THE IMPORTANCE OF HAVING A WILL
The importance of making a will cannot be overstated. Not only will your affairs be dealt with by the Executor of your choice and your estate left to those you wish to benefit, but other matters such as appointing Guardians for infant children can also be addressed. There is also the issue of Inheritance Tax Planning to think about for those with larger estates and a consideration of the ways in which such tax can be mitigated or eliminated on death.
What you need to know about Wills
If you do not have a will, the estate will be divided in accordance with the Intestacy Rules (see below). Although these may be appropriate there are many reasons why this may not be the case. Some of the reasons are as follows:
Where the spouse/civil partner does not necessarily inherit the house. For example, where the family home is not owned as joint tenants or by one spouse alone.
Unmarried partners and dependants do not have an automatic right to inherit under intestacy. A will ensures that they are not left in financial difficulty or even homeless.
Those who have re-married and have children from an earlier marriage, who may not benefit under intestacy.
To avoid unnecessary Inheritance Tax (IHT). This may be the case where Intestacy rules distribute the deceased’s estate to people other than their spouse, and this value exceeds the nil rate bands which can lead to an unexpected IHT bill.
To manage assets for those who may be considered too young to inherit, not trusted to manage for themselves, or who cannot care for themselves.
To appoint guardians to look after minor children.
To avoid money going to a bankrupt person or someone who may be in the process of a divorce.
Donations to favourite charities.
To benefit individuals who are not related.
To ensure advantage can be taken of the Main Residence Nil Rate Band – this alone can be worth up to £140,000 from April 2020 onward.
If you do not have a will or up-to-date will in place, contact Tom Slator for a free consultation.
A brief guide to Intestacy
What happens if an individual dies intestate without leaving a Will?
There are strict rules which follow marriage, civil partnership and the bloodline and the main provisions are:
If there is a surviving spouse and no children the surviving spouse inherits absolutely.
Any jointly owned assets (matrimonial home owned as joint tenants/joint accounts) pass directly to the spouse under the survivorship rules.
If there is a surviving spouse and children, the surviving spouse inherits the first £250,000 absolutely of assets held in the deceased’s sole name. The spouse is entitled to a life interest in the residue of the estate which passes to the children on the second death. The children inherit the other half of the estate immediately in equal proportions.
If there is no surviving spouse, the children inherit in equal share.
If there is no spouse and no children, there is further provision for grandparents, siblings, uncles and aunts in accordance with the rules.
Very importantly a surviving co-habiting partner who is not married or in a civil partnership with the deceased has no automatic right to inherit and this can cause severe problems and difficulties.
There is no provision to disallow estranged members of the family, or leave legacies to charities or close friends.
The message is clear – if you want to leave your assets to whom you want, a valid will is essential, or the above strict rules will apply.
Lasting Power of Attorney (LPA)
At the same time as making a will, an individual should also consider making an LPA.
An LPA is a legal document that allows you to appoint individuals you trust, known as attorneys, to make decisions on your behalf. Naming an attorney means that if you become ill or are involved in an accident and lose mental capacity, you know exactly who will be making decisions for you. An LPA can be set up when an individual is well and can either start immediately or take effect as capacity fails.
There are two types of LPA:
The Property and Financial Affairs LPA
This LPA allows your attorneys to make financial decisions; for example, paying your bills, dealing with your savings and investments, operating your bank accounts, collecting any income, benefits and pension due to you, maintaining your home and even buying and selling property.
The Health and Welfare LPA
This LPA allows your attorneys to make decisions concerning your health and wellbeing. It includes decisions about your medication and treatment and where you live. You also have the option of allowing your attorneys to make decisions regarding life-sustaining treatment. You do not have to have existing health problems to make an LPA.
Will review service
Tom Slator provides a Will review service and offers an initial free consultation. Calculations are made of the potential Inheritance Tax liability and suggestions made as to how any inheritance Tax liability may be reduced. The Will Review considers all aspects of the client’s personal and business life and how this should be reflected in their Will.
The first stage is to consider your Personal Asset Summary, which will include details of all the client’s assets and liabilities with valuations and notes regarding where they are located and who holds documents of title to the assets. The Net Worth figure (the difference between the total asset valuation and liabilities) will give you an idea of whether IHT will be payable on your estate when you die. If IHT is payable you should consider estate and inheritance tax planning.