Wills and the Importance of Professional Advice
We spend our lifetime working hard to fend for ourselves and our loves ones yet often, we don’t think about making a will until we are older. A will, in fact, is something anyone with assets should make, because it ensures that if for any reason we should pass away, our estate would pass to those we wish, in the least cumbersome way possible. If you have children, savings, investments, insurance policies, or a business, making a will should be a top priority. It is vital that you consult a solicitor, since there are very specific rules that need to be adhered to in order for your will to be valid.
If you have properties in various jurisdictions, the relevant taxation law can be complex and you need to speak to a lawyer who specialises in inheritance issues so you can ensure your successors do not pay more tax than is necessary.
Additionally, if you live with someone, they may not automatically inherit your estate and the same applies to step-children. In the UK, if you live with someone but are not married or in a civil partnership, if there is no will, your assets will go directly to blood relatives (siblings, parents or children). This could lead to grave financial consequences for your partner.
Succession law is highly complex and has many loopholes to be avoided, so professional advice is a must. Common law is riddled with cases in which a testator’s wishes have been unable to be respected owing to loopholes or erroneous clauses. For utmost security, rely on a firm that is a member of the Wills and Inheritance Quality Scheme of the Law Society.
What Happens if I Do Not Make a Will?
If you do not have a will, the laws of intestacy apply and vary from case to case. For instance, in England and Wales, the husband, wife or civil partner of a deceased person keeps all assets up to a value of £250,000, plus all personal possessions. The remainder of the estate is shared 50-50 between the husband, wife or civil partner, and the surviving children. If a child has passed and has children, the latter inherits their parent’s share. The law in England and Wales, Scotland, and Northern Ireland varies in some respects – a specialised solicitor will be aware of the subtle differences and will steer you in the right direction. For instance, in Scotland, the spouse or civil partner would receive the house up to a value of £473,000, as well as furniture, up to a certain amount in cash, and a third of the rest of the estate. In Northern Ireland, if the couple had more than one child, the husband, wife or civil partner would keep all assets up to £250,000 and all personal possessions, but they would only inherit one third of the rest of the estate, with the remaining two thirds being divided by the children.
Making a Will: Steps to Take
Make a list of everything you own: Make sure you bring a list of all your assets and liabilities (stating their value) to your first meeting with your solicitor. The list should include all property you own outside the UK as well. If in doubt, include the item. Your list should include savings, vehicles, businesses owned, shares and bonds, and of course, property.
Decide on provision regarding children aged under 18: In your will, you can name someone the legal guardian of any children who are under 18 when you die. You can also set up a trust for your children, ensuring they can access the funds when they are of a certain age (e.g. 21 or 25). Adopted children have the same right as a biological child would though if your children are adopted you need to mention this to your solicitor, since problems can arise if the will isn’t properly executed or if the child has is not ‘formally adopted’ yet (in the UK, there is average wait of almost three years for adoption to be formalised). When you meet your solicitor, bring the full names and address of all the beneficiaries mentioned in your will.
Ring-fence your estate for the benefit of your children: Ring-fencing your estate will ensure that when you die, your share of your estate will ultimately go to your children when your partner dies, regardless of whether or not they have remarried. Ring-fencing will also serve as a guard against local authorities, who might use their existing power to force individuals to sell property to pay for long-term care. A solicitor can help you in this regard by creating a trust for children, or by spouses become tenants in common rather than joint tenants. This will ensure that assets pass to children after a surviving spouse’s death.
Decide whom you would like to receive your assets, and in what measure: Some people you may wish to consider include your children, spouse, civil partner, friends and charities. Consider non-financial wishes as well, such as any instructions regarding burial, cremation, etc. You can make specific gifts (e.g. an artwork, a vehicle etc.). Any gift to charity is tax-free.
Decide who will be the executors of your will: An executor is someone you officially appoint to make sure the stipulations in your will are carried out. Your executor/s can be solicitors, family members of friends. Choose someone who is financially savvy and who is willing to commit to the long-term responsibilities involved. It is a good idea to have more than one executor, since there always needs to be one living executor. Some individuals appoint their spouse as executor, which can cause problems if both spouses die at the same time.
Making a will: Once your solicitor drafts your will, you will need to sign it. Signing must be carried out in the presence of two independent witnesses aged 18 or over. After you sign, the witnesses must sign though they do not actually need to read the will. Your witnesses cannot be beneficiaries. Do not ask anyone who inherits under your will to be a witness, since your gift to them (not the will itself) will be considered void.
Keeping your will: Keep your will in a safe place and ensure the executor has access to it without probate (permission from the court). A safety deposit box at the bank is a bad choice for storage, since an executor would need probate to access it and probate cannot be granted without a will. A good person to leave a will with is your solicitor though you should also keep a copy.
Updating a will: Once you make your will, aim to update it so as to ensure that it always reflects your wishes accurately. Often, a will is intricate and contains many clauses which you can forget about over time. Moreover, circumstances, assets, properties etc. normally change over the course of the years, so new provisions may be necessary. An updated will also shows that the document contains your true wishes at the time of your death. You can make small changes to your will by asking your solicitor to prepare a codicil, though if there are many or substantial changes, a new will may be in order. Some circumstances which merit redrafting of a will include a new marriage or divorce, changes to residence and changes in the size of the family.
Consider other necessary documents: While you are considering who should inherit your estate, think of planning the creation of other documents, such as financial and health care Powers of Attorney (POAs). These will ensure that the right persons make important decisions on your behalf, should you be mentally incapable of doing so.
Avoid DIY kits and will-making guides: There are many DIY kits and guides available to help you make a will, but they should be avoided, since they are littered with errors and loopholes that could result in dire consequences for your beneficiaries. Moreover, your solicitor will help you reduce your tax bill and will enlighten you on the law in any countries abroad in which you may have property or assets. Often, a few small steps can result in your beneficiaries receiving a greater sum and avoiding big tax charges. Steps can also be taken to protect any foreign investments or bank accounts. Making your own will may save money in the short-term, but it could result in significant distress for your beneficiaries. There are many cases in which beneficiaries have had to relinquish their inheritance owing to the significant tax costs involved, or have inherited far less than was clearly intended by the testator. Financial hardships can also be caused to surviving partners if professional advice isn’t sought.
Seeking the help of a solicitor enables the testator to have the peace of mind of knowing that everything they have worked so hard for all their lives, will not be taken away from family and other loved ones because of ignorance of the law or mistaken terminology. It also ensures that all contingencies are taken care of, including guardianship and trusts.
Letter of Wishes
It is common practice, for a testator to give the trustees of their Will guidance as to how they would like them to exercise their powers. A letter of wishes is not intended to be legally binding, but to offer guidance. It is a separate document from the Will, which provides more confidentiality and flexibility as it can be changed or replaced as the testator’s circumstances or family members change. The purpose of a Letter of Wishes would be to further express the testators wishes e.g. if the testator wanted to exclude someone from their Will (who would normally be entitled to benefit) or if they wanted to leave specific instructions to the guardian of their children in relation to their upbringing or religious orientation, if applicable.