Glossary Of Terms

Administrator:

Someone who is appointed by law to settle your affairs if you die without a Will (intestate).

Agricultural property & relief:

Land or pasture used in the growing of crops or intensive rearing of animals for food consumption. It can also include farmhouses and farm cottages. Relief from Inheritance Tax may be available on death on the transfer of agricultural property. The relief applies to the agricultural value of the asset only.

Beneficiary:

Anyone who receives a gift from a Will.

Chattels:

Personal belongings, including jewellery, furniture, wine, pictures, books and cars, but not money, investments, property or business assets.

Child:

In Will or intestacy matters, includes the adopted and illegitimate children of the person who has died, but not their stepchildren – unless they are specifically mentioned. Legacies are often left in trust for children until they are 18 or 21 or 25.

Civil Partners:

Registered civil partners have the same legal rights as a spouse should their partner die intestate after December 2005.

Common-law spouse:

A common-law spouse has no automatic legal rights to be an executor or beneficiary in English law, although a dependent partner who lived with the person who died for two years before their death may be able to claim a share of the estate.

Codicil:

A further document making a change, or adding to, an existing Will. It must comply with the same formalities as the Will. It should be filed with the original Will but not attached to it.

The Crown:

Where the money goes (your estate) if you have no next of kin and did not make a Will – in reality it means HM Treasury.
Discretionary trust: A trust under which no individual has a right to an interest in possession. Generally, the trustees have the power to decide who should receive the capital or income from the trust. Discretionary trusts are also relevant property trusts.

Domicile:

Generally, a person’s domicile is where they have their fixed and permanent home and to which, when they are absent, they always have the intention of returning.

Domicile of choice:

Where a person has left their country of domicile to live in another country with the intention of settling permanently in the new country.

Domicile of origin:

This is acquired by a child at birth and is usually the domicile of the child’s father at that time. It need not be the country in which the child is born.

Deemed domicile:

A legal concept for inheritance tax purposes where a person is treated as if they were domiciled in the UK at the time of a transfer if:

• they were domiciled in the UK within five years of the transfer, or

• they were resident in the UK in at least 15 of the last 20 years.

En ventre sa mere:

A legal term allowing an unborn child to be a potential beneficiary under a Will.

Estate:

The total value of everything you own at your death – including all houses, cars, investments, money and belongings – less any outstanding debts or commitments.

Executor:

The person(s) you choose to make your Will happen. Usually you will have two or three (in England the maximum is four), with one or two more in reserve. Often this will be relatives or friends.

Funeral arrangements:

Directions you can give in your Will (or a non-binding side-letter to your executors) regarding your wishes such as details of your burial, funeral service, In memoriam gifts to charity in lieu of flowers, etc.

Grant of probate:

The proof of legal authority required by the person who is entrusted with dealing with a deceased person’s estate where there is a will.

Inheritance Tax:

A 40% tax payable on estates over a certain threshold, currently £325,000 in 2019-20. Gifts to spouses, civil partners, churches, charities and political parties are exempt from tax and reduce the value of an estate for inheritance tax purposes.

Intestacy:

The legal term for the situation that arises when someone dies without making a legal Will. The estate is then distributed according to a fixed legal formula.

Issue:

All the direct descendants of a person – children, grandchildren and so on.

Joint property:

Something that is jointly owned by two or more people either as a ‘joint tenancy’ or as ‘tenants in common’. There are different legal ways that you can own your home in England, Wales and Northern Ireland:

• sole tenancy – you personally own the home 100 per cent

• joint tenancy – you own the home jointly and equally with one or more people and your share passes automatically to the other joint owners

• tenants in common – you own a property with one or more people but each share doesn’t have to be equal and you can give away your share however you want to

Lasting Power of Attorney:

An LPA is a legal document that you (the Donor) make using a special form. It allows you to choose someone now (the Attorney) that you trust to make decisions on your behalf about things such as your property and financial affairs or health welfare at a time in the future when you no longer wish to make those decisions or you may lack the mental capacity to make those decisions yourself.

Legacy:

A gift in a Will. It can be:

• Specific legacy A definite object or property (eg a specific car, property or painting)

• Pecuniary legacy A gift of a specific sum of money

• Residual legacy A gift of (a share of) the money or assets left when other specific and pecuniary legacies and expenses have been paid – i.e. the remainder of the estate

• Life interest For example, ‘to my wife for her use in her lifetime, then to charity’.

• Reversionary interest What happens when the life interest expires.

• Conditional interest A legacy which is dependent upon an event or specified criteria being met.

Life interest:

The right to receive the income or benefit from a property or capital sum (but not the capital sum itself) for life. See also under Legacy above.

Minor:

A person under 18.

Nil-rate band:

The amount of an estate on which there is no inheritance tax to pay (currently £325,000). If the value of an estate, including any assets held in trust and gifts made within seven years of death, falls within the nil-rate band there will be no IHT payable on the estate. Where the value of an estate exceeds the nil-rate band, only the amount above the nil-rate band is taxed at 40%.

Residential nil-rate band:

Introduced in April 2017, a new allowance free of IHT available in addition to the normal nil-rate band, amounting to £150,000 in 2019-20 tax year, rising to £175,000 in 2020-21. Added together, The availability of this band is dependent both on the value of the deceased estate at the time of death and whether their estate for tax purposes consisted of a residential property or if the testator held such a property in a defined period preceding death. Unlike the nil-rate band, restrictions exist as to how this may be transferred on death and only the immediate family, spouse/civil partner, children (including step) and grandchildren may benefit from this tax-free allowance.

Transferrable nil-rate band:

If you are married at the date of your death and pass all your assets to your spouse, your nil-rate band will also be transferred to them, giving a total of £650,000 (and including the Residence nil-rate band, £1m in 2020-21) taxed at 0%. If you make gifts during your lifetime or on your death to non-exempt beneficiaries, your transferrable nil-rate band will be reduced accordingly.

Probate:

The legal process to establish your Will is valid. If it is, the Probate Registry will give a Grant of Probate to the executors to authorise them to carry out the terms of the Will. If it is not valid or the person died intestate, an administrator is appointed.

Probate Registry:

A court within the Family Division of the High Court which deals with probate and administration matters. The Principal Registry is in London and there are district registries in other cities and some large towns. It checks the validity of all Wills and registers them in a central database. See https://www.hmcourts-service.gov.uk/infoabout/civil/probate/index.htm

Proving the Will:

Making the application for probate to the Probate Registry.

Remoter issue:

Grandchildren, great-grandchildren (and so-on) of the deceased.

Residue:

What is left in the estate after all the debts, taxes, expenses, specific bequests and pecuniary legacies have been paid. See legacy.

Simultaneous deaths:

For inheritance tax, if two or more people die and it is not known who died first, we assume that they have died at the same moment. This does not alter the legal position for the administration of the estate which is that the elder is presumed to have died first. This is also known as commorientes.

Testator:

The person making the Will.

Trust:

An arrangement you can make in your Will to administer part of your assets after your death.

Trustee:

A person appointed to administer a Trust and who is obliged to deal with the property for the benefit of the beneficiaries
Variation, Deed of: An arrangement whereby certain provisions under a Will may be varied by consent of the beneficiaries.

Will:

The document in which you say what will happen to your money and possessions after your death.

Witness:

Two witnesses must see you sign your Will and you must also watch both of them sign it. They must also watch each other sign the Will. No beneficiary (or their spouse) should sign the Will. If they do, any gift to them or their spouse will be invalid and will fail.