For many, making a Will is something to be considered much later in life. The assumption that we are not old enough, own nothing of significant value or the simple belief that our loved ones will inherit our assets, are just some of the reasons why so many people in the UK don’t yet have a Will.
Why is it important to make a Will?
If a person dies without a valid Will, then his or her estate (monetary assets, personal belongings and property) is shared in accordance with the rules of intestacy.
The rules of intestacy are specific, and assets can only be distributed between family members. With the number of couples cohabiting increasing to over 3.4 million in 2019 according to Office of National Statistics, many wrongly assume their partners would inherit their assets in the event of death.
Currently, the law stipulates that if you are married but do not have a Will, your spouse will receive all of your assets if you do not have any children. If you do have children, this is not necessarily the case and whether or not your spouse will inherit your entire estate will depend on its value. If unmarried, only blood or adopted relatives will be legally entitled to your estate e.g. children, parents, grandparents, niece or nephews, cousins etc. If you do have a Will, it’s important to make sure it deals with all of your estate otherwise some assets could still pass under the intestacy rules.
Know where your investments and savings are
Knowing where your investments are and leaving a record of these can help relieve some of the unnecessary stress your loved ones may experience when reviewing and administering your estate. This includes providing details of your bank accounts, stock and shares certificates, savings accounts, foreign assets, pension information and any other investments you may have.
It’s also important to leave details of any social media accounts that are going to be left behind. Today, our estate can also include the digital legacy we leave behind, and many solicitors are now experiencing an increase in families squabbling over ownership of blogs, pictures, websites and social media profiles. Many silver-surfers have given little thought about who should have custody over these digital assets, unintentionally causing complications.
Seeking legal advice to minimise potential disruption
Many people are attracted to the idea of making a ‘DIY’ Will as they expect it to be more cost efficient than using a solicitor. However, this can cause unnecessary risks as poorly drafted Wills can often be subject to prolonged probate ordeals, legal bills and excessive tax, and other general mistakes that could render the document invalid, which again can cause additional stress for your family.
The cost of legal advice is very dependent on the complexity of the Will. For example, a ‘simple Will’ could incur fees of around £250, whereas drafting a ‘specialist Will’ would normally start at minimum of £500. A solicitor would help summarise the individual’s finances and investments and ensure that the most effective choices are being made.
Naming beneficiaries to inherit your assets
Often, the beneficiaries of a Will are usually family members or close friends, but it can also include charitable organisations and institutions. Choosing who will inherit your assets may seem like a simple task, but it can be a lot more complicated than initially anticipated. Here are a few things to consider:
Do you have more than one beneficiary?
When leaving your estate to multiple beneficiaries you need to decide how to distribute your assets – again, it is recommended that you seek legal advice. They could be distributed equally; unequally; or you can specify that your assets should be sold, and any profits shared among recipients; or distribute a portion of the estate between family members with the remainder given to charities.
What happens if your beneficiary dies before you?
You should name a second recipient to receive your assets just in case your primary beneficiary dies before you; or, if they choose not to accept their inheritance.
Have you updated your Will recently?
Research from financial advice service Unbiased.co.uk shows that 15% of people have not updated their Wills over a period of ten years or more. This is worrying given that relationships between individuals and their beneficiaries can change meaning that assets may be given to those the deceased did not intend at the time of their death. It is essential to ensure your Will reflects your current circumstance and your beneficiaries are those you intend to give your assets to.
Can those under the age of 18 be a beneficiary?
Minors under the age of 18 can be beneficiaries within your Will, but often monetary assets will be put in a trust and then given out in a lump sum when they become of age. Usually, you would nominate trustees to look after the money and oversee accounts. This is similar if a minor inherits property as the trustees would manage it until the child can assume control. If you think a trust should be part of your Will, separate planning and legal advice should be taken.
What’s the difference between an executer and beneficiary?
A beneficiary is an individual who receives assets of your Will, whereas the executer is the individual who administers your estate in the event of your death. The executor’s job shouldn’t be taken lightly as there are many tasks involved including:
- communicating with all parties involved in the estate;
- applying to the Probate Registry for a Grant of Probate;
- calculating the value of all the deceased’s assets;
- settling debts;
- distributing the estate to beneficiaries as well as selling any property and transferring investments.
Managing and paying off debts
If you’re in debt when you die, any monies owed become liable on your estate. This means that any assets you currently own will be used to pay off debts. The named executors of your Will, or administrators if no Will is written, will assume this responsibility, ensuring that everything is payed before the beneficiaries receive their share. Sorting out your finances prior to death will help simplify this process, while ensuring your intended recipients will still benefit.
A common myth is that if your estate does not cover the cost of your debts, your surviving relatives will have to settle these – this is not true. Dealing with an insolvent estate can be very difficult and no one should undertake this without specialist advice because if the debts are paid off in the wrong order the executor can become liable for these. Provided it is dealt with correctly any remaining debts should be written off. However, if you have co-signed loan or someone has acted as your guarantor, this person would be liable to pay the outstanding debt.
The only way to ensure your savings and investments are passed on to your loved ones is by writing a Will. Seeking expert legal advice will help you make the most effective choices throughout the process and ensure your final wishes are upheld.
Christine Thornley is head of Wills, Trusts and Probate at Gorvins Solicitors
Further reading: Talk about wealth and make a will before it’s too late
This article first appeared on Tax Guide’s sister website What Investment