Do I really need to make a will?
Making a will is important if you want to be certain your wishes will be met after you die.
It can be difficult to talk about, but it can save everyone a lot of stress. It also ensure that your estate goes to the people you care about. Wills can also stop family arguments, removing additional stress at an already difficult time for them. You can also make it clear whether you want to be buried or cremated, and what kind of service you want.
If you don’t make a will, your estate will be divided according to Intestacy Rules. If you have a spouse or a civil partner and children, your partner would inherit all your personal possessions, at least the first £250,000 of your estate, and half of the rest. The other half would then go to your children. If you have no children, your partner would inherit your entire estate. However, your estate will only be divided after all your debts, funeral costs, and administration expenses have been paid.
If you and your partner aren’t married or in a civil partnership, and they aren’t included in the will, they have no legal right to inherit from your estate, even if you have lived together for a long time, or have children together.
What is my "estate"?
Your estate is everything you own, including all your money and savings, any properties you own, all your personal possessions, and any investments you have made.
Making a will
There are several different ways you can make a legally-valid will (a will recognised by the law):
- You can make your own. If you decide to do this, you must ensure it is valid, and that your wishes are spelled out clearly to avoid confusion. A will is a legal document, so seek advice before making one yourself.
- Hire a professional will-writer. Before you do, check whether they are a member of the Institute of Professional Will Writers, as professional will-writers are not qualified solicitors, and may not be regulated.
- Hire a solicitor. It’s best to get advice from one first, especially if your estate is complex. Always check they are licensed with the Law Society first, and ask them to confirm their fee for writing your will. Your solicitor may also be able to store your will safely for you, but check to see if there is an extra charge for this. Your will executor will also need to know where the will is stored.
- You can ask a charity to help. Some charities offer free services, usually in the hope you will leave them a donation in your will in return.
- You can also enlist the aid of a bank. Some banks offer will-writing services, and remember to ask how much they charge, as some may charge high fees for this service.
If you wish to change any part of your will, you can either cancel the old will and make a new one, or add what’s called a codicil to the existing will. A codicil is a statement added to the will, which either corrects or adds something to the original will. A codicil must be signed and witnessed in the same way as your original will.
If you marry, separate, or divorce, you must arrange a new will. A divorce doesn’t automatically cancel a will made during the marriage, but it will exclude your ex-partner from inheriting from benefit, even if you mention them in the will. If you were to remarry after a divorce, this will automatically cancel any existing will you have.
Once your will has been cancelled, you can destroy it if you wish, or you can keep it and mark it as revoked (cancelled) to avoid any future confusion.
What to include
When you write your will (or have it written for you), you must ensure it is absolutely clear what you want to happen with your estate. You are free to decide how to divide up your estate by stating who will receive what. For example, you can divide your estate between a certain people in specific portions: 50 percent to your spouse, 35 percent to your child, and 15 percent to a charity.
You are free to leave money to charities in your will if you wish. You can also state what should happen if any of your beneficiaries (people or organisations you have chosen to receive part of your estate) die before you do. Make sure to review your will at least every five years, and after any major change in your life, such as a marriage or divorce, having a new child, or moving house.
You can also include legacies in your will. Legacies are gifts you make, such as to your favourite charities. There are three types of legacies – residuary (a portion of your estate given when all other costs and gifts have been made), pecuniary (a fixed sum of money), and specifics (a named item, such as a possession [houses, jewellery, furniture etc.]). If you plan on leaving a legacy to a charity, ensure you include the charity’s full name, address, and registered charity number.
You must sign your will in the presence of two independent witnesses, who must also sign it in your presence. If the will is signed incorrectly, it will not be valid. ‘Independent’ means someone who is not a beneficiary – if any beneficiaries sign your will as a witness, they will lose the right to inherit. You should not have any beneficiaries present in the room when the will is signed.
Valuation - What your estate is worth
When you are arranging your will, it is a good idea to draw up a list of all your assets and any debts you have. This can help to give you a better idea of what your estate is worth, and will help you better decide how to distribute your estate.
Assets can include your home and any property you own, savings in any banks or societies, premium bonds, insurance, pensions, investments and shares, vehicles, jewellery and any personal belongings. Debts could include a mortgage, credit card balances, bank overdrafts, loans, equity releases or personal debts. You should have your assets valued regularly, as the price of things can often go up or down without you realising.
Executing your will
An executor is a person (or group of people) you choose to deal with your estate after your death. Being an executor can be a lot of work, so make sure you choose responsibly. They should understand what’s involved, and check whether they are willing to act on your behalf. You can appoint as many executors as you like, but only a maximum of four can apply for the Grant of Probate – the legal document needed to deal with your estate. It can be a good idea to choose more than one executor, as they can spread the work between them, and in case one of them dies before you do.
You can select a beneficiary to be your executor. You can choose a solicitor to act as a professional executor, especially if the estate is complicated, if there might be a family argument, or if someone independent is better suited to handle things. They will charge for their services, and they will be paid out of your estate. Some charities can also be your executor, but you will need to contact them first.
If you can’t find anyone to act as an executor, there is a government official, the Public Trustee, who can do this. A trust can also act as your executor. A trust is a way of looking after assets for others, such as for people who are too young to manage their affairs. If any of your beneficiaries are under 18, you should appoint at least two trustees/executors.
It can help your executor to know where you keep any related documents, such as the will itself, deeds to your property, insurance policies, documents relating to savings accounts, passports, driving license, documents relating to mortgage loans, documents relating to pensions, and utility bills.
The Inheritance Tax as we know it was introduced in 1986 under the Thatcher Ministry, however, it is just an update of the Estate Duty, introduced in 1914 by the Asquith Ministry. It is a tax on estates worth over a certain amount.
When planning your will, make sure you take into account the tax. It is a tax of 40 percent on estates worth more than £325,000 (including savings, possessions, pension funds, and property). The first £325,000 is tax free, so the tax only applies to the rest. For example, if your estate was worth £1 million, the tax is applied to £675,000 of that value. So, the government would take £270,000 (40 percent of £675,000). There are some instances where the tax isn’t applied, however:
- If you leave your entire estate to your spouse or partner, no tax can be collected
- Anything you leave to charity is exempt. If 10 percent of your estate is left to charity, a lower rate of 36 percent may apply, but seek advice if you plan to do this
- You can make gifts to beneficiaries before you die. However, even while you are alive, the tax can still apply. Seek advice if you are unsure
- Setting up a trust can reduce the amount of tax, and different trusts can affect the amount of tax in different ways. Always seek advice if you are unsure.
When seeking professional advice on the tax, find a solicitor through the Law Society.