AA-C   D-G  H-L M-R  S-Z

A

Annual exemptions
These are assets that you can gift away each year without any IHT liability. The annual exemption is set by the Government. For the 2005/2006 tax year this is £3,000.

ASP
Alternatively Secured Pension (ASP). In essence this means that instead of being forced to take an annuity at age 75 you will be able to take money from the fund without converting it into an annuity.

Asset
A possession which has a value, like a house, cash or land.

B

Beneficiaries
These are the people who may, or will, benefit from a trust. The beneficiaries could be a spouse, children or any other person named by the settlor ie the person who has set up the trust.

Borough-English
A custom of inheritance in parts of England whereby land passed typically to the youngest son in preference to his older brothers. Of Anglo-Saxon origin, the custom was abolished by law in 1925. For alternative systems of inheritance in England see gavelkind

C

Codicil
 A supplement or addition to a persons will.

Confirmation
The process of obtaining a Grant of Confirmation in Scotland. In England and Wales this is known as Probate.

D  

Domicile
This is the country which is your permanent home. Usually this will be the ‘domicile’ of your father. The exception to this is the case of an illegitimate child or if born after the father’s death. In these cases, the domicile will be that of the mother. This is known as the ‘domicile of origin’. It is very hard to change a ‘domicile of origin’.

E

Enduring Power of Attorney (EPA)
Prescribed document by which one person (the "Donor") appoints one or more others to act as "Attorney" to administer assets for the benefit of the Donor. Document continues to operate when the Donor subsequently becomes mentally incapable but first must be registered with the Court.

Estate
This is the value of everything you leave behind when you die. This will include everything from your house, car, jewellery down to the furniture. It also includes:

• your share of any jointly owned assets
• assets in a trust which you have the right to benefit
• any ‘nominated’ assets
• any assets you have given away but have kept an interest in.

Executors
A person who administers a deceased person’s estate in England, Wales and Northern Ireland and is named in the Will. In Scotland this person is known as the Legal Personal Representative.
 

Expression of Wish

This allows you to indicate your preferred choice of who should receive any lump sum death benefit. Trustees, however, are not obliged to abide by your wishes.

F

G

Gavelkind
The custom of inheritance of lands held in socage tenure , whereby all the sons of a holder of an estate in land share equally in such lands upon the death of the father. Most of the lands in England were held in gavelkind tenure prior to the Norman Conquest

Gifts from income
Gifts of any value can be made out of your regular income. However, care should be taken that these gifts don’t affect your standard of living, or the Revenue could decide that these are Potentially Exempt Transfers.

Gifts on marriage
You can gift £5,000 to each child, £2,500 to each grandchild or more distant relatives and £1,000 to friends or any other person when they get married or enter into a civil partnership.

Gifts with reservation
This is a ‘gift with strings attached’, i.e. a gift which is not fully given away so that the person making the gift retains some benefit. For example, if you gift your home to your children but remain living there without paying market rent, this would be a gift with reservation.

H

I

Inheritance Tax (IHT)
This is a tax which is paid to the Government when you die on everything you own over a specified limit known as the Nil Rate Band. The Inheritance Tax threshold for the 2005/06 tax year is £275,000 and the rate at which IHT is payable is 40%.

J

Joint Tenants
Two or more persons who hold property as joint owners.

K

L

Legal Personal Representative
This is a person who administers a deceased person’s estate in Scotland and is named in the Will. In England, Wales and Northern Ireland this person is known as the Executor.

M

N

Nil Rate Band for IHT
This is part of your estate on which there will be no Inheritance Tax to pay. Currently the nil rate band is from £0 - £275,000 (tax year 2005/06). The nil rate band is usually set by the Chancellor each year at the time of the Budget.ee Expression of wish.

O

P

Potentially Exempt Transfers (PETs)
These are gifts not covered by the exemptions. You must survive for seven years from the date of making the gift to ensure no IHT is payable. If you don’t survive seven years, then the value of the gift will be included in your estate on your death for calculating IHT.

Primogeniture
The rule of inheritance whereby land descends to the oldest son. Under the feudal system of medieval Europe, primogeniture generally governed the inheritance of land held in military tenure. The effect of this rule was to keep the father's land

Probate
The process of legally establishing the validity of a will before a judicial authority  In Scotland this is known as Confirmation.

Q

R

S

Socage
 A feudal English property law, form of land tenure in which the tenant lived on his lord's land and in return rendered to the lord a certain agricultural service or money rent. At the death of a tenant in socage (or socager), the land went to his heir after a payment to the lord of a sum of money (known as a relief), which in time became fixed at an amount equal to a year's rent on the land.

Settlor
This is the person who sets up and puts assets into a trust.

Small gifts
Small gifts of up to £250 can be made to any number of people. However, an individual cannot be given a small gift if they have already received the £3,000 annual exemption in the same tax year.

T

Testator
The deceased person

Transfers between spouses
Any money or assets passed from husband to wife, or vice versa, are exempt from IHT as long as both live permanently in the UK.

Trust
A trust is an arrangement binding the trustee(s) to deal with property for the benefit of another person or persons – the beneficiary(ies).

Trustees
These are the people who administer, or manage, the trust in accordance with its terms. A trustee is bound to deal with the assets of the trust for the benefit of the beneficiaries. In general, anyone who is at least 18 years old, of sound mind and not bankrupt can be a trustee. They should usually be UK residents.

U

V

Will
The legal document by which you declare your intention as to what should happen to your estate after your death.