Will and Estate Planning
Do I really need to make a will?
Making a will is important if you want to make sure your wishes will be met after you die.
It can be difficult to talk about, but in the event of your death it will 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 the people closest to you.
If you don’t make a will, your estate will be divided according to the law. Your family will have no control over who inherits your money and assets. This could mean they go to someone you hadn't intended them to. The people or charities that you care about may end up missing out.
What is my "estate"?
Your estate is everything you own, including your money and savings, any properties you own, all your personal possessions, and any investments.
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.
- Hire a professional will-writer.
- Hire a solicitor.
- Ask certain charities to help
- Some banks offer will-writing services
Most will writing services come at a cost. It's important to find out what the fees are in advance as some can be expensive.
Your will is a legal document and it is very important that you seek advice when creating one.
What to include
When writing your will, be very clear about what you want to happen with your estate.
Divide up your estate by stating who will receive what monies, assets (such as a house) or specific items (such as heirlooms or sentimental jewellery).
You can leave money to charities in your will if you choose. You can say what should happen if any beneficiaries (people or organisations you have chosen to receive part of your estate) die before you do.
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. If any beneficiaries act as a witness, they will not be able to inherit. You should not have any beneficiaries in the room when the will is signed.
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 child, or moving house.
Valuation - What your estate is worth
When planning your will, it's a good idea to list your assets and debts. This gives you a clear picture of the value of your estate and will help you decide how to distribute it.
Assets include your home and other property you own, financial savings and investments, and items such as vehicles, jewellery and personal belongings.
Debts include mortgages, credit card balances, loans and suchlike. You should have your assets valued regularly, as the price of things can frequently change.
Executing your will
An executor is a person (or group of people) chosen to deal with your estate after your death. Being an executor can be a lot of work, so make sure you pick wisely.
You can choose a solicitor to act as a professional executor, especially if the estate is complicated, if there might be a family conflict, or if someone independent is required. They will charge for their services, and this will be paid from the 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.
When planning your will, make sure you take into account the tax. It is a tax of 40 per cent on estates worth over £325,000 (including savings, possessions, pension funds, and property). The first £325,000 is tax free.
There are some cases where the tax isn’t applied:
- If you leave your full estate to your spouse or partner
- All charitable donations
- Gifts to beneficiaries before you die - tax can still apply, seek advice.
- Setting up a trust can reduce the amount of tax. Different trusts can affect the amount of tax in different ways.
A will is a complex legal document and it's a good idea to seek professional advice, even if you are employing someone to create one for you.
The Money Advice Service has lots of advice and guidance for things to think about when making a will.