Why do you need a Will?

Whatever your age, if you have assets such as a house, savings or a business along with loved ones you would like to look after, it’s worth considering making a Will. It can also make the lives of those you leave behind a little less daunting at an extremely difficult time.


You may have worries over who would look after your children if you were no longer here. Or you may be concerned about how your family manage your care fee contributions in the future.


You may wish to maximise your tax allowances to ensure your family don’t pay more inheritance tax than they need to. All of this can be addressed by making a legally binding will.

In Summary

A Will can…


• Name your Executors (the people who will distribute your estate).

• Name your Beneficiaries (those who should benefit from your will).

• Appoint Guardians (to take care of your children).

• Include trusts to ensure bloodline inheritance.

• Help to maximise tax allowances.

• Aid in managing care fee contributions.

• Ensure your business can live on after you have passed away.

• Enable you to specify your funeral wishes.

A valid Will is vital to ensure you and your family have control over the money, property and possessions you have worked so hard for after you have passed away.


What exactly is a Will?

A Will is a legal document that gives you the power to decide what should happen to your estate when you die. Your estate refers to your individual assets minus any liabilities. Your Will clearly expresses your wishes as to how your property and possessions are to be distributed after your death.

Some people choose to create what we would call a Simple Will, gifting all of their estate (called the residuary estate) rather than separating it into different amounts or items.

However, others wish to make gifts of property - for example, as a specific gift to a beneficiary (an outright gift) or provide only the right to use the property for a designated period before it is then passed to another specified beneficiary. This is often called a Right to Reside or a Life Interest.

In other cases, rather than specifying particular gifts of money - for example,

£2,000 - it’s possible to specify the source of the account - i.e., “the contents of my Barclays account 1234567” - to help future proof the Will for changing circumstances.

Gifts to charity can also be made within your Will and are an effective way of reducing Inheritance Tax liabilities.

You may wish to appoint Guardians to provide a loving home for your children but would like to appoint different people to look after your children’s financial interests i.e., Trustees.

The important thing to keep in mind is that your Will should be a completely personal and unique document for your individual circumstances.

And remember too that your Will can be re-visited and changed as those individual circumstances change over time.

What type of Will do you need?

Commonly you will have heard the terms “Single Will” and “Mirror Will”.


A Single Will

A Single Will is, as the name suggests, for a single person or a person with solely owned property and assets along with a specific set of wishes and beneficiaries.


A Mirror Will

A Mirror Will is usually two Wills that mirror each other and are often the result of a relationship between two people with the same shared assets, beneficiaries and wishes around what should happen to their estate. It ensures that the property is distributed on identical terms.


It’s worth noting that there is no such thing as a Joint Will. Each individual has their own Will which effectively mirrors the other

Trusts

A Will can also contain Trusts to specify what should happen to certain assets and on what terms.


For example, you can include a Children’s Trust within your Will to specify at what age you wish for your children to inherit. You could also include a Business Trust to ensure your Business can continue and attract the appropriate tax allowances.


Many consider that Trusts are too complicated or believe they don’t have enough wealth for them to be relevant. The truth, however, is Trusts are woven into the fabric of many of our lives - a mortgage is a form of Trust, for example.


Put simply, you can consider a Trust (either within a Will or alongside a Will) as a safety deposit box in which to safely store your assets, protecting your estate and beneficiaries from the threats of divorce, sideways disinheritance, probate costs, remarriage, inheritance tax and more.


Many people make a Will assuming that a simple document is all that is needed. However, as you've read here, there is a great opportunity for you to ensure your wishes are ultimately fulfilled by making the correct provisions in your Will

How your current circumstances can affect your decision.

Your personal circumstances should influence the content, structure and format of your Will. People often consider making a will after experiencing a trigger point within their life such as:


• Marriage

• Divorce

• Moving house

• Death of a family member

• Setting up a business

• Receiving an inheritance

• The birth of a child or grandchild

• A family member going into a care home


It’s also worth noting some common assumptions around inheritance when there is no Will in place. Without a Will it’s entirely possible that:



• Your spouse or partner will not automatically inherit all of your estate.

Also, there is no such thing as ‘common law’ husband or wife, regardless of how long you’ve been together.

• Minor children could be taken into care whilst potential guardians are assessed and appointed.

• People outside of your immediate family are unlikely to benefit.

• Lengthy disputes and delays may be likely that prevent your preferred beneficiaries from benefitting as you would intend.

When you make a Will, you take control of these situations and ensure your wishes are fulfilled

What about inheritance tax?

Dying intestate (without a Will) can result in an unexpected and avoidable bill

for inheritance tax. If you have substantial assets and are married with children, remember that the rules award the first £270,000 to your spouse and half the remainder to your children. Unlike your spouse, who is exempt, your children will have to pay inheritance tax if the total estate is above your nil rate band.


At its simplest, Inheritance Tax is the tax payable on an estate when a person dies if it exceeds a certain amount. The estate value is essentially the net value of everything a person owns i.e. all of the assets minus any expenses and debts.


Currently, inheritance tax is charged at 40% on the value of the estate above the threshold of £325,000 (subject to any exemptions or relief available at the time). Therefore, anything over the value of £325,000 is potentially taxable at 40%.


The threshold figure of £325,000 has not been increased for some time in line with house price inflation and is unlikely to be increased anytime soon. This means that a growing number of people will be facing tax liabilities and without careful planning, many will unknowingly fall into the inheritance tax net.



It’s really important that your Will and any Trusts are carefully structured to ensure tax allowances are maximised to ensure that beneficiaries receive as much as possible from your estate.

Who are the key people to consider when making your Will?

There are important decisions to make when creating your Will, not least the naming of the key people within your document.


Executors

These are the people who are charged with administrating and winding up your estate to make the distributions to your chosen beneficiaries.

Being an Executor is a demanding legal appointment and can involve large sums of money, so you should ensure the people you choose are happy to take up the role. You can appoint a family member, a beneficiary or close friend to act by themselves, jointly or as reserve Executors.

Whilst you do not have to appoint professional Executors, should your Will contain a Trust or be a little complicated, it could be worth having a professional as a reserve executor at  least


Beneficiary

A beneficiary is a person who has been named to inherit in a Will. This person may be left property, land, money or possessions within a Will. A beneficiary could also be a charitable cause or political party.

If you have disabled children who are likely to require specialist support, a Trust may be required to ensure your children’s standard of living is maintained. It's a good idea to seek professional advice on aspects such as this.


Guardians
You will only need to appoint guardians if you have have minor children (under the age of 18 years) and there is no person with parental responsibility alive at the date of your death.

You should choose your guardians carefully and ensure the people you appoint are willing to take on the role.


Trustees

A trustee is a person who takes responsibility for managing money or assets for the benefit of someone else.

Whilst an executor's role ends when the Will has been administered, the role of Trustee can extend for many years - for example, until a child is old enough to inherit. Executors and Trustees can be the same people or Trustees can be other family members, friends or professionals

Share by: