Get your house in order
More than 27 million people in England and Wales do not have a
will, according to the National Consumer Council. Take a few moments to review your will or draw one up today.
1 Why do you need a will?
A will allows you to decide who gets what from your estate and to appoint a person to take responsibility of administering these wishes, known as your executor. If you have assets, you need a will. A house purchase usually prompts people to draw one up because they have acquired equity and possessions. A properly executed will can also ensure your estate doesn’t pay more inheritance tax than necessary.
2 Dying without a will
If you die without a will you are said to have died intestate. The laws of intestacy would apply to your estate, including property, personal possessions and cash, which means your estate would be divided between your lawful spouse and your surviving blood relatives, according to specific rules laid down by Parliament. Cohabiting couples have no rights to each other’s estates by law, so it is important to make a will if you wish to leave anything to your partner rather than your family.
3 Marriage and children
If you get married or enter a civil partnership, you need to review your will because this automatically revokes an existing will. If you have children, you will need to review your will again to detail your wishes for them, such as who would be their guardians and safeguarding money that they would otherwise automatically receive at age 18.
4 Writing your will
You can write a will on your own, but it is advisable to use a solicitor because there are various legal formalities to follow to ensure your will is valid. The cost of drawing it up depends on how complex it is and varies between solicitors, so it’s worth checking prices with a few local solicitors first.
5 Keep it safe
Once you've made your will, keep it in a safe place and tell your executor, a close friend or relative where it is. If a solicitor makes your will, they will normally keep the original and send you a copy.
If you die without making a will, your estate will be divided up and distributed according to a set of complicated procedures laid down by the law as set out in the Administration of Estates Act 1925. The more complicated your life, the more complicated the intestacy laws after your death. Given that 60% of registered deaths last year were intestate, according to Title Research, the only way to ensure your estate is divided according to your wishes is to make a will.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.