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The New Year is always a good time to take stock and set out plans for the future. One of the most important pieces of planning you may ever do for your family is write a will.
Wills are not just something for people with an Inheritance Tax problem, they are for everyone. A will allows you to set out how your assets will be left after your death and appoints executors to make sure your wishes are carried out. If you don’t have a will and die intestate then effectively you have a will dictated to you by the State. These intestacy rules will not necessarily give the best outcome for your family. Unmarried couples are particularly vulnerable here as under the current rules a co-habitee has no automatic entitlement to their partner’s assets. They may potentially have a legal claim on the deceased’s estate, but leaving your loved one in this uncertain position is hardly ideal.
Having a valid, up to date will, is important at any stage of your adult life, not just in old age. Younger people, especially those with children, should make sure they have a sensible will in place. Considering the scenario of your child losing a parent is not a pleasant task but sadly we do see it happen. Unfortunately accidents do happen, and we see families having to struggle not just with bereavement but also with the long term consequences of poor outcomes from intestacy.
A will should be an evolving document; it is meant to ‘walk with you’ through your life. This means that it should be reviewed regularly and kept up to date. A well drafted will can be flexible to cover eventualities such as the birth of a new grandchild, but you should never assume that a will which is 10 or even 20 years old is going to do the job you want – it may even make things worse! Over time your family and personal circumstances change and the assets you want to leave will evolve. Certain events such as marriage or divorce can also affect the validity of some or all of your will and should trigger a review.
Inheritance Tax can be an issue for a single person with assets of over £325,000 and for a married couple with assets over £650,000. Over these limits tax is generally payable on death at a rate of 40%. There are reliefs available for agricultural and business property but in many cases these are not straightforward. A well drafted will is an important document in estate planning. Inheritance Tax legislation is also subject to change and any wills need to be reviewed on these occasions. The introduction of the transferrable nil rate band for married couples in recent years caused many people to look again at their wills and consider if they wanted to take advantage of these provisions or not.
Dealing with a new will and your Inheritance Tax concerns is a two pronged approach. In all cases we would always recommend that the actual will is drawn up by a solicitor, but for estate planning, trusts and the consideration of the likely Inheritance Tax reliefs both your tax adviser and your solicitor should work together get the best outcome for your family.
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