Have you made a will?
Regardless of inheritance duties, tax implications, property and cash there is one very important reason to make a will.
That is to make the closing of a deceased person’s affairs as painless as possible for loved ones left behind. With only a third of adults in the UK adults making a will that leaves a huge amount of needless red tape.
Making a will makes it much easier for your family or friends to sort everything out when you die – without a will the process can be time consuming, stressful and emotionally taxing.
Not making a will can also be costly in monetary terms for you family and friends. Making a will is inexpensive and yet so important.
In this handy guide we aim to set out in simple terms what is involved and why it is crucial that you put your affairs in order especially if you own property.
It seems making a will is one of those things that a lot of people just either don’t get round to or feel averse to doing. Maybe it’s the subject of death that puts people off!
According to research by finance form unbiased.co.uk the number of people in the UK without a will has hit 29.5 million.
Not surprisingly almost nine out of 10 under-35s are living without a will but worryingly more than a third (36%) of those aged over 55 have yet to make a will.
Apathy remains the number one reason for not making a will with 36% saying they just haven’t got round to sorting it out yet. Despite a high rate of home ownership in the UK almost one fifth (18%) don’t think they have anything of value to leave behind.
Despite this 92% of those surveyed have a firm idea of who they would like to see their money go to when they die, and yet many have still not made a will.
What happens if I don’t make a will?
If a person dies without a will, his or her estate must be shared out according to the law instead of your wishes. You will have no say in what happens to your estate.
The current ‘rules of intestacy’ will divide your estate in a pre-determined way and this may not be to people who you wished to benefit. It also may not be carried out in the most tax-efficient way.
Under current intestacy rules, a spouse or civil partner may only inherit £250,000 if there is no will in place, and there are no children or grandchildren, but despite this 48% of married adults don’t have a will.
As of the last law change in October 2014 these are the basic rules of intestacy.
If you have no children or grandchildren:
– If you have a husband, wife or civil partner he or she will inherit everything. It doesn’t matter whether the property and money that someone leaves behind is worth £200,000 or £2 million. The husband, wife of civil partner will inherit it all if there is no will.
If you have a child/children or grandchildren:
– If you have a husband, wife or civil partner and the money and property you own is worth up to £250,000, in that case your husband, wife or civil partner will inherit everything.
– If you have a husband, wife or civil partner and the money and property you own is worth over £250,000, your husband, wife or civil partner will get the first £250,000, plus personal possessions and half the remainder. The other half will be split equally between the children, although they will have to be 18 years old before they can spend/access the money.
If there is no surviving spouse/civil partner
The estate is distributed as follows:
to surviving children in equal shares (or to their children if they died while the deceased was still alive)
if there are no children, to parents (equally, if both alive)
if there are no surviving parents, to brothers and sisters or to their children if they died while the deceased was still alive
if none of the above then to grandparents (equally if more than one)
if there are no grandparents to aunts and uncles (or their children if they died while the deceased was still alive)
to the Crown if there are none of the above (through the Crown Solicitor’s Office)
If you were partners but weren’t married or civil partners
If you weren’t married or registered civil partners, you won’t automatically get a share of your partner’s estate if they don’t make a will.
If they haven’t provided for you in some other way, your only option is to make a claim under the Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979.
Of course the simplest thing is to make a will!
What are assets?
When thinking about making a will you should start to think about making a list of your assets.
In simple terms assets are possessions of value. In the majority of cases a person’s main asset is their home or property.
Financial assets may include cash, investments, savings or shares.
But also consider other assets which may include a car or motorbike, a watch, jewellery, furniture, a family heirloom, a coin or stamp collection and any other personal possessions of value.
Today, people have increasing amounts of digital assets stored either on home computers and laptops or online. These range from email and Facebook accounts, passwords for online accounts, to digital music and photo collections.
Like other assets, digital assets can be passed on to family or friends in you will. However few people do. Facebook has now installed a feature which allows people to select someone to take over your profile when you die.
What is an executor and why would I need one?
As part of the will making process you need to name the people you would like to appoint as executor.
In general terms the duties of the executors are to collect in the estate of the deceased, to pay the deceased’s debts and to distribute assets or gifts to persons properly entitled under the will.
You should appoint at least two executors to guard against an executor’s prior decease.
You can appoint substitute executors who will act if for any reason an executor is unable or unwilling to take up their role. You may also appoint a beneficiary of the estate as an executor.
More people are choosing to appoint professional executors which is strongly recommended if there are complexities to your estate. These are most commonly solicitors.
You may appoint guardians for your children if they are under the age of 18. Generally speaking the appointment of the guardian will only take effect when both you and the child’s other parent have died.
If you are a single parent or if you are divorced from the other parent of your child or you are in a civil partnership special rules will apply. It is preferable for discussions to take place with the proposed guardian before making the will to ensure that he or she appreciates and accepts his or her responsibilities.
In view of the potential disruption to the guardian’s own family and the costs of caring for an additional child you may wish to consider leaving the guardian a legacy.
You may wish to include specific gist to beneficiaries of your personal belongings, other property or cash gifts in your will.
Alternatively you may include a generic gift of personal items to your executors with the request that they dispose of particular items in accordance with a memorandum or letter of wishes.
Equally you may want to include one or more specific gifts in the will (with the balance of personal items passing to the executors or another beneficiary in a generic gift). If you do not include in the will any gift of personal items (specific and/or generic) they will fall into the residue of your estate.
Your residuary estate is what is left after your executors have paid all debts, expenses, tax, administration costs and legacies.
You should consider the following:
– Gifts to spouse/civil partner/partner/sibling/friend may be made outright or on continuing trusts. There may be advantages in using a continuing trust.
– Gifts to children/grandchildren/nephews and nieces/godchildren. These can be made outright or as part of continuing trusts. In the case of minors or young adults you may want to delay distribution of capital until they are older.
– Default gifts. You should decide who you would wish to benefit in the event of the primary beneficiaries not surviving. You may wish to benefit charities.
– If you have children from a previous relationship you may wish to leave them a share of your estate at this stage to ensure they are provided for. Alternatively you may wish to make a direct gift to them of certain assets or consider placing some assets in trust for their future benefit while providing your surviving partner with access in the meantime.
What is a trust and how does it work?
A trust is a way of managing assets – money, investments, land or buildings.
A Trust is an arrangement set up by Will or Deed in which money, property or other assets are held and managed by the appointed Trustees on behalf of the named beneficiaries.
Parents with children under the age of 18 can set up a trust allowing assets to be looked after until they are old enough to take responsibility. This age is usually 21 but some trusts are known to have set age limits much higher.
When you set up a trust as part of a will you will need to consider who you will appoint as trustees.
There are different types of trusts:
Fixed Trusts, in which the proportions for how much to pay to each beneficiary are clearly stated.
These are where the trustees can make certain decisions about how to use the trust income, and sometimes the capital.
Depending on the trust deed, trustees can decide:
- what gets paid out (income or capital)
- which beneficiary to make payments to
- how often payments are made
- any conditions to impose on the beneficiaries
Discretionary trusts are sometimes set up to put assets aside for:
- a future need, like a grandchild who may need more financial help than other beneficiaries at some point in their life
- beneficiaries who aren’t capable or responsible enough to deal with money themselves
This is where the trustees can accumulate income within the trust and add it to the trust’s capital. They may also be able to pay income out, as with discretionary trusts.
These are a combination of more than one type of trust. The different parts of the trust are treated according to the tax rules that apply to each part.
It is crucial to take legal advice when considering setting up a trust.
Every situation is different
It is always a good idea to take professional advice when making a will especially if circumstances are even just slightly out of what was once perhaps assumed to be the ordinary.
For example it is essential that anyone owning property or land or who has any business interests overseas makes a will.
If you have children under the age of 18 you should think about appointing guardians and if you are divorced or separated from a previous civil partner making a will is a very wise move.
Make a will if you have children from more than one marriage.
Anyone estranged from one or more family members should consider carefully how they distribute their assets.
If parental responsibility is questionable then you need to make a will to clarify the situation!
You may wish to set up a trust for one or more of your beneficiaries – you need to make a will to make this happen effectively.
If you are separated, estranged or divorced from the mother or father of your children you really should make a will.
You can’t specically leave someone out of your will without actually making one! Recent court cases have proved even with a will this is not always cut and dried so take advice.
If you have never been married to your children’s mother or father you really should clarify the situation after your death for the sake of your loved ones.
If you are at all in doubt contact one of our expert team here at Sweeney Miller Solicitors for advice on how to make a will.
Should I update my will?
Once you have produced a will it is important that you review it regularly especially if you have had a change in circumstances.
If you get married or enter a civil partnership your existing will is automatically cancelled
If you get divorced re-visit your will.
If you have more children it is wise to take a fresh look at your will.
If you have bought a new house or acquired an expensive asset of any kind it is wise to review your will.
When one of two brothers died suddenly, his whole estate automatically went to their father, who had left them 40 years earlier and hadn’t been in contact since. His brother, who he was close to, got nothing.
If you’re not married and not in a civil partnership, your partner is not legally entitled to anything when you die.
Under the bona vacantia law if you die with no living close relatives, your whole estate will belong to the Crown or to the government!
If you’re not married and not in a civil partnership, your partner is not legally entitled to anything when you die.
Total money and property that went to the government in 2014 from the estates of people who didn’t leave a will.
A small error such as using a shortened or nick name for someone can invalidate a will.