.
- Bequest: This is the term for a gift that you have left to someone in your Will. There are several different kinds, for example a specific bequest is a particular named item, such as a piece of furniture or jewellery.
- Capital Gains Tax: Changing a solely owned property to Tenantsin Common is a transfer of equity from the sole owner. Technically they are gifting an asset which could give rise to Capital Gains Tax (CGT). However their is a releif against CGT if the property is the main residence. Additionally CGT is not applicable for transfers between spouses.
- Codicil: This is a document that can be used to change a Will which has already been written.
- Crown: This is essentially the Government and it is where your money will go if you die without writing a Will.
- Estate: This is the total of your assets minus the value of any liabilities you owe.
- Executor: When you write a Will, you need to name an executor. This is the person who is responsible for ensuring your wishes are carried out.
- Family Interest in Possession Trust: This is for a married couple with an estate value in excess of two “Nil Rate Bands” and benefits from “Spousal Exemption”.
- Family Probate Preservation Plus Trust: This is used where you wish to pass all or part of your main residence to be controlled and managed by Trustees whilst you are still alive. This requires a Conveyance transferring the asset to the Trustees.
- Family Probate Trust: This is a discretionary trust with the main feature being that the Settlor can also be a potential beneficiary.
- Family Trust: To protect the inheritance from various threats rather than the Will directing the assets absolutely to the beneficiaries it is best to direct these assets via a Family Trust. this is a Discretionary Trust where the Trustees decide who and by how much the beneficiaries benefit.
- Guardian: A person who is responsible for children until they reach the age of 18.
- Inheritance Tax: This is a tax which is paid on the portion of your estate which is above the nil-rate threshold. Currently, this stands at £325,000 for individuals, though you can now pass on a further £100,000 (rising to £175,000 by 2020) if you are leaving your primary residence to family.
- Intestate: This is when someone dies without leaving a Will.
- Legacy: This is another word for a gift or bequest left in your Will.
- Mirror Will: As a couple it is very common that the content of each individual’s Will mirrors the other.
- Probate: This proves the Will is valid and gives the executor the authority to administer the estate.
- Residue: This is the word for what is left of your estate after debts, taxes and certain bequests have been handed out to beneficiaries.
- Severance of Tenancy: Most couples own their property as “Joint Tenants” which means that on death of one of them, the property passes to the survivor automatically. It will not pass according to your Will. This is similar to how most joint bank accounts and other jointly owned assets are held. By severing the tenancy of a joint property, it is declared that the owners in fact each own a proportion of the property which their wills can direct accordingly on their death. The ownership of the property when this is done is called “Tenants in Common”.
- Testator: This is the name for the person who has made a Will
- Trust: You can set up a trust to administer some of your assets after you die.
- Trustees: These are the people that manage a trust.
- Witness: A Will must be signed in the presence of two witnesses, who also need to sign the Will.
If you need to speak to a qualified professional about writing a Will or if you have a Will already and not sure if it’s achieving what you need it to, please contact Finance North Estate Planning Services today, on 01782 963 303 or email help@FinanceNorthEPS.co.uk.
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