Studies show that over half of UK adults do not have a Will, and yet it is one of the most important documents that you can make in your lifetime. But why is it so important?
Well, whilst there are many reasons, here we will summarise the 6 most important elements to a Will so that you can quickly establish whether a Will would be beneficial to you and your family.
Although it is something that many of us do not like to think about, and it can easily become one of those life-admin tasks that you want to put off, we like to view it a bit like Life Insurance; something we hope we won’t need to use for many years, but there as a safety net for our loved ones should the worst happen.
1. To Control the Inheritance of your Estate
This is the primary reason to create a Will; it allows you to choose exactly how you would like your estate to be divided. Your estate consists of all your assets and belongings that you have worked hard for over the years, and so it is important that you are provided with the opportunity to make sure they pass to the people that you would like.
Your Will allows you to specify monetary sums that you would like to pass to a particular person, or any gifts to charities, and who you like to pass the majority (or all) of your estate to. However, this is not just limited to money, but can also include items of sentimental value that you would like to leave to a particular person, such as a family photograph.
2. Protect your Family
Without a Will, only your spouse and blood relatives are able to inherit from your estate and this will not be family members of your choosing but will instead follow the Intestacy rules, meaning that your estate could potentially be left to someone you are not close to. An unmarried partner, step-children, friends, and charities are all unable to inherit if you do not have a Will and it is therefore particularly important to create your Will so that you can protect those of your choice.
It is also important to note that if you have married since making your Will, your existing Will is unfortunately unlikely to still be valid. Instead, you will be deemed to not hold a Will and your estate may, therefore, pass entirely to your spouse if they survive you. This would mean the majority of your Estate (but not always all of it), will pass to your new spouse. Whilst you may think that this is fine and is what you would have wanted anyway, you should consider that if your spouse also does not have a Will when they die, the whole of their Estate (including what you gave them) will pass entirely to their blood-relatives and not yours. By making a Will, you are able to ensure that this does not happen.
If you have a spouse and children, only the first £170,000.00 of your estate will pass to your spouse, and everything over this will be split 50/50 between your spouse and your children. This can therefore cause complications and distress if your spouse has not been adequately provided for, particularly where the majority of your estate consisted of the family home.
3. To Avoid Estate Disputes
Your Will also allows you to appoint who you would like to deal with administering your Estate; this involves gathering in your assets, settling any liabilities or Inheritance Tax from the Estate, obtaining Grant of Probate (if required) and distributing your Estate in accordance with the wishes in your Will. By being able to choose who you would like to be responsible for this important role, you are able to ensure you select people that you trust and who will work well together. If your family do not work well together, you have the option to appoint a professional third party, such as a law firm, to act as your Executors instead. This can be very useful if you are concerned that there may be family disputes as it allows the third party to act neutrally between all those named in your Will and can help resolve any disagreements.
Without a Will, it can be a very stressful and difficult time for your loved ones to decide what you would have wanted and honour this to the best of their ability. Providing a Will removes this additional stress, as it allows you to clearly set out how you would like your Estate to be divided so those closest to you can be confident that they are acting in accordance with your wishes.
There may also be particular people, such as an ex-spouse, that you do not wish to inherit from your Estate, and by making a Will you are able to provide evidence of your wishes beyond the grave should they attempt to make a claim.
4. To Minimise Inheritance Tax
If your Estate is over the value of £325,000.00, known as the ‘Nil Rate Band’, then it is possible that everything over and above this may be taxed at 40%. This is a high tax rate, and like many people, you are most likely to want the Estate that you have worked hard for to pass to those you love, rather than the taxman.
However there is also an additional £175,000.00 tax free allowance available, known as the ‘Residence Nil Rate Band’, if you pass your house to your direct lineal descendants such as your children or grandchildren. However, it is also important to note that there are specific and strict conditions surrounding the Residence Nil Rate Band, and so if you are wishing to make use of this allowance then it is particularly advisable to seek legal advice when preparing your Will.
If it is likely that there will still be Inheritance Tax to pay after all the allowances are accounted for, at Aston Bond, we will provide you with details as to how you can Estate plan during your lifetime to minimise the value of tax payable. We also have links to Independent Financial Advisers that we can refer you to, should you require professional assistance in maximising the value of your Estate in the most tax efficient manner as possible.
5. For your Children’s Welfare
If you have minor children, another very useful aspect of making a Will is that it allows you to ensure that they will be well looked after and cared for until they reach adulthood. Although minors cannot legally inherit until they reach the age of 18, or a later age if you prefer, you are still able to name them in your Will.
Rather than the inheritance passing directly to your children, the funds are placed instead into a trust which is managed by the Trustees until your children reach the age of entitlement. Your Trustees are usually the same people you appoint as your Executors, and their role provides them with the discretion to release monies in advance to support your children, such as in their education and welfare, as required.
Additionally, your Will can also provide you with some peace of mind over who will look after your children, as it allows you to choose who you would like to be appointed as their guardian, rather than this potentially being decided by the courts.
6. For You!
And finally, your Will also allows you to detail what you would like to happen to you! Although this is of course something that many of us do not wish to think about, it is still another very important aspect of the Will as it provides you with control over any funeral wishes you may have and also can be a useful guiding hand to your Executors. However, if you would prefer not to think about this aspect just yet, then this is completely fine and there is no obligation to include this in your Will.
So those are our 6 top reasons for making a Will. If having read this you have decided that making a Will would be beneficial to protect both you and your family and you would like to discuss things further with one of our free initial consultations, then please do not hesitate to get in touch with us on 01753 486 777