How important is it to have a Will?
The importance of writing your Will should never be underestimated. But let’s be honest, it’s a difficult subject matter. That’s why so many of us choose to put it off until another day.
Of course, we all know we should have a Will, but the difficulty is finding the right time to sit down and write one. But do you know what will happen if you die without a valid Will in place?
If you haven’t made a Will yet, you’re in good company. In fact, it’s estimated that 60% of people in England and Wales don’t have a valid Will either. But the consequences of not doing so are significant, which is why you might want to consider writing your Will sooner rather than later.
If I die without a Will, what will happen to my estate?
If you die intestate – that’s die without a Will – your assets will be distributed according to the law, not according to your wishes.
Making a Will is the only way to be sure that your property and possessions will be passed to your loved ones.
Doesn’t everything pass to my spouse and children?
Yes, in theory. But if you die intestate, there’s a strict order of entitlement and it isn’t necessarily straightforward.
Depending upon the value of your estate, if you’re married or in a civil partnership and you have children, your spouse or partner will receive the first £250,000 and your personal belongings. This also applies if you’re separated but not divorced.
Of the remainder of your estate, 50% will be held in a life interest trust for your spouse or civil partner, and 50% will go to your children.
However if your estate is worth less than £250,000, your partner will receive everything and your children will get nothing.
What if I’m in a long-term relationship but not married?
Unmarried couples have relatively few rights when compared to those who are married or in a civil partnership.
If you’re not married, your partner won’t inherit under the intestacy rules. The same applies if you’re in a same sex relationship.
Without a Will, you don’t have an automatic right to inherit your dead partner’s home or possessions and their estate may instead pass to their surviving family members.
I’m single and childless, what will happen to my estate?
If you don’t make a Will, your estate will pass to your family members, starting with your parents and siblings. If there are no surviving relatives, it’ll go to the government and your assets will pass to The Crown, Duchy of Lancaster or Duchy of Cornwall, depending on where you die.
What should I consider before writing my Will?
When writing your Will, your biggest priority is probably making sure that you look after and protect the people you care about.
In practical terms, this means that you’ll need to consider the value of your estate (including property, savings, investments and belongings) and whether you have any items of value that you’d like to gift to someone.
If you have young children, you can appoint guardians for them in case you were to die before they reach 18.
A very important consideration when writing your Will is who to appoint as Executors. Your Executors are essentially responsible for dealing with your estate and distributing assets according to the directions set out in your Will.
Acting as Executor carries huge responsibilities, so as well as choosing someone you can trust, you should also feel confident that they’re capable of carrying out such a role.
What about inheritance tax?
Writing your Will is the first step in the estate planning process, but making sure that it is tax efficient is just as important.
On your death, inheritance tax of 40% will be liable if the value of your assets exceed the inheritance tax threshold of £325,000.
If you’re married or in a civil partnership, an exemption applies on the first death where the surviving partner inherits, regardless of the value of the estate. On the second death, the executors can apply to transfer any unused inheritance tax threshold from the first death. This potentially means that a couple could leave an estate of £650,000 before there would be any inheritance tax liability.
If you think now that your estate will exceed the threshold, you can maximise inheritance tax reliefs and exceptions with forward planning. This could include gifts and exemptions, such as lifetime gifts, annual gifts and charity gifts.
You can also use Trusts to pass assets to others, such as your children, and invest in regulated financial and pension products.
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