Making a Will – a matter of choice
Making a Will a Matter of Choice
If you die without having made a Will statutory rules, rather than you, will determine who inherits your estate.
There is a general misconception that, in the absence of a Will, a surviving spouse or civil partner will receive the entire estate. This is not necessarily so and can give rise to unnecessary inheritance tax liabilities. Also, unmarried partners are not automatically entitled to your estate and if you are thinking of supporting any charities, they can only expect to benefit from the estate of someone who has made a Will.
A Will gives you the opportunity of making an informed and reasoned decision as to how to provide for your family and potentially reduces the likelihood of expensive disputes over beneficial entitlements. There is a certain contentedness which flows from knowing that your chosen beneficiaries will reap the rewards from your own good planning, sometimes long after your death.
Matters to consider when making a Will
Choice of executors
Your executors will be responsible for administering your estate. It is usual to appoint two executors, possibly with a third person named as a substitute. Many testators choose one professional executor, such as a solicitor, and one lay executor with a personal knowledge of the family.
Choice of guardians for children aged under 18
If you have views about who should look after your children until they reach 18 then you should confirm these wishes clearly in your Will.
Special funeral wishes and the use of your body for medical research
It is sensible to state these wishes in your Will as well as telling family and/or friends.
Gifts of money or specific items
Many people are surprised at the total value of their assets and choose to leave legacies or specific items to people of importance to them.
Choice of principal beneficiaries
You will probably want to leave your estate to your family. Gifts under your Will can be outright or, if your estate is substantial, in trust. Any property passing to your children or grandchildren will be held in trust until they reach 18. However, your Will can provide for their entitlement to be made dependent upon their attaining a later age (say 21 or 25 years old) if you wish, but this may have inheritance tax implications. In substantial estates, more sophisticated and flexible trusts can be established.
Choice of alternative beneficiaries if principal beneficiaries do not survive
You should include a ‘disaster clause’ to cover the possibility of you and your family all dying together.
The international dimension
It is now commonplace to acquire property in other countries, bringing with it the inevitable difficulties of dealing with the diversity of global legal systems. Wills can be expressed as governing worldwide assets but frequently Wills are overridden by legal codes in other countries which may not permit individuals the complete freedom to choose beneficiaries as they can in the UK. We can give guidance in this respect.
Appraising your estate
Before making a Will, it is helpful to compile details of your assets and their approximate values.
We have a Wills Questionnaire to assist you in compiling a list of your assets.
Reviewing your Will
Once you have made a Will, it should be reviewed regularly and particularly when your circumstances change or as a result of changes in legislation.
A Will is automatically revoked on marriage or civil partnership unless it is made in anticipation of that marriage or civil partnership. This means that if you made a Will before you were married or entered into a civil partnership it is no longer valid.
Your Will should also be reviewed following divorce.
Anything passing to your spouse or civil partner is free from inheritance tax provided you both share the same domicile status. This exemption does not apply to ‘common law spouses’. Anything you leave to charity is also free from inheritance tax. There are a number of other inheritance tax reliefs, for example, for certain business or agricultural assets.
The value of your estate for inheritance tax purposes includes not only what you own in your own right, whether by yourself or jointly, but also any gifts made during the seven years before your death and possibly any interest you may have in a trust. Any debts you have are deducted from the value of your estate. At current rates, inheritance tax is charged at 40% on the value of your estate having discounted the threshold known as the ‘Nil Rate Band’ on which no tax is payable.
The advent of the transferable Nil Rate Band between spouses and between civil partners enables couples to plan rather more easily so that their combined exemptions are fully utilized. However, this should be seen merely as part of your strategic tax planning and not simply as a substitute.
If the inheritance tax payable on your death is likely to be significant, you should consider if it could be mitigated. With careful planning, extensive tax savings can be achieved.
If you would like to prepare a Will or review your existing Will, please contact your usual advisor at RadcliffesLeBrasseur who will be happy to assist and advise you.
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This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.