Royal London announced worrying statistics that 5.4 million adults in the UK do not have a Will, with 59% of parents found to either not have one or have one that is out of date.
Often it takes a significant events, such as marriage, having children or and illness, for someone to make the conscious effort of creating a Will, yet 53% of people have not updated theirs since such key life moments.
Making a Will provides you with the peace of mind that your wishes will be met following your death. It is important to review your Will regularly, particularly following significant life events, to ensure that it still accords with your wishes.
Here are just some of the reasons you may wish to make or update your Will.
Looking after your loved ones
Having a Will makes it clear how you would like your estate to be distributed and can save your loved ones a lot of worry. It ensures that your property, savings and possessions go to the people and/or charities that you care about, and can also ensure that your assets are kept within the family and passed down the generations.
Updating your relationship status
Did you know that upon marriage or civil partnership your legal status changes and any former Will is automatically revoked? If you remarry, you may wish to consider the use of trusts in your Will to support your new spouse and any children from your current and previous marriages. Many unmarried couples who live together do not make wills, incorrectly believing that because they have lived together for a long time they become ‘common law’ husband or wife and acquire automatic rights. This is not the case and you will need to make provision for your unmarried partner in your will.
Changes to the family
Various family changes may mean that you need to reconsider how and to whom you allocate your assets in your Will. This may include births, deaths, marriage, divorce, step-children or other changes in the wider family. If relatives have divorced or had some other financial upheaval, this may affect how you want your estate to be distributed. Even if your own circumstances have not changed, it is important to think about your beneficiaries’ circumstances too. You may also wish to appoint Guardians for any minor children in your Will and allocate money and other assets by way of a trust for the benefit of those children.
Inheritance and tax
If you have inherited money, property or assets of worth, you may wish to state who should benefit from this inheritance.
It’s important to remember that if your estate is worth over £325,000, Inheritance Tax will apply. In most cases, the first £325,000 of your estate is tax free and any amount above that threshold is taxed at 40%. There are some exemptions to Inheritance Tax and with a carefully prepared Will, it may be possible to reduce the Inheritance Tax payable by your estate after your death.
Buying a house? Future planning
It is important to consider where you want your home to go after your death. A Will can ensure that it is passed to the beneficiaries you wish it to go to or allow its continued occupation by your partner or co-owner. A carefully prepared Will can also ensure that you take advantage of the Residence Nil Rate Band allowance which applies if you own your home and leave it to a ‘direct descendant’. The Inheritance Tax-free allowance for your estate could potentially increase from £325,000 to a maximum of £500,000 (depending on the date of your death).
If you would like to effect a will or update your existing will, please contact our Private Client team on 0191 384 2441.