November marks Will Aid month. If you haven’t already written this crucial document, now is the time to do so. Will Aid month gives you an opportunity to ensure your wishes are carried out and support good causes. Taking the time to write a will can give you peace of mind.
A will is the only way to ensure your wishes are carried out. Yet more than half of adults in the UK haven’t had one written up. It could mean your estate isn’t distributed in the way you’d like. Instead, your estate would be distributed according to intestacy rules. Often, these don’t align with your plans. You can find out how the rule of intestacy would impact your wealth if you don’t write a will here.
If you’re unsure about the value of writing a will, here are seven reasons to take action now.
1. Set out how you want your estate to be distributed
The key reason for taking the time to write a will is that it allows you to set out how your estate will be distributed when you pass away. This may include a variety of assets, including property, savings and investments. In addition, you may want to name certain individuals to receive material assets.
There are a variety of ways to split up your estate. For example, you can leave a fixed sum to a loved one, known as a pecuniary bequest, or a portion of your estate, called a residuary bequest. You can also state what you’d like to happen when the beneficiary passes away. This can allow you to leave property to a spouse but ensure it’ll eventually pass to your children, for instance. Which option is right, will depend on your circumstances and priorities.
2. Explain other wishes you may have
You can also use your will to set out other wishes you have that aren’t related to finances. This could include wishes for your funeral, for example. It’s important to note that these wouldn’t be legally binding. However, it can help you explain what you want to loved ones and offer guidance at what will be a difficult time for them.
3. Name a guardian for children and other dependents
A will allows you to make financial provisions for children, including if they’re still under 18. Another reason why a will is crucial is that it can be used to name your preferred guardian. It’s a step that can provide you with peace of mind that should something happen to you, your children or other dependents will be well taken care of.
4. Speed up the probate process
Without a will, the probate process can be complex and lengthy. Writing a will can help you provide some clarity at a time when loved ones will be grieving and may otherwise have faced difficult challenges. Your will can also name someone you trust to administer your estate and guide it throughout the probate process.
5. Disinherit individuals if you choose
Families can be complex, and there may be people that would typically inherit that you don’t want to leave anything to. A will can be used to name those people you wish to disinherit. This can still be contested, but having your wishes clearly stated in a legal document means they’re less likely to be upheld. Someone contesting your will can also be a long and stressful process for all involved, including your beneficiaries. Thinking about those that may have a claim to your estate can allow you to take proactive action.
6. Take steps to reduce Inheritance Tax
Could your estate be liable for Inheritance Tax? If your entire estate is worth more than £325,000, this could be the case. With the standard rate of Inheritance Tax at 40% when your estate exceeds thresholds, it can mean you leave significantly less behind for your loved ones than you planned. However, there are often steps you can take to reduce the amount of Inheritance Tax owed. In some cases, your will can be used to support a wider estate plan to limit the amount of Inheritance Tax paid. If you’re worried about this, please get in touch.
7. Leave a charitable legacy
If you’d like to support causes close to your heart through a charitable donation when you pass away, your will is the place to do so. A charitable legacy simply means leaving something to charity in your will. As with loved ones, there are a variety of ways to do so, including leaving certain items or a set lump sum.
If Inheritance Tax is a concern, a charitable legacy can also reduce the amount owed. Leaving at least 10% of your entire estate to charity will reduce the Inheritance Tax rate from 40% to 36%.
Reviewing your will
When you write a will, that’s not the end of it. It’s important that you continue to review it regularly. Your wishes and circumstances may change, and this should be reflected in your will. If this happens, you can either write a new will, stating all previous wills are void, or add a codicil, which can make amendments.
As a general rule, it’s a good idea to review you will every five years and after big life events.
If you’d like help in understanding your current estate and how the value could change over the years, we’re here to help. Please get in touch to make your will and passing on your estate to loved ones part of your financial plan.
Please note: The Financial Conduct Authority does not regulate Will Writing.
If you die intestate (without a valid will), your personal representatives will have to distribute your estate according to the laws of intestacy. This could mean that your estate doesn’t go to the person you would have wanted it to.
- Children, grandchildren, great-grandchildren only benefit if their parent pre-deceased the deceased. ‘Children’ includes natural, adopted and illegitimate children but excludes stepchildren.
- The family home does not count as ‘personal effects’.
- In circumstances where the Crown would take a deceased’s estate, the Duchy of Lancaster or the Duke of Cornwall (as opposed to the Crown) would take all for residents of those areas.
- The personal representative must pay funeral and administration expenses and any debts of the deceased. The balance remaining (after setting aside an amount to meet any cash gift in the will if the deceased is partially intestate) is shared in accordance with the rules on distribution set out above.
- Beneficiaries must be 18 years old (or married) before their interest vests. Until a child is 18 (or marries), trustees manage the inheritance on their behalf. If a child dies before they reach 18 (or marry or form a civil partnership) but has children, those children may inherit their parent’s interest in the intestate’s estate. If the child died but without having children, his/her interest is redistributed as if the child had not been alive when the deceased died.
If you’re yet to write your will, take a look at our blog explaining seven key reasons why it should be on your to-do list.