Make hay while the sun shines: Write a Will today
We all work hard to build up our assets during our lifetime, not only to provide for a more comfortable life in our later years, but also to provide our loved ones with some financial security for the future after we have died. Unfortunately, far too many people consider making provision as to what should happen to those assets too late, or simply assume that their estate will automatically pass to their loved ones.
As we are all too often aware, life does not always allow us the luxury of time to address these matters later on. If you should you die without having first made a Will, your estate and possessions will be divided according to the laws of intestacy. Under these rules there are no guarantees that your estate shall be distributed as you would have intended.
For example, if you are married or in a civil partnership and have children, your estate shall not automatically pass in its entirety to your spouse contrary to popular belief. In this situation your spouse and children shall share your estate in unequal proportions. If you die without leaving a spouse or child your estate will pass to other members of your family, including your parents, sibling, uncles and aunts, nieces and nephews in turn according to the intestacy rules.
If it is the case that you are unmarried and are living with a partner where you may have children together, at present the intestacy laws do not recognise the rights of cohabitees. Your entire estate shall therefore pass to your children upon death, thus leaving your partner un-provided for. This is of particular concern where the house you are both living in, or assets and income that you both rely upon, are held in the sole name of one partner. A YouGov survey carried out on behalf of the children’s charity Barnardo’s found that 58% of adults in the UK do not currently have a Will in place. The poll also indicated that 74% of those persons without a Will were also cohabiting.
These problems can be prevented from arising by simply making a Will. Your Will can direct where you would like your assets to go upon your death and in what proportions.
Making a Will is also of particular importance when addressing the issue of Inheritance Tax. At present, there is no Inheritance Tax levied upon transfers between spouses on death. In the case of married couples or those in civil partnerships, making a Will can therefore not only ensure that your assets pass in their entirety to your surviving spouse as you may wish, but can also help to preserve each persons Inheritance Tax allowance. By putting a Will together that first passes residuary estates between spouses will have the effect of maximising the Inheritance Tax threshold available upon the death of the surviving spouse. In essence, Wills prepared in this manner ensure the most tax efficient way of transferring estates, which shall ultimately benefit your children whose inheritance will not be reduced by such a heavy Inheritance Tax burden.
A Will can also be used to create various types of trusts whereby assets can be “ring fenced” to provide for the future security of loved ones, especially children from a previous relationship. Using trusts in this manner assets can not only skip a generation, whereby all or part of the estate is left directly to children, but can also be used to provide an income for the surviving spouse and provide a right to reside in the matrimonial home during their lifetime. This is of particular importance where the home is held in the sole name of one person.
Vulnerable loved ones, such as those suffering from a long-term disability, can also be protected by incorporating particular trusts into Wills which enable Trustees to be appointed to look after a vulnerable person’s inheritance on their behalf, and ensure that they receive the care and support they require.
Having an accompanying letter of wishes alongside a professionally drafted and correctly executed Will can also be a way of addressing awkward family issues. These issues all too often arise where family members have fallen out, or where other personal issues may have arisen. Having a Will with an accompanying letter of wishes can set out the personal reasons why a particular person has not been provided for in the Will, and help to prevent claims being brought against estates under the Inheritance (Provision for Family and Dependents) Act 1975.
A Will is therefore something that everyone should certainly have regardless of their age or where they are on their chosen career path. It allows you to decide who should inherit your estate and gives you the opportunity to determine the most tax efficient way of distributing the assets you have worked so hard for. It also gives you and your spouse or partner peace of mind knowing that provision has been made for them and your children upon your death.
Making a Will is a very straightforward process and not as daunting or as time consuming as you may think. Instructing a solicitor to act on your behalf can also be a great comfort to you knowing that it has been prepared by a regulated, insurance-backed, trained professional who specialises in this particular area of the law.