Making a Will
An essential part of your financial planning
We spend our lives working to provide for ourselves and our loved ones. You may have a house or flat (in the UK or overseas), shares, savings and investments, as well as your personal possessions. All of these assets are your ‘estate’. Making a Will ensures that when you die, your estate is shared according to your wishes.
Everyone should have a Will, but it is even more important if you have children; you own property or have savings, investments, insurance policies; or you own a business. Your Will lets you decide what happens to your money, property and possessions after your death.
If you die with no valid Will in England or Wales, the law will decide who gets what under the statutory rules of intestacy. If you have no living family members, all your property and possessions will go to the Crown.
If you make a Will, you can also make sure your beneficiaries don’t pay more Inheritance Tax than they legally need to. It’s an essential part of your financial planning.
Good reasons to make a Will
A Will sets out who is to benefit from your property and possessions (your estate) after your death.
- You can decide how your assets are shared – if you don’t have a Will, the law says who gets what
- If you’re an unmarried couple (whether or not it’s a same-sex relationship), you can make sure your partner is provided for
- If you’re divorced, you can decide whether to leave anything to your former partner
- You can make sure you don’t pay more Inheritance Tax than necessary
- Several people could make a claim on your estate when you die because they depend on you financially
- You want to include a trust in your Will (perhaps to provide for young children
or a disabled person, save tax, or simply protect your assets in some way after you die)
- Your permanent home is not in the UK or you are not a British citizen
- You live here but you have overseas property
- You own all or part of a business
Before you write a Will, it’s a good idea to think about what you want included in it.
You should consider:
- Who you want to benefit from your Will
- Who should look after any children under 18 years of age, nominate guardians
- Who is going to sort out your estate and carry out your wishes after your death (your ‘executor’)
- How much money and what property and possessions you have. Your estate may include:
- A home and any other properties owned
- Savings in bank and building society accounts
- Insurance, such as life assurance or an endowment policy
- Pension funds that include a lump sum payment on death
- National Savings, such as premium bonds
- Investments such as stocks and shares, investment trusts, Individual Savings Accounts
- Motor vehicles
- Jewellery, antiques and other personal belongings
- Furniture and household contents
- You should consider your liabilities which could include:
- Credit card balance
- Bank overdraft
- Equity release or Lifetime Mortgage
- Jointly owned property and possessions. Arranging to own property and other assets jointly can be a way of protecting your spouse or registered civil partner. For example, if you have a joint bank account, your partner will continue to have access to the money they need for day-to-day living without having to wait for their affairs to be sorted out. There are two ways that you can own something jointly with someone else:
- As tenants in common (called ‘common owners’ in Scotland) Each person has their own distinct shares of the asset, which do not have to be equal. They can say in their Will who will inherit their share.
- As joint tenants (called ‘joint owners’ in Scotland) Individuals jointly own the asset so, if they die, the remaining owner(s) automatically inherits their share. A person cannot use their Will to leave their share to someone else.
What are the implications if you die without making a will?
- Assets people expected to pass entirely to their spouse or registered civil partner may have to be shared with children
- An unmarried partner doesn’t automatically inherit anything and may need to go to court to claim for a share of the deceased’s assets. It is particularly important to make a Will if you are not married or are not in a registered civil partnership (a legal arrangement that gives same-sex partners the same status as a married couple). This is because the law does not automatically recognise cohabitants (partners who live together) as having the same rights as husbands, wives and civil partners. As a result, even if you’ve lived together for many years, your cohabitant may be left with nothing if you have not made a Will.
- A spouse or registered civil partner from whom a person is separated, but not divorced, still has rights to inherit from them
- Friends, charities and other organisations the person may have wanted to support will not receive anything
- If the deceased person has no close family, more distant relatives may inherit
- If the deceased person has no surviving relatives at all, their property and possessions may go to the Crown
A Will is also vital if you have children or dependants who may not be able to care for themselves. Without a Will, there could be uncertainty about who will look after or provide for them if you die.
Peace of mind
No one likes to think about it, but death is the one certainty that we all face. Planning ahead can give you the peace of mind that your loved ones can cope financially without you and, at a difficult time, helps remove the stress that monetary worries can bring. Planning your finances in advance should help you to ensure that, when you die, everything you own goes where you want it to. Making a Will is the first step in ensuring that your estate is shared out exactly as you want it to be.
If you leave everything to your spouse or registered civil partner, there’ll be no Inheritance Tax to pay because they are classed as an exempt beneficiary. Or you may decide to use your tax-free allowance to give some of your estate to someone else or to a family trust. Scottish law on inheritance differs from English law.
Once you’ve made your Will, it is important to keep it in a safe place and tell your executor, close friend or relative where it is.
Review your Will
It is advisable to review your Will every five years and after any major change in your life, such as getting separated, married or divorced, having a child, or moving house. Any change must be by ‘codicil’ (an addition, amendment or supplement to a Will) or by making a new Will.
Dying without a Will is not the only situation in which intestacy can occur. It can sometimes happen even when there is a Will, for example, when the Will is not valid, or when it is valid but the beneficiaries die before the testator (the person making the Will). Intestacy can also arise when there is a valid Will but some of the testator’s (person who has made a Will or given a legacy) assets were not disposed of by the Will. This is called a ‘partial intestacy’. Intestacy therefore arises in all cases where a deceased person has failed to dispose of some or all of his or her assets by Will, hence the need to review a Will when events change.
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