Q. My uncle died recently leaving me a £20,000 legacy. I do not have a need for this money, and would like to give it to charity instead. What is the best way to go about this?
A. There are two ways you could go about this. The first would be to exercise a “deed of variation” to your uncle’s will, meaning that the gift would be treated for inheritance tax purposes as though your late uncle had given the money directly to the charity. If inheritance tax was payable by the estate, this may alter the rate of that tax payable on the balance of the estate. Alternatively, assuming that you pay income tax, you could donate the money to charity under the gift aid scheme on your own account. The charity would be able to reclaim basic rate tax relief on your gift, meaning it would be worth £25,000 to them rather than £20,000. If you are a higher rate taxpayer, you could also make a further claim to reduce your tax bill, as the gift would effectively extend your basic rate tax band by up to £25,000. Please remember, however, that if you are in receipt of means tested benefits, or need long term care in the future, the relevant authorities may take the view that you have deliberately deprived yourself of this lump sum in order to maintain your eligibility to those benefits, and cut your entitlement accordingly.
Q. My husband died quite some time ago and we each had shares owned both individually and jointly. The jointly owned shares have been transferred to me. Our wills left everything to each other but I have just received a letter from my solicitor advising that we must go for probate. Is this really necessary?
A. If a deceased person leaves a valid will then the executors of that will must obtain a Grant of Probate to enable them to deal with the assets of the estate as determined by the will. A Grant of Probate may not be needed if a person leaves less than £15,000 or if everything was owned jointly with someone else as those assets pass automatically to the survivor. In your own case I suspect therefore that the assets held in your late husband’s personal name exceed this amount.
Q. I have been offered a voluntary redundancy early retirement package and at the age of 59 I am certainly tempted to take it. This would give me a reasonable pension and lump sums from the pension and redundancy payment. The problem I have is that I have outstanding amounts I owe on credit cards, a car loan and a small mortgage. The pension I would get along with my wife’s salary will cover our basic needs but I can’t find any decent interest rates for the lump sums I would receive to help to service our debts which does cost quite a lot each month, so I wonder if I should just carry on working?
A. What I suggest you consider is to think about how much of your current take home pay you have left each month after making the monthly payments on these debts. Work out what your net monthly pension would be and how close this would be to covering your basic needs. List the amount of debt you owe in order of the most expensive to service so this is probably credit cards, car loan and mortgage. Then think if you actually took the redundancy payment of which the first £30,000 is tax free, and lump sum from the pension scheme could you pay off say your credit cards, car loan and some or all of your mortgage so that you do not need to service these debts or at least a large proportion of them? You would need to check with each provider if there are any redemption penalties. I have dealt with a number of people in similar situations in the past who have adopted this strategy and some did need to get part time work, but all were much happier being in many cases debt free and no longer having the stress of working full time. You might want to talk to an Independent Financial Adviser who will easily be able to run through the figures with you.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
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