Why you need a will before it’s too late
Thinking about the future isn’t for everyone. Some people prefer to just let life happen. But there are some things worth planning for. If you want to be sure your wishes will be met after you die, then a will is vital.
Without a will, a deceased person’s assets could be awarded to the wrong person or go to the government, leaving grieving families out of pocket.
Worryingly, more than half of UK adults (53%) don’t have a will, according to the charity, Will Aid. This includes nearly eight million people over 50 who have yet to make a will, according to a recent study by Saga.
Why bother with a will?
Writing a will ensures that your assets and possessions are passed on to the people you choose. It is one of the most important documents to have when it comes to preserving the long-term financial security of your family.
When a person dies without leaving a valid will, their assets must be distributed according to specific rules. These are called the rules of intestacy, and a person who dies without leaving a will is said to have died intestate. This means that your estate will be distributed according to these laws – and not your wishes.
These rules are acknowledged by even the professionals as archaic and only benefit spouses or civil partners and blood relatives without taking into account your relationships with or feelings towards them.
Those who are in second marriages with a second family have more complex affairs and if things are left to someone else to decide, may find their wishes are not carried out unless they spell them out by writing a will.
Joanne Baker, director of Hillhampton Wills & Probate Services, says: “These rules cannot adequately cope with modern family circumstances, such as those in second marriages with second families. For example, you might not wish step-children to inherit from your estate.”
She adds: “If you are you living with someone to whom you are not married, without a will your partner will receive nothing over and above a share of any assets which you owned jointly together.”
A will also ensures your children are looked after if they are small when you die. Without a will, you cannot decide the age at which your children should take control of anything they inherit from you. Many even consider 18 to be too young.
If you are unmarried with no children, your nearest relatives will inherit your estate, unless you make a will detailing the heirs of your own choosing.
It’s also important to consider the consequences if both you and your partner were to die in an accident. There needs to be a legal document in place.
You might also pay significantly more tax without having a will in place. It emerged that actor Rik Mayall, who died in 2014 at the age of 56, hadn’t drawn up a will. This triggered a potential inheritance tax (IHT) liability costing up to £60,000 on his reported £1.2million estate.
Emma Myers, a legal expert at Saga Legal Services, says: “This is a sum that could have been avoided entirely. The key point to take away from this is that it is absolutely vital to have a will – it’s the only way you can exercise control over who gets what, and how much. From an IHT point of view, bear in mind that surviving spouses can inherit tax-free, although if their estate is still over the threshold when they die, tax would still need to be paid.”
Wills are useful for ensuring money is protected from other things than tax. Ms Baker says: “Older couples who foresee the potential need for one of them to go into care can put important plans in place. They can ensure that the property ownership is split – rather than held jointly – and write the inherited half into a trust. This means that if one passes away and the other needs to go into care, the financial assessment by the local authority will only include half of the value of the house owned by the surviving spouse, meaning they get more financial assistance. There are many ways in which a will can help.”
Choosing a will writer
There are several ways to draw up a will. You can use a high-street solicitor, a will-writing specialist or an online legal service provider. There are various cut-price DIY will writing packs available but it is worth remembering that they tend only to suit those with very simple circumstances. All wills must comply with the Wills Act, and not complying with any of these rules will invalidate your will.
It’s important to ensure the will is legally binding. Mistakes are made easily and often they are not picked up until after the person has died, when it’s too late.
Couples can make separate wills. Yet if they both want the same things, they can opt for mirror wills, which are designed for couples who have the same or very similar wishes. Mirror wills are suitable for people who plan to leave their estate to their spouse or partner, and then to alternative beneficiaries. Since the two wills essentially mirror one another, the fees for drawing up mirror wills can be cheaper than drawing up two single wills.
Already have a will?
Even if you do have a will, don’t just shut it away forever. It’s important to ensure yours is up to date.
If it was made a long time ago, you may find that the money doesn’t go where you wish. Without a relevant and up-to-date will, your relations could end up paying more tax and your legacies may also not go where you wish.
Experts recommend revisiting your will every three to five years, or when there is a material change to your life such as the arrival of children in a family; deaths or divorce can all change the financial picture.
Baker adds: “If you have a will in place and get married, that will is null and void. This is overlooked by many, especially those who are divorced and remarry.”
The process of applying for the right to deal with a deceased person’s estate. If a person has left a will, they will usually have appointed a will executor. The executor then has to apply for a ‘grant of probate’ from the probate registry, which is a legal document that confirms the executor has the authority to deal with the affairs of the deceased. If a person dies without making a will, intestacy law applies (see intestate).
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.