Estate Planning to pass assets to your loved ones
Have you decided what happens to your money, property and possessions after your death?
Since the outbreak of coronavirus (COVID-19), the number of people seeking to write new Wills has risen by over 30%, according to The Law Society. Understandably, the current situation is causing angst among people, particularly elderly and vulnerable clients who are currently self-isolating.
The coronavirus pandemic has made more people think about just how crucial it is to make a Will and ensure it is kept up to date. Everyone should have a Will, but it is even more important if you have children; you own property or have savings, investments, insurance policies; or you own a business. Your Will lets you decide what happens to your money, property and possessions after your death.
We spend our lives working to provide for ourselves and our loved ones. You may have a house or flat (in the UK or overseas), shares, savings and investments as well as your personal possessions. All of these assets are your ‘estate’. Making a Will ensures that when you die, your estate is shared according to your wishes.
Law will decide
If you die with no valid Will in England or Wales, the law will decide who gets what. If you have no living family members, all your property and possessions will go to the Crown.
If you make a Will, you can also make sure you don’t pay more Inheritance Tax than you legally need to. It’s an essential part of your financial planning. Not only does it set out your wishes, but die without a Will and your estate will generally be divided according to the rules of intestacy, which may not reflect your wishes. Without one, the state directs who inherits, so your loved ones, relatives, friends and favourite charities may get nothing.
It is particularly important to make a Will if you are not married or are not in a registered civil partnership (a legal arrangement that gives same-sex partners the same status as a married couple). This is because the law does not automatically recognise cohabitants (partners who live together) as having the same rights as husbands, wives and registered civil partners. As a result, even if you’ve lived together for many years, your cohabitant may be left with nothing if you have not made a Will.
A Will is also vital if you have children or dependants who may not be able to care for themselves. Without a Will, there could be uncertainty about who will look after or provide for them if you die.
Peace of mind
No one likes to think about it, but death is the one certainty that we all face. Planning ahead can give you the peace of mind that your loved ones can cope financially without you, and helps remove the stress that monetary worries at a difficult time can bring. Planning your finances in advance should help you to ensure that when you die, everything you own goes where you want it to. Making a Will is the first step in ensuring that your estate is shared out exactly as you want it to be.
If you leave everything to your spouse or registered civil partner, there’ll be no Inheritance Tax to pay, because they are classed as an exempt beneficiary. Or you may decide to use your tax-free allowance to give some of your estate to someone else or to a family trust. Scottish law on inheritance differs from English law.
Good reasons to make a Will
A Will sets out who is to benefit from your property and possessions (your estate) after your death.
There are many reasons why you need to make a Will:
You can decide how your assets are shared – if you don’t have a Will, the law says who gets what
If you’re an unmarried couple (whether or not it’s a same-sex relationship), you can make sure your partner is provided for
If you’re divorced, you can decide whether to leave anything to your former partner
You can make sure you don’t pay more Inheritance Tax than necessary
Several people could make a claim on your estate when you die because they depend on you financially
You want to include a trust in your Will (perhaps to provide for young children ora disabled person, save tax or simply protect your assets in some way after you die)
Your permanent home is not in the UK or you are not a British citizen
You live here but you have overseas property
You own all or part of a business
Before you write a Will, it’s a good idea to think about what you want included in it.
You should consider:
How much money and what property and possessions you have
Who you want to benefit from your Will
Who should look after any children under 18 years of age
Who is going to sort out your estate and carry out your wishes after your death (your executor)
Passing on your estate
Executors are the people you name in your Will to carry out your wishes after you die. They will be responsible for all aspects of winding up your affairs after you’ve passed away, such as arranging your funeral, notifying people and organisations that you’ve died, collating information about your assets and liabilities, dealing with any tax bills, paying debts, and distributing your estate to your chosen beneficiaries.
You can make all types of different gifts in your Will – these are called ‘legacies’. For example, you may want to give an item of sentimental value to a particular person, or perhaps a fixed cash amount to a friend or favourite charity. You can then decide who you would like to receive the rest of your estate and in what proportions. Once you’ve made your Will, it is important to keep it in a safe place and tell your executor, close friend or relative where it is.
Review your Will
It is advisable to review your Will every five years and after any major change in your life, such as getting separated, married or divorced, having a child or moving house. Any change must be by Codicil (an addition, amendment or supplement to a Will) or by making a new Will.