9 questions you should consider when making or reviewing your will
Posted onWhile current events may make planning for the future challenging, writing a will is one area where you can establish certainty. Having a properly drafted will gives you the peace of mind that your assets will pass to the people you choose in the way that you wish.
To help you, we asked Fiona Lewsey at will specialists Taylor Vinters to share some thoughts on why it’s so important that you have a will, and what important elements it should cover.
Not having a will can result in unintended beneficiaries and an unfavourable tax situation
If you die without a will, your estate would be distributed in accordance with the intestacy rules. These rules would determine what would happen to your assets that would otherwise have passed under your will.
This can often result in unintended beneficiaries and an unfavourable tax situation. Intestacy can be particularly disheartening for unmarried couples, who have no entitlement under the rules.
9 questions you should consider when making or reviewing your will
The key time frame to consider is how you would like your assets to pass if you were to die in the next three to five years. You should think about the following questions.
- Who would you like as your executors?
The executors are the people responsible for administering the estate, including paying any debts and tax, applying for the grant of probate (if needed) and distributing your assets in accordance with your will.
- Who would you like as your trustees?
The role of a trustee is to look after any assets that form part of a trust in your will.
There might be assets that need to be managed until a child reaches 18 (or any older age specified in your will) or your will might include a more complex trust for your family. The executors are often also the trustees but bear in mind that the trustees’ role is likely to last much longer.
- Who would you like to act as the guardians of any children under 18 if both parents should die?
You will need to think about who you would like to care for your children if anything happens to you (and the other parent) before they reach adulthood.
- Would you like to make an outright gift, or set up a trust?
Would you like to make an outright gift of your residuary estate (what’s left once tax, funeral expenses, debts and specific gifts have been paid)?
Or would you prefer a trust structure that allows your spouse or civil partner to benefit from the assets, while ensuring the capital is protected for your children?
The second option can deal with the possibility that, if your spouse or civil partner remarried after your death and that marriage ended in divorce, the assets inherited from you could be diverted away from your children. It is also a common structure for people who have remarried and who have children from a previous relationship.
- What age would you like your children or other young people to inherit?
Would you like your children or other young people to inherit at a certain age – for example, 18, 21 or 25?
Alternatively, would you prefer to include a trust to benefit them? This is frequently used to allow trustees to decide when a person is sufficiently mature to handle a potentially large inheritance.
- Would you like to gift any specific personal belongings?
Are there specific items such as jewellery, art or digital assets that you would like to bequeath to a specific person, perhaps for sentimental reasons?
- Would you like to include gifts to charities?
If you leave 10% or more of your net estate to charity, your estate can benefit from a lower rate of Inheritance Tax (IHT) at 36% instead of 40%.
- If you’re a business owner, what happens to your share of the business?
For business owners, it’s important to consider who you would want to inherit your share of the business. The partnership agreement or articles of association might prevent you from leaving your business interests as you would like to.
- Do you have assets outside of England and Wales?
If so, you might need advice in that other jurisdiction regarding the succession and taxation of those assets and whether a separate will is needed.
Dovetail your will with documents that deal with other assets
It is vital that your will dovetails with documents that deal with assets not passing under your will, such as jointly owned assets held under a joint tenancy, life assurance policy proceeds that have been assigned to another person or to a trust, and pension death benefits.
It is helpful for your executors if you keep an up-to-date list of your assets (including those held digitally online) and any liabilities with your will. You should also include securely stored instructions for how to access your digital assets and accounts after your death.
You should review your will every few years or if there is a significant change in your circumstances.
Mirror wills can be beneficial in some cases, but advice can be useful
Mirror wills (or “reciprocal wills”) are usually wills in which a couple leave everything to each other and to their children on the death of the survivor.
Mirror wills are common, but they are not always the best way to achieve your objectives or the most tax-efficient option.
A deed of variation can help you alter your entitlement under someone’s will
If you want to alter all or part of your entitlement under someone’s will in favour of other people or charities, you can use a deed of variation.
There might be various reasons why you would want to redirect the assets to which you are entitled, including to provide for others or to save tax.
For example, if you inherit business assets from your spouse that qualify for IHT relief, you could redirect them to non-exempt beneficiaries to safeguard the relief.
One key advantage of using a variation is that it can have retrospective effect for IHT and Capital Gains Tax purposes, allowing tax to be saved that might otherwise arise in relation to a lifetime gift by you.
For this to apply, the variation must be made within two years of the person’s death. The transfer can be treated as if it was made in the will of the person who has died rather than by you, which might assist with your own personal estate planning.
Get in touch
If you have any questions or would like more information, please contact Fiona Lewsey of Taylor Vinters.
Email fiona.lewsey@taylorvinters.com or call 0207 382 8047 if you’d like to speak to Fiona about your plans.
Please note
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
The Financial Conduct Authority does not regulate tax or estate planning.
Taylor Vinters is the trading name of Taylor Vinters LLP. Taylor Vinters LLP is a limited liability partnership registered in England and Wales (registered number OC343503), which is authorised and regulated by the Solicitors Regulation Authority. A list of members is available from its registered office: Merlin Place, Milton Road, Cambridge, CB4 0DP.
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