Points to consider in planning your will
Information for married couples and civil partners
This briefing note is designed to provide an overview of some of the points you may wish to consider when reviewing your existing Will or putting a new Will in place. The information in this note is brief so please let us know if you would like further information on any of the points raised.
Why should I make a Will?
A valid Will dictates how your estate will pass after you die. If you die without a valid Will, your estate will pass in accordance with a set of statutory provisions, known as the “Intestacy Rules”. The Intestacy Rules are no substitute for a properly drawn-up Will and can often result in unintended consequences. For example, under the rules, a surviving spouse will not necessarily inherit the whole of the estate, whilst an unmarried partner has no rights at all.
When should I review my Will?
You should review your Will at regular intervals, to ensure that it is still appropriate to your circumstances and that it is consistent with the latest legislation. In particular, you should consider reviewing your Will whenever there is a major change to your or any of the beneficiaries’ financial and/or personal circumstances.
What should I include in my Will?
A Will can deal with a multitude of matters. As a starting point, you may wish to consider the following:
Executors are people you entrust to deal with your estate following your death and to carry out the terms of your Will. The role carries with it great responsibility and it is important you choose people who you trust to deal with things properly. Executors are required to act unanimously, so it is important that the people you choose are capable of working well together. Executors should be at least 18 years of age, of full capacity and, crucially, likely to outlive you!
In some circumstances, it may be possible/appropriate to appoint the Members of Godwins Solicitors LLP as your executors. We are happy to discuss this with you.
You may like to include your funeral wishes in your Will, although there is no requirement to do so. It is one of the first things we get asked following a death; it is important that your next of kin are aware of your wishes.
You may wish to state whether you would like to be buried or cremated, the location of your final resting place, and/or whether you would like your body to be made available for medical research or organ transplant.
If you have minor children then you ought to consider who would be best suited to caring for and looking after your children. Please note that a guardianship provision would only be capable of taking effect on the death of the last person with parental responsibility for any child.
Personal possessions and specific bequests
We tend to deal with personal belongings separately from the rest of the estate, as this reduces complications when dealing with the estate administration. We usually provide for a person’s belongings to pass to their surviving spouse on the first death, and thereafter to pass to the executors to distribute at their discretion. If you have particular items that you would like to pass to specific individuals, we can record this in a separate Letter of Wishes, which you can update from time to time without the need to change your Will.
Pecuniary and specific legacies
You may decide to leave cash gifts of fixed amounts or specific assets to one or more individuals or charities.
You will need to consider who you would like to receive the balance of your estate after payment of all liabilities and administration expenses to include taxes arising as a result of your death as well as any legacies given in the Will (known as the “residue”) and the way in which you would like those people to benefit. If there is more than one beneficiary, you will need to decide on the respective shares that they are to receive.
On the death of the first of a married couple/civil partners, it is usual for the bulk of the estate to pass to the survivor. There are two ways in which this can be achieved, either by way of an outright gift or otherwise by leaving assets to the survivor on a “life interest” trust.
• An outright gift means that the survivor receives the assets without restriction and is free to do with them exactly as he or she pleases. This is the simpler option and is often appropriate in the case of a first marriage, where the intention is to benefit shared children on the second death.
• A gift on a life interest trust meanwhile entitles the surviving spouse/civil partner to the income of the assets (including the right to occupy any property owned by the deceased) for the remainder of his or her life. It does not, however, give them a right to the underlying capital value of those assets, which is preserved for the benefit of the ultimate beneficiaries. This option is more complex, but may be sensible in the case of a second marriage where each party has children of their own from a previous relationship and/or if there are concerns about ringfencing funds against care fees, etc. We are happy to advise further on the options available.
If you have children, you will want to consider the age at which you would be happy for them to receive funds. The default is age 18, however, many people prefer to defer this until age 21, 25, or even later. You should also consider what you would want to happen if none of your intended beneficiaries were to survive you. In these circumstances, do you have other individuals or charities in mind who you would like to benefit?
Another consideration is whether it would be unwise to make funds available to any of the beneficiaries for any reason (e.g. if there is a risk of divorce or bankruptcy proceedings). Finally, you should consider if there is anyone who might feel aggrieved by the provisions of your Will
and who may seek to challenge it. Whilst it is not possible to remove the risk entirely, there are steps that can be taken to reduce the likelihood of a successful claim being made against your estate.
What about inheritance tax?
In preparing your Will, it is necessary to give some thought to inheritance tax, which is primarily a charge to tax on the value of an individual’s estate at death. On a person’s death, inheritance tax is currently payable at the rate of 40% on the chargeable value of the estate above the “nil rate band”. The nil rate band is currently £325,000 (but may be reduced by the value of certain lifetime transfers/gifts).
There are some steps you can take during your life to reduce the value of your estate for inheritance tax purposes.
In terms of Wills, there are a few points to note:
• Where a couple are married or in a civil partnership, any unused nil rate band of the first spouse/civil partner to die may be transferred and set against the estate of the survivor on their eventual death (the so-called “transferable nil rate band”). This claim is for the unused percentage, rather than the value unused at the time. On present values, then, the combined nil rate band and transferable nil rate band available on the second death may be as much as £650,000. It is for this reason that it is sensible to leave the bulk of the estate (and certainly everything in excess of the nil rate band) to the surviving spouse/civil partner on the first death, as this avoids an immediate charge to inheritance tax because it is covered by the spouse exemption.
• As of April 2017, an additional allowance known as the “residence nil rate band” may also be available where a person leaves a property interest to “direct descendants” (which includes children, grandchildren, and so on, as well as step-children and the spouses/civil partners of those people). The maximum amount of the residence nil rate band is currently £175,000. Care should be taken when drafting a Will to ensure that the residence nil rate band is capable of being claimed. As with the “normal” nil rate band, any unused residence nil rate band of the first of a married couple/civil partners to die may be transferred and set against the estate of the survivor on the second death (the “brought-forward allowance”), giving a further maximum allowance of £350,000. A taper is applied to reduce the available residence nil rate band for an estate valued
over £2 million.
• Gifts to charities are free of inheritance tax. In addition, the overall rate of inheritance tax is reduced from 40% to 36% where a person leaves at least 10% of their net estate to charity.
• Properly structured gifts of farmland, business interests, and shares in unquoted trading companies may qualify for generous reliefs from inheritance tax. It is important that you let us know if you hold any assets of this nature.
Can my beneficiaries amend my Will?
It is currently open to the beneficiaries of a Will to vary their entitlements, if so desired. There are no inheritance tax implications, provided this is done within 2 years of death. For example, a beneficiary may have no real need of their inheritance and may prefer to pass it on to their children. Provided this is done correctly, the funds will effectively bypass the original beneficiary’s estate for inheritance tax purposes.
What happens if I lose mental capacity during my lifetime?
Whilst dealing with your Will, you may also wish to consider what would happen if you were to become mentally incapable of dealing with your affairs during your lifetime. We can advise you on putting in place Lasting Powers of Attorney and/or Advance Decisions to deal with the position. Please contact us if you would like further information on this.
The information in this guide is not intended to replace specific advice tailored to your individual circumstances. Information correct as of January 2022.