It’s estimated that a staggering 70% of the UK population doesn’t have a Will. It’s all too easy to put off making a Will, but if you die without having made one your assets will be dealt with under the Rules of Intestacy, which divide your estate in a set way. And the fact is that this may not be in accordance with your wishes – and will probably not be particularly tax efficient.
Consider the assets you own, how they are owned and what they are worth.
You may have assets:
- In your sole name (these are included in your estate and distributed under your Will)
- In joint names (these normally transfer automatically to the joint owner)
- Held in trust (life insurance policies)
- Held by 3rd parties alongside nomination of wishes forms (pension policies, death in service benefits)
Find out what your estate is worth. Simply add up your main assets, such as a house, car, jewellery, savings, insurances etc and deduct from them what you owe, such as an outstanding mortgage or other loans.
Think about how you wish to divide up your estate. Consider who you want to benefit from your Will. Do you have dependants and friends you wish to provide for? Which good causes do you wish to support? Are there specific items you would like to leave to named individuals? Write a list of the names and addresses of all of these people and organisations and consider what you would like to leave them.
There are several types of legacies and these include gifts of money, a specific item (such as an item of jewellery, a house or car) or a lifetime gift (often called a trust, where someone receives the benefit during their lifetime, but the asset reverts to someone else on their death – eg a house). You should also consider at what age children should inherit such gifts.
The residue is anything remaining, once your debts, tax and legacies have been paid. This will usually be the substantial part of your estate and often will go to a spouse, children, other family members or charity.
Think about the people you would trust to be your Executors. Your Executors have the responsibility of dealing with your estate when you die, so ensuring they are the right people for the job is very important. Your Executors have to be over the age of 18 years, can be beneficiaries in your Will and might be your spouse, children or a friend. In some circumstances, when matters are likely to be complicated or where there may be family difficulties, you may wish to consider appointing Cozens-Hardy to act as your Executor.
If you have children you should nominate legal guardians to take care of them, make decisions about their welfare and decide where they live. This appointment would usually come into effect on the death of the second parent. You can consider the age at which children should ultimately inherit from your estate, and whether having a trust in place to protect their inheritance is appropriate. If you don’t specify an
age, children will inherit at the age of 18yrs, which is often considered to be too young.
If you have particular wishes about your funeral, for example whether you want your body to be buried or cremated, then you can include these in your Will.
Your Will allows you to include provisions to mitigate any potential liability your estate might have to pay inheritance tax.
Keeping your Will updated
Wills are prepared using current circumstances, so if these change it may be time for a new Will; for example any of the following may have taken place:
- You married, divorced, entered or left a civil partnership
- You had a child
- You bought a house
- You started a business – your estate may be able to claim certain inheritance tax reliefs
- A person mentioned in your Will, ie an executor or beneficiary, may have died
- Your estate may have increased in value and you need to consider Inheritance Tax in conjunction with your Will