Seven good reasons to make a will
Half of the adult population dies intestate. Yet a will is one of the most important documents you will ever write. This is particularly relevant to private practitioners who need to carefully consider the impact of their financial affairs throughout their professional lives and into retirement, keeping their will under periodic review. Here are seven good reasons why you should make one.
1 – Control
The most important reason for making a will is that it puts you in control so that you choose who benefits from your assets when you die and in what amount. It also means you can name who you want to administer your estate to ensure it is done properly. It is also essential that your will takes into account any Declaration of Trust, Partnership Agreement, LLP Membership Agreement or Shareholders Agreement you may have in place in your particular practice. The transfer of shares in a company will often be governed by its articles of association/shareholders agreement and how a share of the value in an LLP is dealt with on death is often set out in a Members’ Agreement so these need to be looked at carefully to ensure that they are appropriate and do not contradict the terms of your will – creating difficulties for your loved ones after your death.
2 – Choice
If you don’t leave a will everything you own will be divided up in accordance with the statutory intestacy rules.
These also dictate who administers your estate which could mean that the burden falls on those least able to do so through geography, age or ill-health.
So, in simple terms, if you are currently married or in a civil partnership and you have children and your estate is valued at more than £250,000, your partner will inherit all your personal belongings together with the first £250,000 of the estate and half of anything that remains. The other half passes to the children. If there are no children, your partner will inherit the whole estate but if your partner has already predeceased you and you have children they will inherit the whole of your estate.
The exception to this is where there is property owned as beneficial joint tenants where the surviving owner automatically inherits the other’s share irrespective of any will.
Contrary to what many people think, if you aren’t married or in a civil partnership, however long you have been living with your partner, they will not be entitled to anything. There is no such thing as a “common law husband or wife”.
And what if you are widowed, divorced or never married at all and have no children? Then the situation becomes even more complicated. There is a set list of entitlement ranging from parents to siblings, grandparents to uncles and aunts, all in order. Each class must be exhausted first before the next can be considered and if any have predeceased you, then their descendants take their place. If there are none, then your estate is said to be “bona vacantia” and will pass to the Crown!
3 – Cost
You may think this is unusual, but I have two estates currently, one where there was no will and the other sadly where there was a will, but the only beneficiary named has already died. Both of these estates will now be divided between the descendants of the deceased’s uncles and aunts. These were elderly clients and so we are looking at uncles and aunts born in the late 19th Century when families tended to be large, so we are having to trace all the descendants of up to 15 uncles and aunts in each case – a huge task and an expensive one where the assistance of professional genealogists is essential. This is very time-consuming and will greatly delay matters, and the expense will greatly reduce the value of the inheritance. A simple will, or in the latter case, a will that made some alternative substitute provisions, would have avoided all of this.
Making a will means that you can distribute your estate in the most tax effective way possible saving your beneficiaries money. It may be better, for example, to pass assets down a generation rather than leaving everything to your partner. It may mean that you should make maximum use of the various exemptions to which you are legally entitled. Everything passing to a surviving spouse or civil partner will be tax-free, but anything else will be taxed at the rate of 40% over and above your tax-free band at death, currently £325,000 (less any prior gifts in the last seven years which reduce this) and the residence nil-rate band if applicable. How best to deal with business assets is also an important factor. Professional advice will ensure that you arrange your affairs in the most appropriate manner.
4 – Challenge
Unlike most parts of the world, we have complete testamentary freedom, so we can leave our possessions to whoever we want without any constraints, but wills can be challenged in suitable circumstances if someone considers that they ought to have been a beneficiary and they fit the legal criteria. An unmarried partner you have been living with may find that this is the only way to make a claim to any part of your estate which is upsetting and expensive. But if you really want to avoid leaving something to a family member, a professional can advise you and help you do all you can to reduce the likelihood of a legal challenge to your will.
5 – Children
Who will look after your children if they are under the age of 18? If there is a surviving parent then that is simple, but what if there is no surviving parent? A will enables you to appoint those people who you would like to look after your children should the worst possible scenario arise. They don’t have to be the same as your executors. You may choose executors who are best equipped to deal with the financial aspects of your estate, whereas your children’s guardians could be those who you know will provide the loving home that you would want for your children – to give them the emotional support they need for the future.
6 – Charity
If you die without a will, you will never have the opportunity to leave anything to your favourite good causes. And if you don’t have any surviving relatives…and even if you do, you may not wish them to benefit from everything you own! …remember that gifts to charity will generally be tax free and if you leave at least 10% of your net taxable estate to charity then this will have the effect of reducing the overall rate of inheritance tax on your estate from 40% to 36%.
7 – Calm!
How much better to know that when you die everything will be dealt with in accordance with your wishes, rather than the dreadful uncertainty that your family will undergo in ascertaining who is going to benefit from your estate, and how it is going to be dealt with and in the extreme cases that I have mentioned above all the extra time and cost that dying without a will could mean.
If you instruct a solicitor to prepare a will for you, the Law Society will be able to help provide details of local firms close to you, as indeed will STEP (the Society of Trust and Estate Practitioners). The most important thing is to consider who you want to benefit first, before you talk to anyone. You should preferably prepare a brief list of your assets for them beforehand, to get the most out of any meeting. This will not only make it more cost effective, but time-productive too, so that you can get a professionally drawn will right away. If you have a complicated family or assets, then do make sure you get the proper level of advice. A bit more time and money spent will pay dividends in the end…
Fiona Wilson, Partner
As the head of the private client department, Fiona’s work covers a diverse range of legal services catering for the needs of individual private clients and their families on a personal level. This typically includes all advice relating to wills and estate tax planning, including the provision of sensitive and effective guidance with regard to the administration of estates.
Fiona is a member of the Society of Trust and Estate Practitioners; Committee Member of London Central Branch and Chair Charities Special Interest Group.