Being a Beneficiary of a Will Explained
Who is a Beneficiary of a Will?
A Beneficiary of a Will is a person who stands to benefit from the estate of someone who has passed away.
Beneficiaries may be named in a Will or may be included but not named (for example: I leave to my grandchildren to allow for unborn grandchildren when the Will is written).
If youve been left an Inheritance and you want to learn more, you can read our free Inheritance guide.
Who can inherit if someone dies without a Will?
In situations where a Will hasnt been left, close relatives of the deceased will become Beneficiaries according to intestacy rules.
How do Beneficiaries of a Will get notified?
The Executor of the Will is responsible for informing Beneficiaries that they have been named in a Will. If no Will is left, a Personal Representative will be appointed to take on this responsibility.
How do I find out if I am a Beneficiary in a Will?
The best way to find out if you are the Beneficiary of a Will is to ask your deceased family members Executor or solicitor.
All Beneficiaries are entitled to receive a copy of a Will. If the Beneficiary is a minor, their parents or legal guardian is entitled to see the Will on their behalf.
What is a residuary Beneficiary?
A residuary Beneficiary of a Will inherits the Estate after all debts and taxes have been settled, and any specific gifts (called pecuniary legacies) distributed. If there is more than one residuary Beneficiary named in the Will, each will receive a percentage of the estate.
What happens if the Beneficiary of a Will is dead?
If the Beneficiary of a Will dies before the person who has left them something in their Will, their benefit from the estate will normally lapse. Simply, this means they can no longer benefit, and any gift intended for them will go back into the Estate and be distributed among the remaining residual Beneficiaries.
However, there are a few exceptions:
- If the predeceased Beneficiary was a direct descendant of the person whose Will they were a Beneficiary of the testator. Instead of lapsing, any benefit will be passed on to surviving children of the Beneficiary.
- If the testator made provision in their Will for this very circumstance and left directions.
What happens if a Beneficiary dies after the Testator but before they receive an Inheritance?
The share of the estate will be treated as part of the Beneficiarys estate and distributed according to the wishes in their own Will. If no Will was left by the Beneficiary, the rules of intestacy will apply to their estate.
How do I receive my Inheritance?
You receive an Inheritance once Probate has been granted. Probate is the legal and financial process of dealing with the property, money and possessions of a person who has died. It is a long and complicated process.
The Executor of a Will, or Personal Representative when there is no Will, applies to the court for a Grant of Probate.
This gives them legal control over the deceased persons assets so they can start the process of disposing of them, and therefore settle any liabilities of the estate, before distributing the proceeds to the Beneficiaries.
However, in order to get the Grant of Probate, any Inheritance Tax (IHT) has to be paid to HMRC. This means the Executor/Personal Representative has to find the money to pay the IHT before they have access to the assets held in the estate.
To help our clients claim their Inheritance easily, Tower Street Finance has created a unique product. The IHT Loan helps Executors (or Personal Representatives if theres no Will) with estates where there is an Inheritance Tax (IHT) liability but no funds to pay it.
How long does it take to execute a Will?
Given how complicated the process of probate can be, it usually takes between 9-12 months before any of the Beneficiaries of a Will receive any money from the Estate.
Do Beneficiaries have to pay Inheritance Tax?
No, the Beneficiaries of a Will do not have to pay Inheritance Tax. This responsibility lies with the Executor. However, until the Executor finds the funds to pay the inheritance tax, Beneficiaries cant access their share of the estate.
How much tax do you pay on Inheritance?
Inheritance Tax is charged at 40% of the value of the estate that falls above the nil rate band, which is currently set at £325,000 for a single person.
A typical IHT scenario example: If an estate is worth £525,000 the tax charged will be on £200,000 (£525,000 less the £325,000 allowance for a single person). The inheritance tax payable in this situation would be 40% of £200,000, which is £80,000.
Can I get Inheritance money early?
Before we designed the Inheritance Advance product, Beneficiaries could only receive their inheritance once Probate had been granted and all the assets in the estate sold.
However, our Inheritance Advance is a unique, award-winning financial product that enables Beneficiaries to access up to 60% of their inheritance before Probate has been granted.
There are no credit checks, no charge over property, no personal liability, and no monthly repayments. The loan is repaid from the estate funds once it is ready to distribute.
There is a 2% origination fee, capped at £1,500 which can be added to the loan, and a fixed yearly interest rate of 19.6%.
Interest roll-up is capped at 30 months.
Want to learn more about accessing your inheritance early? Get in touch with Tower Street Finance.
Can a Beneficiary be removed from a Will?
Beneficiaries can be written in and out of a Will while the person who owns the estate is alive, but after theyve died any named Beneficiaries cannot be removed.
Which Beneficiaries get paid first out of a deceaseds Estate?
Creditors are paid first before the estate can be distributed to Beneficiaries. Once that happens then Pecuniary Beneficiaries are paid out before Residuary Beneficiaries.
What happens when you jointly inherit a property?
If more Beneficiaries jointly inherit a property, they need to agree on what to do with it sell it, live in it, rent it. However, reaching a decision all Beneficiaries are happy with can often be easier said than done.
Do you pay stamp duty when you inherit a property?
No. You dont pay stamp duty, income tax or capital gains tax on a property when you inherit a property.
However, if inheriting a property means you own two homes, you will have to nominate one as your main home. You must tell HMRC about this within two years of inheriting the property. If you dont inform HMRC and you sell one of the properties, theyll decide which is your main residence and you may be charged capital gains tax on the other property.
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