In our previous article we considered the basics of will writing, setting out the key people involved in the writing and execution of a Will.
In this article we will consider the REAL benefits to be enjoyed from ensuring you have a properly written Will.
10 Great Reasons Why You Should Write a Will
1. To allocate assets between different people.
You may wish to leave jewellery to a niece, or promised a grandson your war medals. A Will can formalise all these gifts and help prevent family arguments – remember this – family and money rarely mixes!
2. If you’re not married then you need to make Wills.
There is no automatic transfer of assets between couples who are cohabiting. Other than jointly owned asset which would pass to the surviving owner on first death, in law, all other assets could pass back to the deceased’s family under intestacy rules. In practicality though it is unrealistic to expect your deceased partners family to come asking for his/her DVD collection but a Will formally arranges your affairs after death and avoids problems later.
3. Leave assets to an ex-partner.
It could be that you have now remarried or are living with someone else. A Will could be used to leave assets to an ex-partner, for example, they may have made a large gift to you during your relationship which you would like to return to them in the event of your death.
4. Reduce the amount of Inheritance Tax you pay.
In the current tax year we can each leave an estate of up to £325,000 (2009/2010 tax year) with immediate liability to inheritance tax. Anything we own, over and above this £325,000 Nil Rate Band is chargeable to Inheritance Tax at a rate of 40%. A Will could be written to leave up to £325,000 to be split equally between children or held in Trust for their benefit. Under a normal “British” Will it is usual for all assets to pass between husband and wife. It might be prudent to still include a will trust to hold £325,000 for the benefit of your children – leaving all your assets to your spouse could see that money all eaten up in care home fees – it is vitally important that you take legal advice in this respect.
5. A Will can be used to make assets skip a generation.
It may be that your own children are financially successful in their own right. Passing assets to them on your death may be of no benefit and could simply compound their own Inheritance Tax problems later by artificially expanding their Estates. If this is the situation then why not leave your Estate to benefit your grandchildre, or even great-grandchildren if that is the case.
6. A Will can be used to set up a Trust.
If you are fortunate to have a very large Estate you may choose to set up a Trust to benefit a local charity or support group in terms of providing them with a regular income. Seek legal advice if you are considering this course of action.
7. To avoid Intestacy.
If you don’t make a Will then the Government have already made one for you. These are known as the rules of Intestacy – you are said to have died “intestate” if there is no valid will at the time of your death. For example, if you are married and die with a spouse and children then your spouse doesn’t automatically get eveything – if your Estate is less than £250,000 everything goes to the surviving spouse. If the estate is over £250,000 the surviving spouse gets £250,000 and all personal possessions.
Half of the remaining estate is split equally between the children with the spouse retaining a “life interest” e.g an income from the remaining 50% with this 50% ultimately being split between the children on second death.
As you can see – assets being allocated in this manner can and does cause problems after death.
More information on intestacy rules can be found here – HMRC – Intestacy Rules
8. You need to appoint Guardians for your children – this is vitally important.
In the absense of a Will it would be the Courts/Social Services who decide where your children are best placed – and it might not be with the people you thought would look after and raise your children. By making a Will with Guardians named for your children you can avoid this uncertainty. You should also consider putting in place life insurance to provide for your children in the event of your death – consider this – it could be very difficult if one day two children turned up on your doorstep expecting to be looked after until they are 18 and there is no money there to fund them!
9. If you are separated but not yet divorced.
You should write a will with the will written in view of the divorde going ahead as there is a possibility in law that, in the event of your death, your asset could pass back to your ex-partner. Although you are separated, in the eyes of the law your ex-partner might be entitled to your Estate after your death!
10. If you have been married previously or you don’t trust/like your spouses family.
You might care to write your Will so that in the event of you both dying together your assets don’t end up passing to your spouse’s family. For example, if you were killed in a car crash, in the eyes of the law, the eldest person is deemed to have died first. It is possible that their Wills leave all their assets to their families – you could see your assets momentarily pass to your spouse before passing straight to her family. Is this what you want to happen?!
We hope this article was of some benefit in sparking an interest in writing your own will.