A well-ordered estate is one of the most helpful gifts you can leave loved ones on your death, and a Will is the place to start. Yet frequent research suggests that one in three of the population has not made a Will.
Here, Olivia Meekin explains why a Will is a vitally important document and what happens when one is absent.
Put simply, a Will is a legal document that sets out how you would like your assets to be distributed after your death. For those with limited assets or little by way of immediate family, it might be a relatively simple document. For those with accumulated wealth, owning or having shares in a business, with children or with families from more than one marriage a Will becomes essential.
It is often wrongly assumed that a spouse or civil partner will inherit everything on death in the absence of a Will, but that may not be the case where there are other surviving close relatives.
Cohabiting partners, sometimes called common law husband or wife, may receive nothing irrespective of the length of the relationship should a partner die without a Will.
A Will provides the executors of your estate with clear directions on how your estate will be distributed and who will benefit. Without a Will, the State will make those decisions for you through what is called the intestacy rules.
Guardians for children
The importance of a Will for those with children cannot be underestimated. It allows the parents of children to appoint their preferred guardians should both parents die when they are still young. Where a Will is absent, the State will make those decisions for you, and whilst they will always look to act in the best interests of the children that may not always be aligned with the wishes of parents.
Financial provision for children
Where a Will does not exist, the intestacy rules will make a provision for children to receive a share of your estate aged 18. Children from earlier marriages may find themselves inheriting very little or nothing at all under the intestacy rules as it is the current spouse who will inherit all or most of your estate.
Additionally, a Will provides you with greater flexibility on when children can receive an inheritance, perhaps deferring the age at which they receive assets or cash, holding any assets in trust, and providing for children from earlier marriages.
Minimise inheritance tax
Few people realise that a Will is a useful way to reduce exposure to inheritance tax (IHT). IHT is paid on all estates over £325,000 at a rate of 40%. Making gifts may reduce exposure to IHT.
Further IHT savings can be made via a Will for married couples and civil partners, with IHT thresholds increased by a further £175,000 each via the Residence Nil Rate Band. As the name suggests, it applies to property meaning that in many circumstances property can be transferred without paying IHT.
Plans for your business
Business owners need to carefully consider their Will alongside the company’s articles of association. A Will may be able to transfer business interests to family members, make a provision for the continued operation of the business, sell their shares to other directors as well as ensuring any co-directors or employees have the authority to make business-critical decisions. Alongside a Will, business owners may wish to consider business continuity plans and a business Lasting Power of Attorney.
Reviewing a Will
A Will should not be considered a static document and regularly be reviewed. We would recommend a Will be reviewed every three to five years, or when personal circumstances change. Getting married, divorced, the arrival of children, receiving an inheritance or the sale of a business are examples of life events that should remind you to review your Will.
Contact our Private Client Solicitors
If you are in need of advice or assistance on any of the legal issues mentioned in this article please contact any member of our experienced Private Client team Nicholas Barlow, Olivia Meekin, or Helen Langworthy on 020 7631 4141 or email firstname.lastname@example.org
The above is accurate as at 27 October 2023. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.