Why Do You Need To Make A Will?
Making a will is arguably one of the most important things you can do for your family – without one, your assets will be distributed on your death as designated by the law (intestacy). It’s unlikely that this will reflect your wishes and can cause unnecessary distress and inheritance tax being payable unnecessarily. Intestacy, for example, does not confer any rights for cohabitees, step-children, friends or charities writes Suzanne Leggott of Shakespeare Martineau.
If I want to leave everything to one person, is a simple will enough?
Our advice to our clients is that a simple will is always better than no will, however, there are factors to consider before making even a simple will. For example, it’s important to consider the financial circumstances of the beneficiaries, as you could create an inheritance tax ‘headache’ for them if they have their own significant wealth, or the inheritance could adversely impact their entitlement to means-tested benefits. Consideration needs to be given as to whether they can manage the money themselves, if they are minors, or are not good with money or are mentally or physically incapable.
Beneficiaries’ circumstances can also change between the date you write your will and the date of your death. Would you want all the money to pass to your surviving spouse/civil partner and ultimately not be available to your children if your spouse remarries after your death, or needs long-term care? What age would you want any children to inherit? What happens if a beneficiary becomes bankrupt? What if they die or divorce?
Should I include a trust in my will?
If any of the above scenarios resonate with you, including a trust might be the answer. Trusts created in your will only come into existence on your death and can offer protection for your family. They can also provide inheritance tax saving opportunities. It’s important to get specialist advice about the type of trust that’s right for you and your circumstances.
Other things to consider in your will
• Tax mitigation – your will can be used as a tax planning tool if properly drafted.
• Guardians – if you have minor children, it’s important to appoint guardians.
• Executors – it’s important to select people you can trust, as they will be responsible for carrying out the terms of your will. You don’t have to use family members and an executor can also be a beneficiary. It’s advisable to have at least two executors and it’s important that they’re able to work together. If your will is complex it may be advisable to appoint a professional executor.
• Gifts to charity – you may wish to leave a sum of money to a chosen charity.
• Funeral wishes – you can leave detailed instructions or simple wishes about burial or cremation.
• Pets – you might want to make provision for your pets.
• Personal items – you might want to make specific wishes for gifts of jewellery, cars or other items.
Who can speak for me during my lifetime?
A will only speaks for you from death. An attorney, appointed under a lasting power of attorney (LPA), can act on your behalf during your lifetime. They can act on your behalf, even if you lack mental capacity,
and must act in your best interests. The power granted by an LPA ceases on death.
There are two types of LPAs – one for financial decisions and one for health and care decisions.
Your attorneys, under an LPA for financial decisions, can step in when needed to ensure your assets are protected and your bills paid. Your attorneys, under a LPA for health and care decisions, can only act if you lack capacity to make the relevant decision and you can authorise them to make decisions about life-sustaining treatment.
You should consider preparing LPAs at the same time as preparing your will – unfortunately, these are often considered at a later stage in life when it might be too late. If an LPA is not in place, an application will need to be made to the court of protection for a deputy to be appointed
if you lose mental capacity and financial decisions need to be made. This process is more complicated, and costly, and the ongoing responsibilities of a deputy are more onerous.
Estate and inheritance tax planning may be an uncomfortable thought, but it’s vital to ensure that your wishes are met on your death. Having a will and an LPA in place can make an already difficult time much easier for your family and friends.