Where there’s a Will there is a way…
by Usman Khan
Whilst the pandemic became a springboard for the public to question their mortality and revise their estate plans, it is estimated that more than half the population still do not have a Will in place. So why is it important that a Will should exist?
A Will deals with any assets and debts left in your Estate at the date of your death. It is therefore up to the person making the Will to review this over their lifetime to check whether there are any steps that can be taken to make their Estate more tax efficient, check those they want to benefit are still included and to check whether there have been any changes to the law or the tax exemptions available to them. A Will should therefore never be an exercise of “set and forget” and should be reviewed every 3-5 years as a rule of thumb (unless circumstances require earlier action).
In my practice I often find that individuals will have made a Will some 10+ years ago with the common misconception that everything will still work out the same way should they leave things as they are or because a friend had a similar situation. In these instances, their tax position has often changed due to things like the introduction of children, or they have unknowingly gone 10+ years without the knowledge that their Will is invalid because they got married or entered a civil partnership after making it.
Wills are tailor made to an individual and therefore what may work for a married or civil couple with a property and children, may not for a single person renting with close nieces and nephews. By structuring your Will with a professional, available tax exemptions can be used to lower the amount of Inheritance Tax applicable at your death. This has led to help clients save thousands of pounds in Inheritance Tax which currently stands at 40% on anything over any available tax exemption threshold.
Should you die without a Will, the “Intestacy Rules” dictate an order of family members who will be able to apply to administrate your Estate and inherit. This can often lead to family members the deceased did not get along with inheriting from them against their intended wishes or couples being unable to inherit from their partner because they did not marry or enter a civil partnership.
In this instance and my practice, another common theme and misconception raised is that a spouse will inherit everything on a death should there be no Will. Whilst this can be possible, should the deceased leave children, then the first £270,000 will pass to the surviving spouse with any possessions, and the remainder of the estate will be divided evenly between the children and spouse. This can cause issue where children are very young or of an age where they are not ready to handle large sums of money.
Not every matter is straightforward, and many people will find themselves making a Will following a second marriage or in order to protect vulnerable family members. This is primarily by ensuring that they are taken care of due to their disabilities, age or to protect inheritance from being included in their children’s divorce proceedings.
In these instances, a Trust can be incorporated into the Will to make sure that these situations are taken care of. This can be seen in the recent Will of Charlie Watts of the Rolling Stones who left a detailed Will instructing his Executors to use the income from his assets to support his Beneficiaries, and for the remainder of his Estate given to his surviving wife to pass to named family members on her death.
Whether it be guardianship of young children, funeral wishes or passing family heirlooms on there are many additional reasons a Will should exist for everyone.