Some parts of the UK media have a habit of revelling in the financial details of celebrities who’ve recently died. Whilst this practice is questionable, it nevertheless sometimes teaches us a valuable lesson – that minimalizing tax liabilities after death is somewhat of an art form – one that demands professional planning and intelligent choices.
Following the passing of cherished funny man Ronnie Corbett in March of 2016, it was reported that he’d previously sold the family home for £1.27m in 2003, from where Ronnie and his wife then downsized to a local property, valued at around a fifth of their previous home.
A source later identified as the purchaser of Ronnie’s old home, came forward to say that they’d taken this step to gift money to their two adult children. As this had happened in 2003 his children escaped taxation, however the tax man could otherwise have served a bill if the gift was given in the seven years previous to his passing.
This bill would have been significant, too, as assets that are above the tax-free threshold of £325,000 per person (or twice this amount for married couples – £650,000) attract a rate of 40%.
Rik Mayall’s story demonstrates a critical mistake to avoid – not making a will. Amazingly, despite Rik’s wealth and a life-threatening accident back in 1998, the comedian was reported not to have made a will (it’s worth noting here that two other possibilities are that a will was drawn up, but had been incorrect or that it had been lost in the years since its writing).
The ultimate result of this lack of action was a potential tax bill of £1.2 million – served to his wife of 29 years who survived the star. This could, in part, be explained by his age (Rik was only 56 years old when he passed away unexpectedly in 2014 from a heart attack); however whatever the reason, the 40% inheritance tax rate was one that, without further planning or other varying schemes, would have to be paid.
A firebrand in UK politics, Tony Benn was revered by fellow labour politicians and oppositions alike as an authentic, passionate voice for the working man and woman and for the ‘hard left’. Despite his commitment to socialism, it appears that even Tony may have drawn the line at the significant rates of tax that are bestowed on individuals post death.
We say this as, following his wife’s passing in 2000, it emerged that she had split the family home’s ownership between their children and Benn, this was possibly the best solution at that time but under todays rules this would have meant that some of her nil rate allowance had been used. By splitting it in the way that they did, although it’s possible that Tony Benn’s children avoided inheritance tax on the family home altogether, had they not passed some of Mrs Benn’s estate to children more of the estate could have passed to the children with no tax payable. This shows how important it is to ensure that any tax planning measures you take are reviewed regularly.
Whether you’re a global superstar or Joe Blogs from Birmingham, estate planning always requires a professional helping hand – if you’re in the midst of probate administration and could benefit from expert advice, we’re here. Contact the team at IWC Probate Services, London – call us on 020 8017 1029 or send us an email to find out how we can help you: email@example.com.