What do Abraham Lincoln, Howard Hughes, Pablo Picasso and Jimi Hendrix all have in common? Apart from being famous they all died without making a will. However it’s not just the rich and famous who don’t get around to making a will. Recent surveys suggest that as many as 60% of people in the UK don’t have a will. This so called ‘will apathy’ is perhaps understandable as there are always lots of other seemingly more immediate things to do in our busy lives but in truth writing a will is one of the most important pieces of planning you may ever do for your family.
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 divide the estate in a particular way depending on whether there is a surviving spouse or civil partner and whether there are any children or other surviving relatives. In most cases this will not give the best outcome for your family. Unmarried couples are particularly vulnerable as a co-habitee has no automatic entitlement to their partner’s assets.
All of these problems can be avoided by having a valid, up to date will. A will is important at any stage of your adult life, not just in old age. 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. 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.
When making or reviewing a will it is also a good time to consider your Inheritance Tax (IHT) position. 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. The IHT threshold has been frozen since 6 April 2009 and is not due to be increased until 6 April 2015. As a result, without planning more estates are likely to become liable to IHT.
Making a new will and reviewing your IHT 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 IHT reliefs both your tax adviser and your solicitor should work together to get the best outcome for your family.
If you don’t currently have an up to date will or if you are concerned about your IHT position please get in touch with us for advice.
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