The last year has seen us all receive an unprecedented amount of information about death rates and infection levels in relation to Covid19 which has touched us all in one form or another. As a property owner there are a myriad of practical realities that come with death when managing your own property portfolio and also dealing with the death of tenants.
As with all big life events it is important to plan for your death during your lifetime, making it clear who you would like to inherit your assets and having a strategy in place to manage the inheritance tax consequences. With inheritance tax charged on death at a draconian rate of 40% on the value of your estate above the inheritance tax “nil rate band”, currently set at £325,000, careful life time planning is needed at the outset to alleviate the worst effects of this tax and make sure your chosen heirs receive what you expect. This will mean having the right property structures, financial planning tools and Will in place to cover your property portfolio and its continuation, if this is what you would like, after you have gone.
Where you are in business with others, holding property jointly or in corporate or partnership structures these issues need to be considered and discussed with your business partner/s and, again, steps should be taken in your life-time to alleviate the inheritance tax consequences to make sure there are no nasty surprise on your or your business partner/s’ death/s. Similarly, thought should be given to what will happen if you or your business partner/s lose mental capacity – who will have the authority to manage the business and make the day to day decisions on property management and to keep the business running; are business Lasting Powers of Attorney in place and have provisions for this been incorporated into the business structure?
At the other end of the spectrum a plan will also be required on what to do on the death of a tenant. After the initial shock and grieving period you will need to know who has the authority to take control of the deceased’s estate in order to deal with lease obligations, not to mention recovery of any rents due. In most cases it will soon become apparent who the Executors are but in those cases where there is no Will and no obvious next of kin you may find yourself in a position where you are obliged to instruct and pay for a genealogist (or “heir hunter”) to find out who is entitled to act as the personal representatives. Alternatively, you may need to work with the Government’s Bona Vacantia Division which administers estates of those who die without a Will or any known blood entitled relatives. Having information from the tenant at the outset of who to contact in an emergency and or their solicitor will be invaluable. It will also be a reminder to the tenants that they need to get their personal legal housekeeping in order as well.
Few people like to contemplate their own demise, but it makes it much easier for those you leave behind if a Will and a Lasting Power of Attorney is in place.
Key points
- Organise a Will so that your property is dealt with in the way you would like after you have died
- Lasting Powers of Attorney offer invaluable protection if you lose mental capacity
- Give details of executors or attorneys to business partners and contacts