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Inheritance tax is a levy which has to be met upon a person’s death, with probate serving as the process of dealing with this individual’s estate. As probate often proves a difficult and somewhat lengthy process, it can compound existing issues of grief Britons often feel upon losing someone they love. Discussing these sorts of financial matters when a person is still alive can often be taboo, and avoided due to the sadness such discussions may bring about.
However, having a clear plan about what happens after someone dies is often vital as it can eliminate unnecessary expenses, and even administrative work later on.
Old Mill, a financial advice company, has warned Britons they will need to take action on important matters such as Inheritance Tax, probate and wills as soon as possible.
On average, findings have shown probate costs £2,771, however, the process can be slow, meaning costs can be dragged out for those left behind.
A further study from Exizent shared with Express.co.uk, showed issues such as administration and waiting for institutions to respond can hold up the process, often leaving families to meet significant costs.
The inefficiencies of probate can often prove an additional stress for an already burdened family.
As such, Nick Cousins, Founder and CEO of Exizent, a platform designed to help those left behind after someone dies, has urged these conversations to take place as soon as possible
He said: “People’s lives are increasingly dispersed and varied. Performing executor work with a growing number of banks and institutions is more complex than ever.
“It is important to talk with family about money. If loved ones know what assets you have and where they are, the probate process is much quicker and far less stressful for those left behind.”
It will also leave the executor of a will – someone in charge of dealing with a person’s estate – with time to focus on matters such as funeral planning, and of course, their own grief.
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While these conversations may be potentially uncomfortable or unwanted, it will ease the process, and is likely to reduce associated costs.
Carolyn Matravers, Chartered Financial Planner at Old Mill, also stressed the importance of planning ahead, offering a checklist of matters to consider.
She said: “Even if as a family you have never discussed your parents’ financial matters or if you feel uncomfortable talking to them about a declining health situation, plucking up the courage to have these conversation now will make it easier in the longer term.
“Find out from your parents exactly what assets are where. This will include bank accounts, investments, savings and pensions as well as material assets of worth, for example jewellery.
“If you parents own property then it’s helpful to have all the information relating to that property in one place; utility information, TV licence and insurance documents and making sure you know where the title deeds of any property your parents own are held is good thing to do.
“If an asset needs to be sold quickly in a crisis, being able to locate the title deeds quickly will help. Having this information readily accessible will make it easier if you need to step in and support your parents at some point in the future.”
This conversation, Ms Matravers, highlighted should always include matters of Inheritance Tax.
This can include whether a person has made any financial gifts and when, as it can help tax aspects of an estate to be managed.
In addition, simplifying a person’s assets may also be the key to making an estate easier to deal with.
Ms Matravers continued: “It’s worth considering if they could rationalise the number of bank and savings accounts they have, while being mindful of the protection levels offers per financial institution through the Financial Services Compensation Scheme.
“Where investments are concerned, it’s worth making sure that there are held in an easily accessible and understandable format and in line with your parents’ attitude to investment risk.”
Finally, it is of the utmost importance that Britons keep an up-to-date will which clearly outlines their wishes.
This will also assist in eliminating confusion or difficulty upon a person’s death, as well as providing legal rights for specific individuals.
Inheritance Tax is currently set at 40 percent of the value of an estate which is above £325,000.
An executor of a will must apply for the process of probate upon a person’s death – which will give them the legal right to deal with money, property and possessions of the person who has passed away.
This can be achieved online or via post for those who have checked their eligibility.
However, it is important to note an estate’s value must be reported before an application for probate – and most Inheritance Tax paid.
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