Many of my clients are asking, “should I put off my estate planning until things are clearer given the statement made in the Tory Manifesto?”

There are 2 answers to that, the simple one, No.  If you have no planning in place then you are at the mercy of the existing legislation.  This may not be too much of a problem for low value estates that do not include a property, but if you own your own home and want to ensure that your loved ones receive the maximum benefit from your estate then you should be acting now.

The more complex answer is that good Estate planning is an ongoing commitment.  A good rule of thumb is to review your current planning every 5 years.  When there are significant changes in legislation which may affect the planning you already have in place, then it should be reviewed at that time.  There are few people who would make a long term financial investment without reviewing it on a regular basis.  The same is true for Estate Planning.

Inheritance Tax

At the date of this article the individual Nil Rate Band is £325,000.  If you own your own home and you are passing on an interest in that property to your children, then you may also benefit from the recently introduced Residential Nil Rate Band which is currently £100,000.  Therefore, an individual with an estate consisting of a principle residence of £100,000 or more and other assets which together add up to £425,000 will not have to pay Inheritance Tax.

A married couple (including Civil Partners) or Widow/Widower can make use of double the above allowances.  Therefore, they have a potential allowance of £850,000 before any Inheritance Tax is due.
If the estate is over the above figures then Inheritance Tax is payable at a rate of 40% on the amount over the allowance.

The Tory “Dementia Tax”

The conservative manifesto proposed a change to the existing rules relating to care fees.  Some have referred to this as the “Dementia Tax”  It proposed a floor of £100,000, which is considerably better than the existing floor of £14,250.  However, there was one crucial difference.  The value of your home would be included in the means test even if you receive care whilst still living in your home.  At present, if you receive care in your own home, the property itself it is not included in the means test.  This could affect a great number of people.

It is important to remember that this is a proposal in a political party’s manifesto.  This is not legally binding on the government and it can be implemented, changed or ignored without consultation.  It is in effect a wish list, that imposes no obligation.

So where does this leave us?

We are exactly where we were before the general election was called.  If you should go into a care home and have more than £23,500 in assets then you will need to fund your own care.  If your main or only asset is your home and your spouse continues to live in the property, then it should be disregarded in any means test.  If this leaves you with assets of less than £23,250 then you should receive assistance with the costs of your care.  If your assets are less than £14,250 then you should have your care provided by the local authority.

If you are single or a widow/widower and own your own home and need to go into care then your home will be included in the means test assessment.

What should I do now?

If you do not have any planning in place or you ned your existing planning reviewed you should ask for a free no obligation appointment.  We will provide professional advice specific to your own circumstances giving you peace of mind that you have done all you can to protect your estate for your family and loved ones.

If you would like to arrange a meeting with an Estate Planning professional please call these details.  If you place an order with us by the end of June, quote LFJUNE17 and receive a 5% discount.  (This offer expires on the 30th June 2017)

Call us on 01202 798345 to book your appointment.