If you’re wondering why having a will is important, this informative guide will provide you with what you need to make the right choices for your loved ones, your personal and business interests and your wealth. We explore why you should write a will and talk you through our useful step-by-step guide on how to create a will.
Why should I write a will?
1. To provide financial security for your loved ones
You should write a will because it’s an effective way of ensuring your loved ones have been provided with financial security. The best way of ensuring that those closest to you will be taken care should anything happen. Writing a will also offers your family peace of mind when grieving, taking the extra pressure off them when going through a difficult time.
2. To specifying wishes for your funeral
As funeral planning is not a topic that is commonly discussed within a family, writing a will allows you to express your preferences and leave helpful instructions for those you leave behind. For example, if you have any special wishes you want to be carried out regarding your burial or cremation, then a will is the perfect place to clarify these things to ensure that they are seen through.
3. To choose your executors
What’s more, a will allows you to decide and make clear who will be responsible for organising your estate and making sure all your wishes are carried out. This person is called your ‘executor’, which can also be several people if you wish. The benefit of highlighting your executors in your will means you can be safe in the knowledge your wishes will be carried out by those you trust the most.
Executors are mainly responsible for the following:
- Arranging your funeral
- Arranging your finances
- Valuing your estate
- Paying inheritance tax
- Making sure any of your outstanding debts are paid
- Distributing your estate in accordance with the will you created
4. To avoid rules of intestacy
Another reason many people write a will is to avoid their estates being distributed following intestacy rules. The rules of intestacy are beyond your family’s control and can result in your loved ones not benefitting from your will in the way you hoped.
Intestacy law follows standard rules determining who inherits your estate and how much based on family connections and hierarchy. This means those who need financial support, or who you are closest with, will not be taken into account. This can result in disputes, stress and significant expenses for family members as they may deem the outcome as unfair and wish to challenge the arrangements in court. For example, under intestacy rules, a long-term partner would not receive a share of the estate. As a result, the unmarried partner would have to issue an application to the court to be given a share of the estate.
The intestacy law hierarchy is as follows:
- Spouse
- Children
- Grandchildren
- Parents
- Brothers and sisters
- Grandparents
- Aunties and uncles
To find out more about the many reasons to make a will, please watch our podcast below.
Transcript: “If [a couple is] married, they need to consider if they will make reasonable financial provision for their spouse. They also need to consider the particular interests or the particular requirements of children. One child might, for example, have a medical condition that requires maybe a little more money for them to be looked after.
Start with what I call a ‘fact-find’, which isn’t just necessarily about what you want to do with your money, but what is your money, and how is your money made up? Have you got a business? Have you got a farm? All these things which complicate matters.
Interviewer: That sounds very similar to financial planning.
You do the same sort of fact-find, in a lot of ways, as a financial planner would do, because you need to have an indication of the value of an estate to be able to advise on the potential for inheritance tax and you need to know what types of assets you have because some of them might be subject to inheritance tax and others might be inheritance tax-free, such as farms and business interests.
The wills that we do would be on a fixed fee, although if it is complicated, i.e. by having foreign assets or by having several businesses, then we’d probably do it on a time basis. My time is charged out at £200 per hour (plus VAT).
I could give you an example of one I’ve advised on recently. A gentleman who had two assets – a house worth £250,000 and £25,000 in a building society account –left his house and his will to his sister, and his building society account (or the rest of what he had) to his grandchildren. Clearly, at that stage, his sister was the major beneficiary of the estate. He went into a nursing home, the property was sold and that fell into the pot that the grandchildren inherited, because the solicitors hadn’t asked the question as to, if your house is sold before you die, do you want your sister to get the sale proceeds? And clearly in his mind, at that stage when he made his will, he wanted his sister to be his major beneficiary and she ended up not being his major beneficiary.”
Why is having a will important?
There are many reasons why having a will is important.
1. Protection of your estate
Firstly, if you die without a will, you cannot ensure your estate’s protection. Creating a trust in your will enables your intentions to be successfully carried out and can even protect your property, so your children inherit it. If you wish for a minor to be a recipient of your inheritance, a trust can guarantee that the young person is sufficiently looked after without being in control of the inheritance before they turn 18.
2. Inheritance Tax
What’s more, having a will is important because it can help you reduce inheritance tax. If your estate is below £325,000 then inheritance tax will not be paid on your estate. However, if your estate is over this threshold, then the standard inheritance tax rate is 40%. Also, assets you wish to pass to your spouse or civil partner are not subject to inheritance tax. And if you wish for your children, stepchildren or grandchildren to inherit your home, then the tax threshold rises to £475,000.
To find out more details on why having a will is important, listen to our podcast below with Beverley FM where we discuss the importance of having a will.
How do I create a will?
Depending on how complex your assets are and how much assistance you need, you can create a will yourself. However, we always recommend seeking professional advice from a solicitor, especially if it’s your first experience creating a will or if any of the following applies to you:
- Your estate will have to pay inheritance tax
- Your family’s dynamics are complex (e.g. you have an ex-spouse or children from a previous partner)
- You have a vulnerable family member who is a minor or has special needs
Below, we’ve created a breakdown on how to create a will, so you’re more familiar with what the process entails.
Step 1: Assess the value of your estate
Many different types of assets can make up your estate from your home and savings in the bank to investment stocks and shares. It’s important to consider all of your assets to get an idea of how much your estate is worth.
As stated in our video below, deciphering an estate’s value is also important because you need to be aware of the potential for inheritance tax. This is because some of your assets might be subject to inheritance tax whilst others might be tax-free (e.g. farms and business interests).
Step 2: Decide who you wish to benefit from your estate
Once you know your estate’s value, you need to consider how you would like your estate to be divided and whether you wish for specific assets to go to particular people.
Step 3: Carefully choose your executors
Choosing your executors is not something that should be taken lightly as it entails a lot of work and responsibility. You can select more than one executor, and they don’t have to necessarily be a family member or a friend as solicitors can also take on this role. However, it’s worth noting that if you do choose a professional executor, then a service fee will be required that will come out of your estate.
Step 4: Write your will
There are many ways to write a will, from writing it yourself, hiring a will writer or getting advice from a lawyer specialising in wills, trusts and probate. Either way, the following must be carried out:
- Ensure your will’s content is specific (e.g. state clearly people’s names rather than simply writing ‘my daughter’ or ‘my wife’)
- Destroy any old wills to ensure any previous wishes don’t override your new ones
- Meticulously check spelling, especially people’s names
To highlight just how important specific details are in a will, here is an example of a gentleman we advised recently:
The gentleman had two assets, one being his house worth £250,000 and the other being £25,000 in his building society account. In the gentleman’s will, he clarified that he wished to leave his house to his sister and his building society account money to his grandchildren. This meant that his sister was the major beneficiary of his estate.
After writing his will, the gentleman went into a nursing home, and his sister sold the property. Unfortunately, because his solicitors hadn’t clarified what should happen with the sale proceeds if the house is sold before he passes away, the money from the house went into the grandchildren’s inheritance pot instead. Therefore, although the gentleman intended for his sister to be his major beneficiary, the sister was not made his major beneficiary due to this missing detail.
To avoid the description of your assets or property being too vague, we recommend reaching out to our experienced solicitors to prevent the risk of leaving your family with problems and financial stress.
Step 5: Sign your will
To ensure your will is valid and to prevent fraud, it’s important to have two witnesses present when signing your will.
Step 6: Safely store your will
You can select the following locations to store your will safely:
- A solicitor
- A bank
- At home
You must inform your executor where the will is stored, so they know where to find the document. Also, possessing a photocopy provides you with a back-up in case the original is lost or destroyed.
Here at Newtons Solicitors, our wills, probate and trusts team are on hand to help you make sure everything is to provide you with some peace of mind. For advice on wills, trusts and probate, please don’t hesitate to contact us. Our experienced team of solicitors are committed to making the legal process as stress-free as possible for you by providing advice with the utmost sensitivity and care.