These are some of the comments we have heard concerning making a Will
1. "Everything I own will go automatically to my spouse or my children"
2. "My assets are too insignificant"
If you leave everything to chance and you die intestate, the "intestacy rules" will apply. The rules will govern not only who benefits from your estate but also who is able to apply to be your personal representative.
It really doesn't matter how large or small your estate is, by making a Will you are giving yourself the opportunity to make certain decisions about how your property and affairs will be dealt with. By making a Will you are able to choose who you would like to be your Executors (personal representatives). You may wish to appoint a good friend, family members or a professional.
The" intestacy rules" set out a strict order of those who can apply to be your personal representative and those who will become entitled to benefit from your estate.
The Inheritance and Trustees' Powers Act 2014 has brought about some changes to the law of Intestacy (where a person dies without having made a will). If you die intestate leaving a spouse and children the statutory legacy will apply whereby the surviving spouse (which now includes same-sex married couples) receives the first £250,000 of your estate and the remainder is divided between your children and spouse (one half to your spouse absolutely and the other half divided between your children equally).
If you die intestate without a spouse, then the children will benefit on the statutory trust. Where a person dies intestate, there is no spouse or children then the order of entitlement is as follows:-
However the only way to ensure that your wishes are carried out is to make a will.
Other benefits of making a Will include appointing Guardians for your children in the event that should those with parental responsibility die (usually the father and mother of a child), you appoint someone whom you trust to be Guardian(s) of your children under the age of 18. This is a very deep and personal choice to all of us and without a Will there can be nothing formal or enforceable.
Appointing specific personal representatives to deal with specific situations such as where you have a business and you wish to provide for the continuation of that business.
There are many other benefits to making a Will including complex family or financial situations which are discussed further below (see asset protection and will trusts).
It is possible to provide for specific funeral arrangements which can be particularly important to some clients.
A Will can allow others to enjoy opportunities that you never had by passing on your estate to particular individuals whom you wish to benefit.
The Civil Partnership Act provides a legal registration for same-sex couples, which puts their relationship on a par with married couples. From March 2014 it has been possible for same sex couples to enter into marriage. Civil partners therefore have the right to inherit if a partner dies without leaving a Will. The Civil Partnership Act, however, does not apply to non same-sex cohabitees. Therefore, if you are cohabiting, the intestacy rules do not recognise cohabitees and without a Will your cohabitee will receive nothing. Your partner (cohabitee) will have to make a claim under the Inheritance (Provision for Family and Dependents) Act 1975 claiming financial dependence if appropriate. Further if you had children with your cohabitee then they will automatically benefit under the intestacy rules and both your children and you would have to have separate legal representation. This is expensive and obviously a situation that should be avoided. A simple will is all that is needed to ensure that your partner and your children are provided for.
It could be said that you may appoint as many executors as you wish but probate can be given to a maximum of four. Executors can be friends, family or professionals. Three executors is an ideal number made up of say, two family members or friends and a professional, which is advisable if the estate is complex or there is any friction within the family.
In 2007, the government introduced the transferrable nil-rate band, which provides that the unused proportion of the first to die can be passed to the survivor. Therefore, on the second death a surviving spouse can leave £650,000 free of inheritance tax.
The new transferrable nil-rate band provides a simple way of saving on inheritance tax. However, those married couples who made nil rate band discretionary trust wills prior to 2007 should not rush to redraft them without first obtaining legal advice. There are many benefits to keeping such trusts within Wills. Such trusts can offer some solutions to complex family arrangements and some level of asset protection.
The inclusion of a trust within a Will, whether it is discretionary or gives the surviving spouse a right to income or occupation of the family home, may be attractive for a variety of reasons.
By creating a will trust it is possible to include children from a previous marriage or to give a second spouse the right to occupy the family home, while protecting the capital for children of an earlier marriage. This will ensure that the assets will not pass outside the immediate family.
An ever ageing population means that tens of thousands of homes are sold each year to fund the cost of residential care. A carefully drafted will can provide that a share of the family home passes into a trust on first death, which may give the survivor a right to occupy. With care, such a trust will ensure that the capital will be preserved and instead passes to the intended beneficiaries. A trust of this type can be drafted flexibly to allow the survivor to 'down size' or move property.
Trusts can protect assets should future generations suffer financial or matrimonial difficulties, or the beneficiaries are not mature and responsible enough to own large sums of money. Trusts can also be used to skip generations and to benefit grandchildren instead of children.
There may be ongoing IHT charges and this will have to be weighed up with the benefit of asset protection.
There are certain events which make reviewing your Will essential such as divorce, remarriage, on the death of a partner, if you inherit a significant amount of money or for some other reason your assets increase significantly, if an executor becomes unsuitable or unable to act due to age, ill health or bankruptcy or if a beneficiary dies. It is advisable to have your will reviewed every five years in any event as tax changes can have significant impacts on your will.
If you would like further advice on any of these issues please do not hesitate to contact us.