A recent case illustrated the dangers of using homemade wills when one was found to be invalid. It emphasises the importance of keeping even a well-drafted will current, especially with the potential for future changes in inheritance tax (IHT) laws.
Invalid will
While there is usually the presumption that the testator will have had knowledge of a will, and will have approved it, a will might be considered as suspicious if:
- It is a homemade will;
- It is created by a beneficiary;
- It contains spelling mistakes;
- It represents a radical change from a previous will; or
- The relationship between the testator and beneficiary was not close.
In the case of Ingram and Whitfield v Abraham 2023, a homemade will would have seen Joanne Abraham’s estate inherited by her brother – who drafted the will – rather than her children who were previously the beneficiaries. The homemade will, which also misspelt Joanne’s name, was held to be invalid, therefore, her children inherited the estate.
Future IHT changes
Although IHT reliefs have remained largely unchanged since the introduction of the residence nil rate band in 2017, future changes cannot be ruled out – especially with an election on the horizon.
The Institute for Fiscal Studies has recommended that three IHT reliefs are cancelled:
- AIM shares: these shares are exempt from IHT, with AIM portfolios – including AIM ISAs – often used to avoid IHT.
- Business and agricultural property relief: although full abolishment might be politically difficult, relief could be capped.
- Pension pots: funds in money purchase pension schemes can currently be passed on to beneficiaries free of IHT.
The lesson here is to review your will regularly, even if it is well-written, because your circumstances, wealth and IHT rules could change.
The Government’s guide to making a will can be found here.
For more information, contact us on 0114 266 4432 or email info@smh.group.
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