Wills – Why Are They So Important And Why Do I Need One?
You might not need a Will to live, but you do need a Will when you stop.
In a recent survey conducted by the Money and Pensions Services (MaPS), 56% of adults in the UK do not have a Will In daily practice, I see three very common misconceptions from people about the need to prepare a Will, and in most cases, they are completely incorrect.
On an almost weekly basis, I see the following two points raised: -
1) They do not need a Will because they do not have anything.
Not everyone has a Rolls Royce, and many people do not own their own home. In the current financial climate, people are more conscious than ever about what they leave behind after death and for many people, money is not something they have.
However, money, property and material goods are not the only things to be considered when preparing a Will. I frequently meet with individuals who are open and honest about their circumstances, citing the above as reasons not to prepare a Will; but what I often find is that these people often have something invaluable that is often overlooked – their children and their pets.
Children
Whilst children cannot be “disposed” of in the same sense as a house or vehicle, it is important that the ongoing care and welfare of your child is considered and noted in your Will.
The most obvious example is who would care for your child following death? In your Will, you can stipulate who guardianship is to pass to if your child is still a minor at your death. Your Will can also be supported by a Letter of Wishes, stipulating things that you would like to happen as your child grows up – this could include such things as
In addition to guardianship, it is important to plan your finances to ensure that your child’s welfare and development is supported for as long as it is required. Legal instruments, such as discretionary trusts can be included to ensure that your child is protected even after attaining the age of 18; this would be appropriate for children or young adults with complex needs
Pets
Many people, like me, are devoted to their “fur babies”. But what will happen to them when I am no longer here? As with children, you can stipulate who will care for them after death. Some people may request that they are passed to the care of recognised charitable organisations or even family and friends.
Whatever you choose, it is extremely important that the care and maintenance of your pets is carefully considered and planned for. Whilst we all hope that family may just adopt the role of carer, in a lot of cases this is not always practicable and can often lead to pets being assumed by a person or environment that they are not accustomed or appropriate for.
Additionally, you may wish to include a monetary gift to the intended carer for the ongoing care and maintenance of your pet. In the absence of a Will, this would not naturally occur and would require the consent and approval of those benefiting from your estate under the intestacy rules – something that cannot be guaranteed.
2) They do not need a Will because everything will go to their children.
In some cases, this is correct. In the absence of a Will, the intestacy rules will come into effect and these will determine who is entitled to your estate and who is entitled to administer your estate. Your administrator will need to obtain Letters of Administration, opposed to a Grant of Probate. This might seem straightforward, but it can become complicated very quickly.
If you have a spouse, your estate will go to them in the first instance; however, caution should be exercised as only the first £322,000 of your estate will go to them. If you have children, they will receive 50% of the remainder estate, and your spouse will receive the other 50%. This creates complications where estates exceed £322,000- specifically where a property is in the sole name of the deceased spouse. It could lead to the marital home being sold to satisfy the other interested parties.
An application for Letters of Administration takes a lot longer than a Grant of Probate application. Again, this can create complications where access to funds is needed. For example, if the first spouse dies leaving several bank accounts in their sole name, the surviving spouse cannot simply withdraw those funds if the balance of the account exceeds that particular bank threshold (i.e. the amount for which they will request Letters of Administration). This can lead to the surviving spouse finding themselves in a precarious financial position until Letters of Administration are obtained.
I often see individuals who have separated from their spouses but remain married; in some cases, this can be a long time ago. When considering the intestacy rules, it is irrelevant that you have separated if you have not divorced, and your spouse will still inherit your estate subject to the above. If you have a new partner, or other intended beneficiaries, the onus would be on them to bring a claim against your estate (if able) and this can prove costly – in both time and money.
If you do not have a spouse or children, there is a risk that distant relatives (who you do not even know!) will inherit from your estate. I commonly see such cases, where I must instruct tracing agents to locate potential beneficiaries to the estate. This can be expensive and time consuming.
In some cases, located individuals have resided overseas. It may also lead to people benefiting that you do not want to i.e. if there has been a breakdown in relations. A will ensures that only the persons specified will receive your estate and prevents any adverse costs or delays to the administration.
Preparing a Will should hopefully prevent any dispute over your estate and allows control over who is going to inherit. As we have seen, the intestacy rules do not make provision for partners or even stepchildren. I often encounter individuals that have been together for decades yet never married. In other cases, I have seen individuals with stepchildren who they treat as their own biological child. The consequence is that neither of these people will not be left with anything from your estate, unless a Will is prepared to provide for them.
A Will also provides appropriate tax advantages, specifically inheritance tax. The solicitor preparing your Will should discuss the extent of your estate and advise on how a Will can be tailored to maximise the available tax reliefs. For instance, an estate passing entirely to the surviving spouse will mean that it is fully exempt from inheritance tax (“spouse exemption”). If the estate then passed to lineal descendants, such as children or grandchildren, the residential nil-rate band would be captured on relevant property providing additional tax relief.
Finally, a Will can be drafted to protect certain beneficiaries. This may include beneficiaries with disabilities or housing needs. There are a range of things that can be done, including discretionary trusts or rights of occupation, which can only be done by virtue of a Will. It is extremely important that this is considered, especially if you have any vulnerable individuals that you intend to benefit from your estate.
3) It is too expensive to do a Will with a solicitor, I will just do one myself
In the current financial climate, it is appreciated that a Will is likely at the bottom of your priorities; however, it shouldn’t be. As we have seen above, it is extremely important that you prepare a Will and here at Clough & Willis we provide transparent fixed-fee services to ensure your needs are met.
Not preparing a Will can lead to several financial complications that can easily be avoided – this could be paying more in inheritance tax, paying legal costs from your estate in the event of any challenges or even instructing tracing agents to locate potential beneficiaries/administrators. The list is not exhaustive.
A Will allows peace of mind to your loved ones and makes things a lot easier for them in an already difficult period.
If you would like advice on any of the above, please contact us on 0800 083 0815 where a member of the Private Client Team can provide you with a free initial consultation to discuss any of your concerns.
