Wills, powers of attorney and inheritance tax

Families sort out their affairs at different times in life.

Putting your affairs in order usually comes down to a will, a lasting power of attorney and a look at inheritance tax. These notes follow the rules for England and Wales.

Making a will

A will decides what happens to your money, property and possessions after you die. If someone dies without a will, the law decides who gets what. Citizens Advice points out that unmarried partners who are not in a civil partnership cannot inherit from each other without one.

You can write your own will. GOV.UK suggests getting advice if yours is not straightforward. To be valid, you must be 18 or over, of sound mind and making it by choice. You sign it in front of 2 witnesses over 18, and they sign it in front of you. Witnesses and their married partners cannot inherit under it.

Keeping a will up to date

GOV.UK suggests reviewing a will every 5 years and after any big change in life, such as a new child or a house move. Getting married cancels any will made before.

A signed will cannot be changed by hand. Changes go in a codicil, signed and witnessed the same way, or in a new will.

Lasting powers of attorney

A lasting power of attorney (LPA) lets you appoint one or more people to make decisions for you. There are two types.

A health and welfare LPA covers things like medical care and moving into a care home. It can only be used when you are unable to decide for yourself. A property and financial affairs LPA covers things like paying bills and selling your home. It can be used as soon as it is registered, with your permission.

You must be 18 or over and able to make your own decisions when you make one. The Office of the Public Guardian registers LPAs. Registration takes 8 to 10 weeks if there are no mistakes.

How inheritance tax works

Inheritance tax is a tax on the estate of someone who has died. These are the rules as GOV.UK sets them out in October 2026.

There is normally nothing to pay if the estate is worth less than £325,000. Everything left to a husband, wife, civil partner or charity is normally free of the tax. Leaving your home to your children or grandchildren can raise the threshold to £500,000, if the estate is worth less than £2 million. Married couples and civil partners can pass any unused threshold to the one who dies second.

The standard rate is 40%. It is charged only on the part of the estate above the threshold.

Gifts during your lifetime

Gifts are normally free of inheritance tax if you live for 7 years after giving them. Gifts into a trust follow other rules. If tax is due on a gift, a gift made in the 3 years before death is taxed at 40%. A gift made 3 to 7 years before death is taxed on a sliding scale called taper relief.

Each person can also give away £3,000 a year without it counting towards the estate. Giving away your home and carrying on living there counts as a gift with reservation, unless you pay the new owner a market rent.

Pensions from April 2027

The government is bringing most unused pension funds and death benefits into inheritance tax for deaths on or after 6 April 2027.

Death in service benefits from a registered pension scheme stay outside the tax. Pension money passing to a husband, wife, civil partner or charity keeps its exemption. The people dealing with the estate will report and pay any tax due. The government expects most estates still to pay none.