The cost of studying gets ever more expensive for younger generationsQ: I recently applied for a fashion catalogue but, despite never having been refused credit before, I failed the credit-rating test. I have two credit cards and have never missed a payment. I was told to contact the credit reference agency Equifax. My husband thinks I may have been refused because I don’t have an email address.
A There are three possibilities: there is an error in your credit record, your identity has been stolen and misused or your record is simply ‘too good’ (if you pay your bills in full each month, the catalogue firm believes it won’t make any money out of you). It certainly won’t be because you have no email address. Whatever the reason, it’s a good idea to check your record regularly with all three credit reference agencies: Equifax, Experian and Callcredit. Checks cost £2.
Q: I would like to assist with my grandchildren’s school fees. Would this be chargeable against inheritance tax?
A If you hand over irregular sums, these are treated as gifts – potentially exempt transfers for inheritance tax (IHT) purposes – and they drop out of your inheritance tax liability as long as you live seven years after making each gift. If you did not live for seven years there could be tax to pay on a sliding scale.
A better idea might be to set up a regular payment. Then there would be no IHT due on the money, so long as the cost does not affect your lifestyle or diminish your savings. This is the rule that exempts regular gifts that form part of your normal expenditure after tax. You can also utilise your annual gift exemptions. You and your spouse can give up to £3,000 a year without attracting a tax charge. Any unused portion from one year can be carried to the next, enabling you to give up to £6,000 each the next year. But if you don’t use the carried-over allowance in that year either, it expires.
Q: In his will, my wife’s cousin had left her £40,000 as she was his next of kin. Sadly my wife died six months ago and now her cousin has died. Will I be entitled to the money?
A: It’s unlikely, unless the cousin’s will specified that the bequest passes to your wife’s heirs if she were to predecease him and you are your wife’s only heir. A properly drafted will should contain a ‘residuary’ clause that specifies where property not ‘devised’ – earmarked for a particular person or people – should go. If there is no such clause, the remainder of the assets would be dealt with under the intestacy rules and, if no beneficiary can be found, the money passes to the Crown. Also go to Saga Legal Services.
The way we are...
Retiring types
One in five women planning to retire this year will do so with only a state pension, compared with fewer than one in ten men. The average person retiring this year will rely on the state pension to provide 34% of their retirement income. Company pensions are the next highest source of income, and the remaining third comes from a mixture of savings, investments, personal pensions, part-time work and money from family members.
Bricks and mortar
Retired homeowners have total property wealth owned outright of around £743.07 billion, according to new research. However, as house prices have fallen, particularly in the north and Wales, homeowners aged 65-plus have lost around £24 billion – equivalent to £5,192 each – since May 2010, when total property value was worth £767 billion.
If you do one thing this month...
Check whether you are a Premium Bond winner
There are currently more than 680,000 Premium Bond prizes worth more than £39 million going unclaimed. Check if you’re a winner on the NS&I website, nsandi.com (put ‘Have I won a prize’ into the search box). Even if you don’t have a prize waiting, make sure the details NS&I holds for you are up to date so you don’t miss out in future.
* Read Annie Shaw's money articles every month in Saga Magazine.