A Will is a vitally important thing to write. But an incorrect, badly drafted or obsolete Will can be a huge headache.
A Will is an expression of your wishes regarding the management and distribution of your estate (your 'worldly goods') after you die. It's also a legal declaration in which you appoint one or more adults to manage your estate and transfer your property after your death.
Die 'intestate' (without a Will) and your property, personal possessions and other assets will be distributed according to intestacy law, rather than your personal wishes. In other words, all that you own will be at the mercy of a mishmash of laws created over several centuries.
Many Brits believe that when they die, their spouse or partner will receive all their wealth and goods. Actually, this is not the case. In fact, without a Will, your assets are distributed according to a strict legal pecking order.
The rules of inheritance
In England and Wales (the rules are different in Scotland and Northern Ireland), if you're married or in a Civil Partnership and have no children, then your husband, wife or same-sex Civil Partner will get:
- all your personal belongings, including cars and household articles;
- £450,000 tax-free (or your entire estate if valued at less than £450,000); and
- half of the estate above £450,000, also tax-free.
The remaining half of your estate (if any) will be shared by:
- any surviving parents;
- if you have no surviving parents, then brothers and sisters;
- if you have none of the above, then your husband, wife or Civil Partner gets everything.
If you're married or in a Civil Partnership and have children, then the rules are slightly different. In this situation, your husband, wife or Civil Partner will get:
- all your personal belongings, including cars and household articles;
- £250,000 tax-free (or your entire estate if valued at less than £250,000); and
- a life interest in half of your remaining estate (on your death, this will go to your children).
The rest of your estate will be shared by your children.
If you and your partner live together and aren't married or in a Civil Partnership, then things get even more complicated. In fact, without a Will, your other half won't automatically get any of your estate when you die. If you haven't provided for your partner, then his/her only option is to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
If you die without leaving a surviving spouse or Civil Partner, then your estate is distributed:
- equally among your surviving children (or to their children if they died while you were still alive);
- if you have no surviving children, then equally among your parents;
- if you have no surviving parents, then to your brothers and sisters (or to their children if they died while you were still alive);
- if you have no brothers or sisters, then equally among half-brothers and half-sisters (or to their children if they died while you were still alive);
- if none of the above, then equally among your grandparents;
- if you have no grandparents, then equally among your aunts and uncles (or their children if they died while you were still alive);
- if none of the above, then equally among half-uncles and half-aunts (or their children if they died while you were still alive);
- if none of the above, then to the Crown.
Wow, how complicated was that? My brain needs a break!
Why make a Will?
Obviously, the best reason to make a Will is to ensure that you dodge intestacy and avoid the painful sharing-out described above. If you fail to make a Will, then your loved ones could receive less than you wanted, thanks to money going to family members who may not need or deserve it.
[SPOTLIGHT]In addition, if you have been married more than once, then you may wish to leave something to your ex-partner, especially if you had children together and even if your ex is living with someone else.
Reducing your Inheritance Tax bill
Another important reason to make a Will is to minimise your Inheritance Tax (IHT) bill. Anything you leave to your spouse or Civil Partner is not usually liable to IHT. However, your other half's estate will be boosted by your estate and could be liable itself to IHT one day.
The first £325,000 of your estate is in the 'nil-rate band' for IHT, with tax charged at 0% (zero). Above this threshold, there is a flat rate for IHT of 40%, so you will lose two-fifths of all your wealth above this limit to the taxman.
What's more, if you want to make charitable donations after your death, or even leave your entire estate to charity, then you must make a Will. All charitable donations are free of IHT. If you donate a tenth (10%) or more of your estate to charity, then your IHT rate will also drop by a tenth, falling from 40% to 36%.
Finally, making a Will makes the whole process of administering your estate and applying for probate (the right to manage and distribute your estate) so much easier. Without a Will, this red tape piles up, creating yet more misery for mourning relatives.
When Wills turn toxic
A Will should be a 'living document' -- a contract that changes and evolves as your life and circumstances change. A badly drafted or outdated Will can be a time-bomb waiting to explode, blowing up your estate after your death.
What this means is that when you make major changes to your life, your will should change too. Otherwise, your Will could become obsolete, making the settlement of your estate a bureaucratic nightmare and causing family rifts among your relatives.
In particular, you should draft or redraft a Will (or add a supplement called a 'codicil') if you marry, enter into a same-sex Civil Partnership, separate or divorce, or if your Civil Partnership is dissolved. The birth of another child or children may also require you to redraft your Will.
If you make a major change to your housing circumstances (for example, moving from being an owner to a tenant or care-home resident), then you may no longer have a home to leave to your relatives. So selling your home or moving house could be another trigger to redraft your Will.
Where to get a Will
Most Brits wanting a Will ask a local firm of solicitors to draw one up. However, this is not always the best option, because firms often assign this task to the lowest-paid, least-experienced and least-qualified junior lawyers. Sometimes, these young legal eagles make horrible mistakes that don't come to light for years or even decades.
That's why I always recommend getting a Will from a member of STEP, the Society of Trust and Estate Practitioners. STEP members specialise in Wills, trusts and estates, making them experts in this field.
Once you have a current Will, then keep it in a safe place and tell your executors and close relatives where it is.