8 Key Benefits of Mirror Wills
Executors
You are able to appointment an executor(s) and substitute executor(s) in your Will to administer your estate. The executor(s) duties are to administer your estate according to the wishes in your Will.
Married couples and civil partners usually appoint each other as executor(s) in their Mirror Wills to deal with the estate administration process and in more advance estates they will appoint a legal professional to aid their surviving partner through the estate administration process.
Tax Efficiency
Mirror Wills can allow married couples to transfer gifts in a tax efficient manner to other beneficiaries. Assets that qualify for relief such as business property relief, agricultural property relief and other reliefs can be identified and made the subject of a gift within a Will to other beneficiaries therefore provide effective tax planning.
Spouse Exemption
If a married couple or civil partner mutually agree to leave their whole estate to the last surviving partner in Mirror Wills, the estate will qualify for spouse exemption if one of them dies. This again provides effective tax planning on the first death.
Married Couples and Civil Partners
By agreeing to pass on your residuary estate in a Mirror Will to your husband, wife or civil partner, you are protecting their future. If an estate is to be administered according to the intestacy rules, this does not mean your estate will automatically pass to each other if you are married or in a civil partnership and your children could benefit earlier than expected.
Cohabiting Couples & Residential Property
Mirror Wills protect couples who are not married or in a civil partnership, especially if they own residential property and it is held in tenants in common. If there is no Will and co-habiting couples own property together, the property would be distributed according to the intestacy rules which could potentially leave the surviving co-habitee in a difficult position if the beneficiaries wish for the property to be sold and they do not have sufficient liquid assets to purchase another property.
Nil Rate Band Transfer
Each individual has a Nil Rate Band (“NRB”) which is currently £325,000. After the NRB, inheritance tax is payable on your estate. If the estate qualifies for spouse exemption for a married couple or civil partners, on the first death, the unused NRB from the death is transferrable to the surviving partner and this amount can be added to the surviving partner’s NRB on their death. The example below illustrates the position further:
“Mr Smith & Mrs Smith instructed their solicitor to prepare Mirror Wills for them leaving their residuary estate to each other on the first death. Unfortunately, Mr Smith dies in 2012. Mr Smith did not use up his Nil Rate Band seven years before his death so his full NRB is available. As Mrs Smith is inheriting his estate, the estate qualifies for spouse exemption. Therefore no inheritance tax is payable. On Mrs Smith’s death, her children will benefit from a nil rate band of £650,000 as Mr Smith’s NRB can be transferred over.”
Primary Residence Allowance Transfer
From 6 April 2017, an additional “residence nil-rate band” of £100,000 per person was introduced by the government taking into account the rise in property prices. Similar to the NRB, this can be transferred between married couples and civil partners potentially allowing direct descendants to benefit from a threshold of £850,000.
Guardianship
Whether you are a married, unmarried couple or civil partners and you have children below the age of eighteen (18) years, you can appoint guardians of your choice in your Mirror Wills, should both parents die. You can also appoint trustees that will hold your estate on trust until your children are old enough to inherit it.
A qualified Private Client Solicitor at Fitz Solicitors can provide you with the advice you need in relation to Mirror Wills. If you would like an appointment to discuss this further, please do not hesitate to call us on 01753 592000.