November is Will Aid month, where participating solicitors waive their fee for writing a will in exchange for a donation to charity. This excellent scheme helps raise money for good causes while also encouraging people to consider their estate plans.
This annual incentive to write or review your will may be very important as research from Canada Life revealed that 1 in 2 UK adults do not have one at all.
Even those who do have a will may not have updated it for a long time, and this could mean that it no longer reflects their wishes. As such, it is important that you regularly revisit your estate plans.
Read on to learn five practical reasons to write or update your will now.
1. You can make sure your wishes are fulfilled
The main reason to create or update your will is to ensure that your wishes are fulfilled when you are gone.
If you die without a clear will in place, your estate is normally divided according to the rules of intestacy. Typically, a spouse or civil partner will inherit:
- All your personal property and belongings
- The first £322,000 of your estate
- Half of the remaining estate.
The rest of your estate will go to your surviving children or grandchildren, if you have any. Otherwise, your spouse or civil partner will normally inherit everything.
If you aren’t married, a long-term partner can’t usually inherit under the rules of intestacy. Instead, your estate may go to your parents or siblings.
As a result, if you don’t have a will, your estate may not be divided in the way you wanted and important people may not inherit anything at all. Fortunately, if you set out clear instructions now, you can ensure that your wishes are fulfilled.
2. You can prevent difficulties for your family
The loss of a loved one is always challenging, and you could make this difficult situation even harder if you don’t make your wishes clear.
Without a comprehensive will, your family must decide how to handle your estate, and this can lead to undue stress. This is especially true if you don’t leave a will at all. In this case, your family will need to apply to the courts for permission to manage your affairs, which can be a time-consuming process.
An outdated will can be equally difficult if it misses out important assets you have acquired since you last updated your estate plans.
Additionally, there may be disputes about who should inherit what, leading to expensive court proceedings for your loved ones.
To avoid this, make sure you write a will and update it whenever your assets or life circumstances change. It may also be useful to gather important paperwork and copies of the will, and then show trusted family members where you keep them.
This could allow your family to action your wishes more easily and reduce the chance of a dispute.
3. You may need to appoint guardians for your children
The main function of your will is often to give instructions about how your assets should be divided. However, you may also make important decisions about other aspects of your life.
For example, you will likely use your will to appoint guardians for your children if they are under the age of 18.
Failing to do this could have serious consequences as the courts will decide who should take care of your children if you die. Unfortunately, they may not choose the same guardians that you would have chosen.
This is a crucial decision that requires serious consideration. Writing your wishes into your will gives you peace of mind knowing that your children will be cared for by a trusted friend or family member should something happen to you.
4. You can avoid sideways disinheritance
Sideways disinheritance typically affects blended families where one or both parents have remarried.
Normally, in England and Wales, your current will becomes invalid when you get married. Consequently, if you remarry, your estate could be divided according to the rules of intestacy if you die before putting a new will in place.
This could potentially mean that everything goes to your new spouse. As a result, children from your first marriage might not inherit anything.
Complications may also arise if you leave everything to a spouse and they remarry after you die. If they choose, they could leave everything to children from their second marriage and leave out any of your children, for example.
Luckily, by updating your will regularly to reflect your new circumstances, you can avoid sideways disinheritance and ensure that everybody is treated fairly.
5. You could mitigate Inheritance Tax
Inheritance Tax (IHT) has been in the news a lot recently as the number of people paying it is on the rise.
Indeed, according to Money Marketing, the government raised £3.9 billion from IHT between April and September 2023 – an increase of £400 million on the same period the previous year.
This is likely because the “nil-rate bands” – the amount that you can pass on to your loved ones without triggering an IHT charge – have been frozen until 2028.
Rising property prices and potential investment returns could mean that the value of your estate also rises. As a result, more of your wealth could exceed the nil-rate band and your family may pay more IHT.
Fortunately, a comprehensive estate plan may help you mitigate IHT in several ways. For instance, if you specify that your main home goes to a direct descendant such as a child or grandchild, you can ensure you benefit from the full “residence nil-rate band” of £175,000 in the 2023/2024 tax year.
Alternatively, if you leave at least 10% of your estate to charity in 2023/2024, your family may pay a reduced rate of IHT.
These are just two ways to reduce the amount of IHT that may be liable on your estate. By updating your will regularly and considering the potential IHT implications now, you may be able to pass more of your wealth on to your loved ones.
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This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.