Tag: United Kingdom
President Obama has recently revealed plans to increase inheritance taxes payable by Americans with high-value estates. His proposal increases the tax rate applied to estates of sizes greater than $5,430,000.00 from 40% to 68% of the amount over the threshold. If implemented, this increased tax rate will make American estates the highest taxed in the world, surpassing Japan, South Korea, and France, currently with the top three inheritance tax rates worldwide, at 55%, 50%, and 45%, respectively.
The proposal for inheritance tax increases in the United States is inspired in part by a study conducted earlier this month by the Tax Foundation, which suggests that our neighbours to the south are currently earning half of what they were from inheritance taxation in the early 2000s.
The decreased revenue is attributable to the exemption of estates valued at less than $5.43 million from inheritance taxes and estate planning with a view to avoiding the taxation. The exemption threshold for payment of American inheritance taxes has increased significantly since the year 2003, at which time estate assets beyond the first $1,000,000.00 were subject to inheritance taxes.
However, reduced earnings may be a scenario preferable to the American government to what has been seen in thirteen other jurisdictions since the year 2000 – the abolition of inheritance taxes altogether.
In other regions, such as the United Kingdom, where inheritance tax is also applied, the issue of the tax is divisive. It has the potential to raise funds which may be used to accomplish important social objectives, but can also frustrate estate plans of the wealthy whose beneficiaries may not be able to afford to keep what has been gifted to them.
Inheritance tax rates of greater than 50% certainly make the probate fees payable by residents of Ontario seem relatively insignificant. When so much planning revolves around avoiding the payment of low Estate Administration tax rates, it would seem that many Canadians would object to the establishment of an inheritance tax regime. Further, the recent study by the Tax Foundation suggests that there may be less benefit to government funding through the implementation of inheritance taxes than might be expected.
Thank you for reading.
October 1, 2009 was a historical day in U.K.’s judicial history, as the Supreme Court of the United Kingdom was established.
Prior to last week, the House of Lords held the judicial function as the court of last resort.
A Committee of legally qualified lords who sat in the House of Lords, known as the Law Lords, heard final appeals of court decisions. Even though they rarely took part in political debates or voted on legislation, the Law Lords were peers of the House of Lords.
Prompted by concern and possible criticism by the European Union, due to the appearance of a conflict of interest as the officials who execute laws were those testing those laws, there was a movement to create visibly distinct legislative, judicial, and executive powers.
In 2003, then Prime Minister Tony Blair announced the creation of a judicial body to act as a Supreme Court. The Constitutional Reform Act, 2005 provides that the Supreme Court take over the judicial functions from the House of Lords. Now the Supreme Court has their own building, identity separate from the House of Lords, and blog.
The Supreme Court is the court of the last resort in all civil matters in the U.K. and criminal matters in England, Wales and Northern Ireland.
There are 12 Law Lords (with one current vacancy) who will hear appeals, with up to nine judges hearing an appeal. It will be interesting to see if the appointment of the Law Lords becomes politicized as in the United States or if this move merely re-brands the system that was already in place.
Thanks for reading,
Diane A. Vieira – Click here for more information on Diane Vieira.
A widow in the United Kingdom is suing her two children, her one-year-old son and three-year old-daughter, over her late husband’s estate. Taryn Dielle launched an action in London’s High Court claiming that the country’s intestacy laws do not provide her with enough money to care for her children.
Her husband, a London millionaire, died in 2007 without leaving a Will. As he died intestate, his estate, worth about £2,231,201 (approximately 4.5 million dollars), was distributed in accordance with the United Kingdom’s intestacy rules. According to those rules, Ms. Dielle is to receive the statutory legacy and £50,000.00 ($100,000) per year in interest from her late husband’s estate, while her two children inherit the rest of the estate.
The United Kingdom’s intestacy rules provide that when someone dies intestate, leaving a spouse and issue, the surviving spouse receives all personal chattels, a lump sum of £125,000 (just over $250,000 dollars) referred to as the statutory legacy, and a life interest in one half of the residue. The surviving spouse can only receive the interest from the residue and cannot encroach upon the capital. The issue of the Deceased receive one half of any excess over the statutory legacy and ultimately they receive the other half of the residue when the surviving spouse dies. To contrast the UK law with Canada’s intestacy succession law, please read David Smith’s blog on intestacy distribution.
This will be an interesting case to follow and is already being referred to as an example that highlights the importance of estate planning.
Thanks for reading,