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Fergusson Law shares their latest news, the latest legal news and provides some legal advice on this blog.

Intestacy For Buy To Let Investors

buy to let properties and intestacy

Do you have a Will? If you die without one, your estate may not be distributed in the way you would have intended, and it might cause real problems for your family. The issue is of particular concern to buy-to-let investors, who own flats and houses in addition to their family home.

If you do not have a Will in Scotland, your estate is divided according to the rules of intestacy.

Firstly, if there is a surviving spouse they get PRIOR RIGHTS.

  • The family home (if they live there) up to a value of £473,000
  • Contents (if they live there) up to a value of £29,000
  • Cash - £50,000 if there are children, £89,000 if there are none.

If there are moveable assets left after prior rights, LEGAL RIGHTS apply

These only apply to moveable assets – that is everything except houses, flats and land.

  • Surviving spouse and children: spouse gets 1/3rd of moveable assets, children between them share 1/3rd of moveable assets. Final 1/3  of moveable assets goes into FREE ESTATE
  • Surviving spouse only: s/he receives half net moveable assets.  The other half to FREE ESTATE
  • Surviving children only: they share half net moveable assets. The other half to FREE ESTATE

everything left over after Prior and Legal Rights falls into the  FREE ESTATE

Therefore any other houses and land you own (including your buy-to-let properties), and all the cash etc. left from Rights will be distributed in the following strict order of succession:

Buy to let properties

  • Your children come first
  • If you have parents and siblings they share your free estate
  • If you only have parents, they take your free estate
  • If you have siblings, but no parents, they inherit (or their children if they have predeceased)
  • If you have no children, parents or siblings your surviving spouse comes next

It then goes on to uncles/aunts and other more distant relatives.  But the important point is that your wife or husband is very low on the list.  Your nieces and nephews may have better rights to your free estate than your surviving spouse.  If no-one can be found then the Government gets it.

If you are a buy to let investor with no Will your properties are likely to end up in your free estate.  If you have children, they will inherit these properties in preference to your surviving spouse, even if they are very young at the time.  This could result in an unnecessary inheritance tax bill and make the properties difficult to manage as young children do not have legal capacity.  If you are married with no children, your parents, brothers and sisters, (or their children if they have died before you) will inherit your buy to let properties in preference to your husband or wife. If you have an unmarried partner, they have limited rights, which do not include the buy-to-let properties.

If that is not what you want the practical solution is to draw up a Will.

For further help and legal advice about this matter please do not hesitate to get in touch with one of the Solicitors at Fergusson Law.

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BLOODLINE WILLS

What is a Bloodline Will?

Many of you will have heard about or seen TV advertisements for, so-called Bloodline Wills.

The theme is that you want your estate to go to your immediate family whom you know, with no risk of it being diverted to your daughter’s ex-boyfriends, people whom your children owe money to, future step-parents to a grandchild, and so on. Your grandchildren could be specifically named in your Will but end up with nothing at all. It is even possible that your wishes could be bypassed if you own a buy-to-let property as well as a family home.

There is nothing new about making your directions clear in your Will except that modern cohabiting relationships can create unexpected legal consequences.

You might think your existing Will provides protection for your family assets but it is likely that your grandchildren will only inherit if their mother or father dies before them. Your grandchildren may never benefit from your estate.

Bloodline Trusts

The solution may be placing funds into a specialist Trust whose sole beneficiaries are within your family. These funds can be used at any time for the named persons’ personal benefit but cannot be accessed by outside third parties.

Without such a Trust, you could find that your money wends its way to former partners (married or not) of your sons and daughters, their stepchildren, people who claim money from your descendants and so on.

A thoughtfully drawn up Will is the first step. If you die without one, your estate may not be distributed in the way you would have intended, and it might cause real problems for your family. The issue is of particular concern to buy-to-let investors, who own flats and houses in addition to their family home. If you do not have a Will in Scotland, your estate is divided according to the rules of intestacy.

After your spouse (probably) gets the family home, any other houses and land you own (including your buy-to-let properties), and all the cash remaining may go to relatives whom you have never met. Known in Germany as Laughing Heirs whose relationship to the deceased is so distant they suffer no sense of bereavement but are happy to receive an unexpected financial windfall.

Potential care home fees are another area where we can offer advice to protect your assets.

‘Bloodline’ Will Trusts are not for everyone. Annual costs are involved as accounts have to be created and tax returns made. We can help put a Plan together and quote you a Fixed Price for doing it.

Please call Janice now to have a talk about it. Ring 0131 556 4044 or send us a message via our website.

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NEWLY RETIRED? PLAN FOR THE FUTURE

By the year 2040 one in 12 of us will be aged over 80. With an ageing population, it makes sense for each of us to consider the future and put in place plans for future care and legal protection to look after our affairs.

Care Home Planning

Advice from Fergusson Law can help smooth the process of choosing to move to a care home.

  • Write a Will which helps preserve your assets for your family and minimise care home costs.
  • Help you budget your money and arrange for all your bills to be paid.
  • Deal with your state benefits and apply for additional benefits if you are eligible.
  • Sort out your tax affairs including Income Tax.
  • Deal with the Local Authority on your behalf.

Power of Attorney

This is a very useful legal tool which everyone should consider putting in place.  By making a Lasting Power of Attorney, you are able to choose who will have the legal authority to manage your affairs and speak on your behalf if, in the future, you lose capacity to do so because of physical illness, frailty or mental health issues.  It is a comfort to know that one or two people whom you trust completely and who know your preferences and life choices, will be able to stand in for you when you are in need of help.  A word of caution. We advise against having joint Attorneys.  By all means have more than one who can each act for you alone but it can be complex if two people have to be present together at, say, a bank branch, in order to take any action.  We can explain further .  Ring us on 0131 556 4044.

There are two types of Lasting Power of Attorney; one dealing with property and finance and the other concerned with health and welfare matters.

Making a Will

Making a Will, is relatively quick and simple. It can also give you peace of mind, knowing that your affairs are in order, so that everything will be straightforward for your family and loved ones.  We offer fixed prices and will store your Will. 

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