Find out about inheritance tax liabilities (IHT) and key information on Wills, Trusts and Probate in Watford

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This page covers inheritance related issues of specific interest to residents of Watford, including:

  • Average property prices in the borough
  • How they affect your Inheritance Tax (IHT) liability
  • Wills & Guardianship
  • Trusts and how they can be used to protect your property
  • Lasting Powers of Attorney (LPA) and how they can help you

About your property and Inheritance Tax

As one of the Home Counties most populous towns, and with excellent transport links into London, Watford now commands high property prices.

The area has seen prices rise 34% since 2014, pushing many properties above the IHT threshold.

As an individual living in Watford, you will pay 40% Inheritance Tax on the total value of your estate above your £325,000 allowance.

Married couples have a double allowance of £650,000.

Property values in Watford and inheritance tax

The average sold property price in Watford was £402,064 in 2018.

Taken in isolation (excluding other assets like pensions and savings), this would create the following IHT liability:

Individual’s IHT liability – £30,826
Married couple’s IHT liability – nil

IHT liability based on more average property values

Looking at this in more detail, you can see that different types of properties carry vastly different IHT liabilities:

Flats in Watford – £277,929 (2018)
Individual – nil
Married couple – nil

Terrace in Watford – £387,493 (2018)
Individual – £24,997
Married couple – nil

Semi-detached in Watford – £480,436 (2018)
Individual – £62,175
Married couple – nil

Areas near Watford with significant IHT liabilities
Oxhey (£559,409)
Individual – £93,764
Married couple – nil

Cassiobury (£442,843)
Individual – £47,137
Married couple – £nil

Nascot Wood (£445,326)
Individual – £48,130
Married couple – £nil

Don’t forget that these figures are based purely on average property prices. If you have savings, pensions, investments and valuable possessions, such as art and jewellery, then your IHT bill will be considerably higher.

How to reduce your IHT liability?

There are ways you can reduce your IHT liability and lower the bill your family will have to pay in the event of your death. This can be done with sensible forward planning through Trusts.

In the first instance, you should speak to one of our Will consultants – or a financial adviser – who can advise you on the best course of action based on your individual circumstances.

Trusts and how they can be used to protect your property

You can insert a Trust into your Will to help manage your money in the event of your death. For example, you might want to add one to specify that your children inherit at 25 rather than the standard legal age of 18.

Another widely used Trust is called a Disabled Trust. This can be used to leave money to a disabled discretionary relative in a way that won’t have a negative impact on their disability allowances.

Wills & Guardianship

Having Guardianship in your Will is extremely important if you have children. Guardianship specifies to the courts how you wish your children to be cared for in the event of your death. Without this information, it is left for the Courts to decide and a judge will ultimately have the final say on who takes responsibility for them.

Lasting Power of Attorney

An LPA is a legal document that gives someone you trust the authority to act for you if you become too ill to do so for yourself. This includes things like paying bills, speaking to the bank and making important decisions about medical treatment.

It is important to get an LPA while you are healthy as it is not possible to get one if you are deemed to have already lost mental capacity.

Image: Wikimedia Commons