Wills, Probate, Estate Planning, Chattels. There is a lot of confusing terminology associated with finances and assets in your Will. Here is Final Choices' jargon buster, which we hope will help clarify certain terms and phrases.
When considering writing a Will or changing an existing Will, you'll come accross words and terms that just don't come into our everyday language. So if you're having trouble sorting your Chattels from your Testators, take a look at our Wills jargon buster.
Beneficiaries: Anyone who benefits by receiving something left to them in the Will.
Chattels: Moveable possessions. Their sale can be added to the estate. Valuable chattels should be added to the Will, less valuable chattels should be covered in the Letter of wishes.
Codicil: A document making a change or addition to an existing Will; it must comply with the same formalities as the Will.
Estate: The value of the deceased’s total property.
Executors: The person or people (generally family members, friends or suitable professionals) appointed to look after the testator/testatrix’s affairs according to the terms of the Will.
Grant of Letters of Administration: The issue of the legal document which authorises the administrator to deal with the deceased’s estate in accordance with the laws of intestacy.
Intestacy: The situation when the deceased has not made a Will. A partial intestacy is where a Will does not deal with all of the testator/testatrix’s estate.
Lasting Power of Attorney: A legal document allowing the donor to choose someone (the Attorney) to make decisions on his/her behalf about property and affairs or personal welfare at a time in the future when he/she no longer wishes to make those decisions or lacks the mental capacity to do so.
Life interest: An interest which a person has in something for the duration of their life.
Lifetime Chargeable Transfers: Transfers/gifts which are neither exempt nor potentially exempt. The most common chargeable transfers are those into certain trusts. A transfer will be chargeable if it (together with any cumulative transfers made within the last seven years) exceed the nil rate band. Tax is payable at 20% on the excess over the nil rate band and there will be no further tax to pay if the person making the gift survives for seven years. If death occurs within seven years, the tax at death rates will apply to the transfer retrospectively. Credit will be given for the tax already paid.
Nil-rate band: The first slice of the estate on death that is subject to a nil rate of inheritance tax (currently £325,000).
Potentially Exempt Transfers (PETs): Transfers/gifts to individuals and certain trusts can be PET’s. There is no immediate tax liability and no eventual charge provided the person making the transfer/gift survives for seven years after making it. The rate of tax reduces in the case of very large gifts only, if death occurs after three years but within seven years. One important advantage of making a PET is that it freezes the value of the gift; if you die within seven years the value of the asset concerned at the date of the gift Will be added back to your estate for tax purposes, whereas, if you had retained the item, its value at your death would have been taxed.
Probate: The official procedure whereby it is formally established whether a valid Will has been left, who the executors Will be and that they are authorised to sort out the deceased’s affairs.
Residue: What is left of an estate after the payment of all debts, expenses and any specific legacies etc.
Specific legacy: An item left by Will. Such items may be of sentimental value as well as those of monetary value.
Statutory trusts: Each child receives a share of the assets on reaching the age of majority (18) or on marriage if that is earlier. If a child dies before becoming entitled to a share, that share passes to any other children on the same basis.
Testamentary capacity: The testator/testatrix must be of sound mind, memory and understanding. He/she must appreciate the nature of a Will and its effects, understand the extent of the property of which he/she is disposing and must be able to comprehend and appreciate any claims to which they ought to give effect (e.g. those of a spouse, children etc).
Testator/Testatrix: The person (man/woman) making the Will.
Find out more about lnheritance Tax on GOV.UK.