Probate FAQs

Dementia - The Financial Issues

My husband is suffering from dementia and has just been assessed for a suitable residential home. Is there anything i need to do or think about in relation to our finances?
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Firstly you must seek advice in relation to your home ownership. If your house is jointly owned you may wish to register a Notice on your property so you and your husband each own a 50% share in it. Your property will currently be disregarded from your husband's local authority financial assessment, but if you were to predecease him, the whole of the property would otherwise pass to him and could be used to fund his care. By owning a 50% share you can then pass your share of the property to your children directly on your death. You should therefore consider making a new Will and pass your estate directly to your children but you will need to take advice on this if your husband could be considered to be financially dependent on you. Your husband's Will can only be amended if he still has mental capacity.

You should separate out any joint accounts, again so your finances can be assessed separately from your husband's and ensure any income you are receiving is paid into your sole account.

Finally you should consider making a Lasting Power of Attorney (Property & Affairs) as you will then have assets in your sole name. The forms have recently been simplified by the Office of the Public Guardian on 1st October 2009.

We have specialists in Wills, Lasting Powers of Attorney and Asset Protection planning at each of our 7 offices who can be contacted to provide you with the advice you require.

Probate Explained

What is probate and will my executors need to apply for it when I die?
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A Grant of Representation is a court document issued by the Probate Registry, which confirms that a person's Will is valid and that the people named as the executors or administrators of the estate who appear on the Grant are authorised to deal with the assets in the Estate.
When a person dies leaving a valid Will and the executors named in the Will apply for the Grant, it is known as a Grant of Probate. When a person dies without making a valid Will, or without naming executors, or if the executors named have all died or are unable to act, or do not wish to act, then the people entitled to apply for the Grant are known as the administrators and the document is known as a Grant of Letters of Administration.
It depends what assets are in an estate whether a Grant of Representation is required. If it is a very small estate, or if all of the assets are held in joint names and pass by survivorship to the joint owner, then it is likely that a Grant will not be required. If there is land or property in the sole name of the person who has died then a Grant will be required in order to transfer or sell the land /property. With other assets, such as bank accounts or shares, it depends upon the balance or value of the asset whether a Grant will be required and the financial organisations have their own internal rules about this. After your death, your executors would need to contact the relevant parties to make enquiries about whether they require the Grant of Probate in order to close / sell the particular assets.

Not made a will?

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There is no simple answer to this question, it depends on what assets you own and what surviving relatives you have. The only way to ensure that your Estate passes to who you want is to make a Will.

Any bank accounts that are in joint names pass automatically to the surviving joint owner on your death. This is slightly more complicated regarding a property or land held in joint names. If you hold the legal title as joint tenants then the property will pass automatically to the surviving joint owner on your death. If you hold the legal title as tenants in common, then your share of the property passes with the rest of your Estate.

The Intestacy Rules, updated from 1st February 2009, specify what happens to the Estate of a person who dies without making a valid Will.

If you die leaving a surviving spouse/civil partner and children, your spouse/civil partner will receive a statutory legacy up to £250,000, plus interest from your date of death, your personal chattels and a life interest in half of the rest of your Estate and the remainder will pass to your children upon attaining 18. Once your spouse/civil partner has died, the share in which they had a life interest will also pass to your children.

If you die leaving a surviving spouse/civil partner and no children, but you have surviving parents or brothers/sisters, your spouse/civil partner will receive a statutory legacy up to £450,000 plus interest from your date of death, your personal chattels and half of the rest of your Estate. The remainder of your Estate will pass to any surviving parents, or your brothers/sisters if both of your parents have died.

It is vital that you make a will to ensure that your wishes are carried out. Please contact us for further information.

Transfer of Property to Family

A friend has suggested I transfer my house to my daughter as otherwise the local authority will sell it if I need to go into a care home. Should I do this?
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Firstly giving assets away purely in order to avoid paying care home fees can be seen as deliberate deprivation of capital. There must be some other reason why you want to transfer assets otherwise the local authority can set the gift aside and means test you as if you still have the asset. This is called 'notional capital'.

If you are fit and healthy and don't anticipate needing care then transferring your property to your daughter may seem like an easy solution. You may be extremely close to her and think that there would never be any problem. However, it is worth thinking about what would happen if your daughter died, became bankrupt or got divorced. In these circumstances you may find that the property would have to be sold and the proceeds paid to her beneficiaries, her creditors, or if divorced, to fund any agreed financial settlement with her ex-spouse. Basically once you give your home away you lose control of it and have very little protection.

Instead of giving your property straight to your daughter you could declare a trust over it. This would give you the right to live in the property for the rest of your life but if you went into a care home or died it would pass to your daughter. This is obviously more expensive to set up, but does give you much more security.

Ultimately you should think very carefully before doing anything. You should see a solicitor who can then properly assess your income and capital, and give advice about the situation and the options available to you. You may find that the likely impact of possibly requiring residential care in the future is not as significant as you fear.

Your Final Wishes

I have been asked to state in my will as to whether I wish my body to be buried or cremated but I am environmentally conscious and would like to know the options available to me?
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With many cemeteries now at full capacity, and the availability of burial plots dwindling quickly, many people believe that cremation is the best option.

Traditionally cremations have been viewed as 'greener' as they do not require any land space. Cremations however release pollutants into the environment and crematoria are considering this issue and taking measures to reduce carbon emissions during the process.

A common belief is that a hearse and coffin are legal requirements for burials or cremations, but this view is changing quickly and people are expressing their individuality be it a cardboard coffin or wicker basket.

Natural and woodland burial sites are becoming more commonplace. They are governed by a code of practice to ensure the long term future and use of these sites. Trees can be sponsored in memory as an alternative to headstones, or plaques made of wood or biodegradable material can be arranged.

Another option is burial at sea. Ashes can be scattered at sea anywhere, but a burial at sea requires a licence from DEFRA.

A burial in a private garden, is becoming a more frequent request. This type of burial is restricted to two people, the death must be certified, the Local Authority asked for permission and it is advisable to notify the police for their future records. Consideration however does need to be given as to what will happen if the land is sold in future.

There are now more options available on death and it is likely that awareness of our carbon footprint and green issues following death will increase. We would recommend that you discuss these issues with your solicitor to ensure that your loved ones are able to honour your request in your Will

Your Final Wishes - Last Will and Testament

I am thinking of making a will but fear my wishes will be contested after I die. What can I do to prevent this?
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There are two ways of disputing a will. The first is an attack on the will itself. This could be done for reasons such as the will not having the correct formalities (proper signatures or witnesses) or if the will was made at a time when the deceased did not have the mental capacity to do so. A person must both know, as in understand, and approve the contents of their will. A will can also be set aside if it has been coerced by undue influence or fraud.
If any of the above result in the will being set aside, any previous will may become effective or more likely the Rules of Intestacy will come into play.

The second way of disputing a will is under the Inheritance Legislation of 1975. This arises when a will does not make provision for someone for whom it should have made provision. Such a person can claim against the assets of the estate. However only certain categories of people are able to do this, these include spouses and former spouses, civil partners, children or anyone who has been treated as a child by the deceased, cohabitees and those who were financially dependent on the deceased at the time of death.

If a person is entitled to claim the court will then consider whether the will makes a fair provision or not and will take into account a range of factors including the expressed wishes of the deceased. This is where you can make provisions to prevent or at least reduce the risk of your will from being contested. In this situation, it is advisable to make a will clearly expressing your final wishes and perhaps explain in a separate letter, to be kept with your will and only opened in the event of your death, why those are your wishes. This can then be considered if a dispute occurs.

Inheritance Tax

I have heard that married couples can now have assets of £600,000 before they pay Inheritance Tax, is this true?
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Every individual has a nil-rate band for Inheritance Tax, currently £300,000 for the tax year 2007/2008. Inheritance Tax is payable at 40% on any value in an estate over the nil-rate band, including certain gifts made in the 7 years before death, joint assets and some trust assets. In addition to the nil-rate band, any gift to a spouse/civil partner, or to a registered charity, is exempt from Inheritance Tax.

Prior to 9th October 2007, it was common that where the first spouse/civil partner died leaving everything to the survivor, the first nil-rate band would be lost and on the death of the survivor, their Personal Representatives could only claim one nil-rate band. This often resulted in Inheritance Tax being payable on the death of the surviving spouse.

From 9th October 2007, the Personal Representatives of an estate of the surviving spouse/civil partner can claim to carry forward any of the unused nil-rate band of the first to die, in addition to the nil-rate band of the second to die. This only applies where the second death occurred on or after 9th October 2007 and only relates to Inheritance Tax chargeable on death, not lifetime chargeable transfers.

In the example shown above, where the first to die left their whole estate to the survivor; on the death of the survivor the personal representatives of their estate can claim double the nil-rate band at that date, currently £600,000. If the first to die had used part of their nil-rate band, for example by legacies to children in their Will, the unused proportion of the nil rate band can be transferred to the estate of the second to die.

Lasting Power of Attorney

I understand I can no longer appoint an attorney under an enduring power of attorney to look after my financial affairs in case I become unable to do so in the future but my husband says that we should have a lasting power of attorney drawn up instead. What is this?
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A lasting power of attorney is similar to an enduring power of attorney in that it enables you to appoint one or more people of your choice (“attorneys”) to look after your financial affairs in case you are ever unable to do so, for example, through illness or following an accident. This is called a property and affairs power of attorney.

This operates in a similar way to an enduring power of attorney in that if you give your attorneys general power to look after your financial affairs, they will be able to do everything financially which you could do; for example, buy and sell property, make investments, operate your bank accounts, sign cheques and complete your tax return. The government have built in more protection for someone unable to manage their own finances and for this reason the forms are longer and have to be registered with the Court of Protection before they can be used. However, they are more flexible than before in that you can appoint different attorneys to make different decisions and you can appoint a substitute attorney. You may also put restrictions and conditions on your attorneys if you wish.

In addition, you can now also make a lasting power of attorney to cover health and welfare decisions which were not previously covered under enduring powers of attorney. This means that you can decide now who should make important decisions on your behalf if you are not able to make them yourself. You can give your attorneys power to decide where you should live, who should visit you and what kind of care you should receive. You can, if you wish, give your attorneys power to consent or refuse medical treatment on your behalf, including life sustaining treatment.

Deciding now who can make important financial, social and welfare decisions on your behalf in case you are ever not able to do so will give you peace of mind for the future.

Do i need to make an Enduring Power of Attorney?

There is lots of information about Enduring Powers of Attorney at the moment. I am only in my 30's and no one in my family has ever suffered from dementia why would I need to make one?
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Many people think that Enduring Powers of Attorney are only relevant to older people but this is not the case. The Law Society recommends that everyone over the age of 18 makes an Enduring Power of Attorney.

An Enduring Power of Attorney allows you to decide who you would want to manage your financial affairs if you were not able to in the future.

Once you have made an Enduring Power of Attorney it can be stored away and could then be used in any number of circumstances including the following:

  1. If you go abroad and want someone to look after your finances or sell your property while you are away
  2. If you become incapacitated possibly as a result of an accident or illness
  3. If you become mentally incapable of managing your financial affairs through mental illness, accident, or old age.

Without an Enduring Power of Attorney no one, including your husband or wife, would automatically have the authority to operate your bank accounts, pay your bills or deal with your property.

From October it will no longer be possible to create an Enduring Power of Attorney, although any made before this time will continue to be effective.

Enduring Powers of attorney are vital for people of any age as you do not know what might happen in the future. It can be incredibly useful and reassuring to know that you have appointed someone who could look after your finances and property if you ever weren't able to.

Changes to Enduring Powers of Attorney

I have heard that laws are going to change for Enduring Powers of Attorney. Can you explain the existing powers and why we need to take action now?
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An Enduring Power of Attorney is a document whereby you give the legal right to one or more people, the “attorneys”, to manage your financial affairs and property on your behalf.

The power can come into effect straight away, or be stored until a later date when you feel that you no longer wish to deal with your finances, or you become mentally incapable of doing so.

The attorneys must always act in your best interests and they are permitted to:

  1. Sign cheques and withdraw money from bank/building society accounts on your behalf;
  2. Sell or purchase a house or shares for you;
  3. Use your assets to finance residential/nursing care fees.

If you, young or old, are unable to deal with your finances and do not have the benefit of an Enduring Power of Attorney it would be necessary to apply to the Court for a Receivership Order which is a costly and lengthy process.

From October this year it will no longer be possible to create an Enduring Power of Attorney. Existing powers and those created before October 2007 will continue to be effective, but a new, more complex procedure will need to be followed for anyone wishing to choose someone to look after their financial affairs.

Enduring Powers of Attorneys are a vital part of financial planning and it is important to take action now if you or a relative are to benefit from having one.

Validity of Will

My uncle has died recently. On sorting out his possessions we have found a copy of his Will which has the words 'cancelled' heavily written over each page. The Will and signatures can still be read, although with difficulty and I therefore wanted to know if it was still valid.
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It sounds as though the original Will of your Uncle has not been validly revoked and would be classed as valid. The Wills Act 1837 indicates that one of the ways to validly revoke a Will is by "burning, tearing or otherwise destroying". This implies that a physical act of destruction is required and simply writing cancelled across it would be insufficient. The Wills Act 1837 goes on to indicate that if original wording is apparent then that wording will be regarded as valid. "Apparent" here means wording that can be read by ordinary means such as by close inspection or use of a magnifying glass.
By far the safest and best way of changing any old Will is to make a new one. By this method you can ensure revocation of any previous Wills and make sure those you intend to benefit actually do.

Tax planning wills

My wife and I did tax planning Wills containing a nil rate band discretionary trust last year. Does the March 2006 Budget mean that this is no longer effective?
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The answer to your question is no. Tax planning Wills making use of each spouse's nil rate band for Inheritance Tax, whether by gifting an outright gift of £285,000 on the first death to children, or by using a discretionary trust is still an effective way of saving Inheritance Tax.

In the March 2006 Budget Gordon Brown altered the tax treatment of other trusts in Wills, namely trusts for children or grandchildren and life interest trusts.

Recently the Government announced a climb down to these alterations following pressure from professional bodies.

In summary:

  1. Life Interest Trusts (i.e. to my wife for life and then on her death on to my children) will still receive spouse exemption, i.e. the assets will pass to the surviving spouse free of Inheritance Tax. The original Budget had announced a 40% Inheritance Tax charge.
  2. Trusts created for children/grandchildren on attaining any age over 18 will however still be affected, but not as severely as originally proposed. The original Budget stated that these trusts must pass assets to the child at 18 or face an Inheritance Tax charge of 6% every 10 years, or on payments out of the trust on the value of the assets above £285,000. Following the climb down, the Inheritance Tax charge will only apply when the child reaches 18 until the age contingency (usually 21 or 25) resulting in a lower rate of 4.2% tax on any assets over £285,000.

We are still waiting for the legislation in July to be able to advise you fully. As with any Will, keep this under regular review and contact your solicitor if you feel the March 2006 Budget may have an impact on you.

Inheritance issues

My son has learning difficulties and cannot manage his own finances, how can I include him in my will?
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Leaving a large inheritance can cause many problems in this area. A child with learning difficulties may not be able to deal with an inheritance. The inheritance may also adversely effect existing financial arrangements such as state benefits or local authority care plans.

For these reasons parents often leave out children with such difficulties from their Will, relying on other children to provide for their sibling from their "extra" inheritance. There is however a preferable option. A trust can be set up either in lifetime or in a Will, which is designed to manage an inheritance for a son or daughter who is unable to receive a direct legacy. These trusts can also preserve entitlement to existing financial benefits and can be administered by trustees from the family or perhaps independent third parties, such as a solicitor. MENCAP also offer similar arrangements with trusts being set up by parents in lifetime to be administered by MENCAP when the parent has died. Contact us for further details.

Enduring Powers of Attorney

I have an Enduring Power of Attorney in favour of my daughter should she need to deal with my finances in the future. I have heard that Enduring Powers of Attorney are soon to be replaced with Lasting Powers of Attorney. Does this mean that my Enduring Power of Attorney will shortly be of no use?
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Lasting Powers of Attorney were introduced in the Mental Capacity Act 2005 to replace Enduring Powers of Attorney. The Act 2005 is likely to come into force in 2007. Until then Enduring Powers of Attorney can still be made and those made before the implementation of the Act will still continue to be valid. Your daughter can still therefore use your Enduring Power of Attorney in the future.

Lasting Powers of Attorney have been introduced to provide the Court of Protection with more control over the use of Powers of Attorney. Disputes have arisen in the past due to people granting Powers of Attorney when they have insufficient mental capacity, have been placed under undue influence or have granted powers to unscrupulous attorneys. A lot of these disputes have arisen from “homemade Enduring Powers of Attorney”.

Lasting Powers of Attorney will have the advantage over Enduring Powers of Attorney in that they will enable the attorney to make welfare decisions as well as financial decisions on behalf of the Donor and can make provision for successive appointments, but they will have to be registered with the Court of Protection before they can be used even if the Donor still has their mental capacity.

They are therefore likely to be more expensive to create and implement than Enduring Powers of Attorney.

As long as your Enduring Power of Attorney is in favour of someone you trust there is no need for you to replace it with a Lasting Power of Attorney.

Civil Partnership

What rights do same sex couples have for inheritance tax purposes?
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As of 5 December 2005 the Civil Partnership Act 2004 will come into effect. This introduces the concept of Civil Partnership, allowing same-sex couples to gain legal recognition of their relationship.

Registered civil partnerships will have many similarities to marriage. These include the gaining of certain rights relating to the rules of intestacy; the registering of the death of a partner; in relation to inquests and burials, bereavement benefits and also regarding survivorship pensions.

As with marriage, entering a civil partnership will automatically revoke an individual's existing Will unless the Will is written in contemplation of the partnership. As a result, an individual could die intestate with no guarantee that their assets will pass to their intended beneficiary.

Civil partnership couples will receive the same full exemption for inheritance tax purposes that spouses have upon the first death. The Wills of the civil partners can also be used to incorporate inheritance tax planning, utilising the nil rate band threshold (presently £300,000 as of 6 April 2007).

There will be several issues for civil partners to think about in order to minimise the inheritance tax that will be paid upon their second death. These include the use of lifetime trusts and the revising of Wills to include discretionary trusts.

Consideration should also be made to maximising the giving of exempt lifetime gifts.

Ease your Inheritance Tax worries

In the last few years the value of our home has risen substantially and we are now worried about Inheritance Tax. Is there anything we can do?
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The past rise in property prices have meant that more and more people are facing an Inheritance Tax bill when they have died. It is possible for a couple to take steps to eliminate or reduce the likely amount of Inheritance Tax payable by having suitable Wills. The Wills take advantage of a trust arrangement to create a structure in which Inheritance Tax is saved on the value of your home or indeed any other assets which you own. This has the added advantage of enabling you to continue to benefit from these assets during your lifetimes and the lifetime of the remaining partner, when one of you has died. To take advantage of this scheme it is important that you have proper Wills in place as soon as possible. Contact us to find out how this can be done.

Dying Abroad

My partner's father retired to Spain several years ago. Unfortunately, he has just died and he always said that he wanted to be buried in England. What do we have to do?
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Firstly, any deaths that occur abroad must be registered in that country according their formalities. If at all possible, the death should then also be registered with the British Consul. This means that a death certificate can then be obtained in this country from the Coroner's Section of the Home Office. Also, the British Consul will be able to give you valuable advice about the actual procedures for bringing the body home.

It is also necessary to obtain an authenticated translation of the foreign documents. You will need the death certificate or equivalent to bring the body through British Customs. You will also need the death certificate to obtain a certificate of "no liability to register" from the Registrar of the District in which the funeral is to take place.

If, of course, a death occurs during a package holiday the travel insurers and tour operators should be able to provide all the assistance that you need.

A Grant of Probate

Why do I have to obtain Probate when my father left a Will appointing me the Executor and leaving all of his property to me?
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A Grant of Probate is usually required as this enables you as Executor to prove your authority to deal with your late father's property which passes under the terms of his Will. The Grant of Probate will enable you to close any bank accounts held by your father, cash any National Savings Bonds or investments and if necessary sell any property owned by him. However, it is not always necessary to obtain a Grant of Probate. In small estates, that is where the total value of all the deceased's assets is less than £5,000, some banks, building societies and National Savings will often make payments to persons who are entitled to the assets of the deceased without a formal Grant of Probate. In addition, assets such as a property or a bank account which are held jointly with another pass by survivorship to the surviving joint holder. A survivor can prove that they have become the sole owner merely by production of the deceased's Death Certificate.

I have lived with my boyfriend for a year and have one daughter aged four years. I have not made a Will. If I die will my estate pass to my boyfriend.?

No. Your boyfriend does not have any legal right to your estate. Your estate will pass to your daughter when she attains eighteen years. However, as she is a minor, she would not be able to administer the estate and someone would have to be appointed to do this on her behalf. Briefly, priority of right to do this for the use and benefit of a minor is given to a parent or guardian with parental responsibility. In the absence of such a parent or guardian, persons to deal with the administration for the use and benefit of the minor must be appointed by District Judges or Registrars Order. Therefore if you make a Will and die before your daughter attains eighteen, your executers will deal with your estate and invest the monies for your daughter until she attains the age of eighteen.

Appointing a Guardian

Can I appoint a guardian to care for children in the event of my death? If so, how does the appointment work?
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Yes, a parent with what the law calls "parental responsibility" can appoint a person as guardian for their children. It is advisable to do this in a Will as by its nature such a document is likely to be preserved, easily identifiable and considerable by those dealing with the estate of the deceased.

The appointment takes effect on the appointing parents death, provided there is no surviving parent with parental responsibility for the child. If at the appointers death, the child does have a surviving parent with parental responsibility, the appointment generally takes effect only on the death of that parent, unless there was a sole residence order in favour of the appointer in force at death. In every case, it is important that the proposed guardians be consulted in advance to ensure they are willing to act and also that sensible provision is made for the cost of the children's upbringing. In the event of any dispute over the appointment, the court retains overriding jurisdiction over the care of minor children.

Issues Relating to Inheritance Tax

My father owns a property which is let and to avoid future Inheritance Tax he would like to give it t me. Will I be liable to any tax on it? Would tax be avoided if I paid a small amount for the property? If the property is given to me, could my father still keep the rent during his lifetime?
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No, Inheritance Tax is payable on gifts provided that the donor survives for a period of seven years from the date of the gift. If your father made the gift and died within that period, the value of the property would be added back to his estate for Inheritance Tax purposes.

It would not make any difference if you paid something for the property because if the payment was less than the full market value at the time, the difference would still be regarded as a gift made by your father.

The gift would be ineffective for Inheritance Tax purposes if your father continued to receive the rent. This is called "a reservation of benefit". Where property is given away and the donor retains some benefit from it, the gift is disregarded for Inheritance Tax purposes.

There is another point to consider, i.e. Capital Gains Tax. Even though your father may be able to make a gift which would exempt the property from any Inheritance Tax, the gift is a disposal for Capital Gains Tax purposes which may give rise to an immediate liability to tax. The taxable gain would be the difference between the market value at the date of the gift and the original cost price, or market value at March 1982, if later, plus an indexation allowance up to April 1998. Subject to the annual Capital Gains Tax allowance, the gain would be chargeable at your father's income tax rate in the year of the gift.

Validity of a Will after Marriage

I made a Will about five years ago. Since then my girlfriend and I have married. Is my Will still valid?
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The basic rule is that any Wills signed after 31st December 1982 are automatically cancelled by the marriage.

However, this will not apply if the Will includes a cause stating that you intend to be married shortly and that you wish the Will to remain valid after your marriage. It is quite unusual to include such a provision and the chances are that your current Will is now invalid and I would advise that you prepare a new one. Remember that if you have any children you can also appoint guardians for your children in your Will.

Incidentally, if you divorced after making a Will, then any references to or gifts to the former spouse lapse unless it is clear from the Will that the person making the Will intended the gift to remain despite the divorce.