How to Reserve Power as Executor

You are not obliged to serve as the executor of someone’s estate. You can renounce this role entirely but if you do not want to completely remove yourself from the equation, you can reserve power as an executor instead. Prestige Tax and Trust Services explains how to reserve power as an executor.

Executor duties

We strongly advise people to draw up wills before passing away. With this legal document, people can determine who will inherit their assets (e.g. money, property, antiques), once they have died. When drawing up a will, people are required to appoint someone to serve as the executor of their estate.

If you are named the executor of someone’s estate, you will be responsible for managing it day-to-day once the person in question has passed away. This encompasses a range of tasks from applying for probate and calculating/paying its inheritance tax bill, to ensuring beneficiaries receive assets. You may not wish to take on these responsibilities and if this is the case, you do not have to.

Renouncing the role

You can renounce your role as executor, as long as you have not already involved yourself in the affairs of the deceased’s estate. In order to complete this task, you will be required to fill out a deed of renunciation and submit this document to the probate registry. You are relieved of executorship the minute you sign the deed, but you can withdraw it before the deed reaches the registry if you change your mind. Otherwise, you will need to secure the leave of a district judge to withdraw the deed.

After the deed has come into effect, you lose your title to probate for the deceased’s estate, meaning that you can no longer legally serve as its executor. What happens next depends on whether the deceased appointed multiple executors in their will. If the person has more than one executor, the rest can then go ahead and apply for probate without you. But if you were the only executor and the deceased did not name an alternative in their will, the court will need to appoint an administrator.

Reserving power

But what if you do not want something so final? Say you are one of three executors. You are all children of the deceased and one sibling lived closer to the parent who has died. It makes sense for them to take control of the executorship process, but you need a failsafe in case your sibling falls ill. Renouncing your role would not be appropriate in this situation, so you should reserve power instead.

With this option, you can unofficially leave the day-to-day running of the deceased’s estate. But you can step in later, should the remaining executor become unable to fulfil their duties. It is important to note that in order to reserve power as an executor, there must be another executor willing to apply for probate and formal notice must be given to the executor acting with power reserved.

Prestige Tax and Trust Services

If you believe this option is appropriate for you, ask a solicitor to draw up documents allowing you to reserve power as an executor. It is wise to gain expert guidance on this matter, to ensure that you fulfil any legal requirements. Prestige Tax and Trust Services’ team has the expertise required to provide advice on probate matters, helping you navigate the duties than come with executorship.

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Explaining Rules for Making Gifts Out of Income

With some forward planning, you can find ways to avoid inheritance tax, ensuring your loved ones can benefit fully from your estate when you pass away. Prestige Tax and Trust services explains the rules you should keep in mind when making gifts out of income for inheritance tax purposes.

Giving gifts

Your estate is liable to pay 40% inheritance tax, if its value eclipses a threshold (currently £325,000). However in some cases when you give a gift (anything with value or which causes a loss in value when transferred) it can be deducted from the value of your estate, reducing your inheritance tax bill.

So what counts as a gift? This is where the seven year rule applies. Gifts given at least seven years before you die, do not count towards your estate, but those made within this time frame receive exemptions on a sliding scale, with your beneficiary becoming responsible for paying inheritance tax.

Gift exemptions

It is also worth noting that each tax year, you can benefit from a range of gift exemptions, deducting the value from your estate. These gifts for inheritance tax purposes range from charitable donations, to gifts given at weddings and civil partnerships (up to £1,000 or more for children and grandchildren). You can also give up to £3,000 worth of gifts away each year, without inheritance tax obligations

We should also point out that these exemptions include any ‘normal’ gifts you make out of your income. This refers to things like birthdays presents and Christmas presents, where you pay for the gift out of your wages. You should remember that these presents do count as gifts for inheritance tax purposes, as long as you can maintain your standard of living after giving them away.

For inheritance tax purposes, remember that you can use more than one exemption on the same person. You could give them a birthday present and a wedding gift in the same tax year and deduct both from your estate. You can also give up to £250 in gifts to one person per tax year, further lowering your inheritance tax bill, but you will not be able to use any of the other exemptions on this individual.

Prestige Tax and Trust Services

Therefore with some strategic planning, you can give small gifts to various people within a tax year, allowing for significant reductions from the value of your estate, lowering it inheritance tax bill. In order to deploy this strategy effectively, it is wise to enlist the aid of experts. Prestige Tax and Trust Services’ team has the expertise needed to help you navigate inheritance tax matters carefully.

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