How to protect your family and property in the event of a death
Nobody likes to think about their own death or that of a loved one. However, when you own property, it’s essential to be sure that you have your property affairs in order so that those who rely on you are not left in the lurch in the event that someone passes away. From ensuring that you have written a will to be certain that there is enough cash available to cover inheritance tax burdens, there are plenty of ways to prepare yourself and your family for the future when it comes to property. This article will help you to understand the options and find the right one – or ones – for you.
Perhaps the most obvious way to protect your family’s financial interest in the event of someone’s death is to ensure that everyone who owns all or part of the property has a last will and testament in place. This document is crucial because without it there’s no guarantee that the person you want to receive your assets will actually be the one who does receive them.
Wills can be complex, however. If you own your home as tenants in common along with another person (perhaps a spouse with whom you bought the house using different deposit amounts, for example), each party may have a different amount of equity – and you could find yourself in a situation in which that equity is not automatically sent to the surviving partner, especially if you’re not married. If you are joint tenants, this is less likely to happen. Either way though, it’s important to ensure that the solicitor you hire to write your will is professional and competent, as that way they will be able to iron out these issues for you.
Another complicating factor lies in the fact that, since the boom in house prices, lots of people who own homes have become what is often described as “asset rich yet cash poor”. This means that while homeownership is prolific and values are rising, the amount of ready cash that people have access to and to actually spend is often not very high.
In the event of a death, this can become a serious problem. If your overall estate is valued at £325,000 or higher, you or those surviving may be liable to inheritance tax. In many cases, this could amount to 40% of the difference between the value of the estate and the £325,000 limit – so it could be a significant amount of cash. This doesn’t just take into account how much cash is in the bank, though: it also covers the overall value of your home and other assets. If there is a high amount of assets but a low amount of cash, the home may in some cases have to be sold in order to pay the inheritance tax bill – even if it has a current occupant. For that reason, it’s often worth reworking your assets to be sure that there is enough cash in the mix to pay any potential future inheritance tax bill, and that a forced sale does not have to take place.
There are all kinds of reasons why your family might want to make a quick sale of any property they inherit from you once you have passed away. They could, for example, want to get the process over and done with as soon as possible, due to the emotionally charged nature of the probate process. Alternatively, they might be worried about falling house prices and want to lock in value, or perhaps they are concerned that the property is not in a good enough condition to sell on the open market.
In order to make the process as smooth as possible, it might be worth making sure that your family are fully familiar with the different options open to them. One possibility might be to sell it to a cash buyer. It’s often possible to do this without having to accept a big cut in value, and many cash buyers can help with this
The emotional aspect
Inheriting and then selling a home can be really difficult on an emotional level too – especially if it’s a home in which family members have spent many happy memories, or even in which they grew up. If you’re in the process of writing a will, it may be worth telling your family that you’re bequeathing them the property with no conditions attached – and that they should feel free to dispose of it in the way that they themselves see fit. That way, when the sale process eventually begins, your family will have the confidence to act decisively and without recourse to the emotional elements of the process.
Selling a property is never an easy process, and if you’re planning your estate for after your death (or having to deal with the death of a loved one in the here and now) then it’s even more complex. While in the long term, it can render a left-behind family wealthier than before, it can also be a real-time drag in the interim as everything is sorted out. For properties which are particularly valuable, there can be a further complexity with inheritance tax – and if the person dies intestate, or without a will, the problems are even more acute. Luckily, many of these problems can be mitigated well in advance. Whether it’s by employing a financial adviser to make sure that all affairs are in order or simply ensuring that all parties including the beneficiaries know what their options are when the time comes, a little bit of forward planning can go a long way.
To learn more about the services we offer here at National Property Trade when it comes to buying properties quickly and in cash, please check out this link.