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Why should I make a will: Common myths debunked
There are many common myths and misunderstandings when it comes to making a will, here are a few of them.
Everything will go to my spouse/civil partner
If you have no will, then who inherits relies on a set of rules known as the ‘Intestacy Rules’. Depending on any other relatives you have, it could be that your spouse is not entitled to all your estate under these strict rules.
I have a common-law spouse who will inherit
There is no such thing as a ‘common-law spouse’ it simply does not exist. If you die without a will, unmarried partners are not legally recognised, and they will not be entitled to anything in your estate.
My will is watertight and cannot be challenged
All wills are able to be challenged, or a claim can be brought against your estate in certain circumstances. It is still vital to make sure you make a will, so you make provision for the people you want to benefit, and it’s correctly signed and witnessed. This will potentially prevent challenges and disagreements, but there is no such thing as an unchallengeable will.
My family knows who I want to deal with my estate
Unless you appoint executors in your will, only the people who benefit under the Intestacy Rules are entitled to administer your estate. Making a will enables you to choose who will deal with your affairs, when you are gone.
My family knows who I want to look after my children
Again, unless you appoint guardians to care for your children in your will, without an order of the court, there is no legal mechanism for a person you favour to be recognised. Appointing them in your will avoids the need to make a court application which will incur delay, stress and costs.
If I don’t make a will I won’t pay Inheritance Tax
All estates are subject to the tax regime, but this doesn’t mean all estates pay tax. Only a small number do but making a will can enable you to efficiently manage your affairs to potentially reduce your IHT burden.
5 things to consider when making your will
1. Know exactly what you have
Many people are not fully aware of the extent of their assets or understand what forms part of their estate. For example, assets owned jointly will usually pass to the surviving owner, and some assets such as pensions and life policies will not usually form part of your estate. It’s important to understand exactly what you’re dealing with, so if you are unsure, contact the companies where you hold assets, and find out.
2. Be clear
It is important your will is clear in terms of what you’re gifting, and who you’re gifting to. For example, ‘I give my painting’ is problematic if you have more than one painting, or ‘I give £10,000 to my friends’ as friends is not something that can be defined. This can lead to disputes and unnecessary legal costs. Your will needs to make sense to you, but also to your executors, so make sure what you include is clear.
3. Digital Assets
Consider your digital assets, such as cryptocurrencies, social media accounts, or online businesses, and how these can be dealt with in your will (if at all). Understand what digital assets you own and have control over, and those that won’t form part of your estate, and how you can deal with them. Cryptocurrency and other digital assets involve particular complexity from both a legal and regulatory perspective. Specialist advice is strongly recommended before including these in your estate planning.
4. Know when to get help
No will is watertight (despite what people may say), and all wills and estates can be subject to a challenge or claim. A badly written will creates a world of pain and confusion for your family, so before you choose which service you think is best (whether that be DIY, online or solicitor drafted) understand what you might need to include, and your situation. If there is any complication, be confident the service you choose can deal with it and provide you with the advice and guidance you need.
5. And… Don’t forget to review and update
A will is not a once and done job! You should review your will if there’s a change in your financial or personal circumstances e.g. a marriage, if not there could be serious unintended consequences. Keep a copy of your will available to you, and review it every couple of years, or, if there is a life changing event. If it is no longer suitable, then it may be necessary to make a new will.
Coordinating your Will with your overall estate plan
It is important not to just think of your will in isolation, as it is part of your wider estate plan. When making your will you should factor in the following.
Your financial situation
A financial health check to review your income, savings and investments. This might be a good time to alter your portfolio to maximise any reliefs, or to consider ways to increase your income for example.
Taking Inheritance Tax planning guidance
There are many myths around inheritance tax, so to make sure you have all the information you need before you make any decisions, seek help from an appropriately qualified tax advisor. They can assess your assets and help you understand your potential IHT liability and provide you with guidance on how you can reduce it. This may also be important when drafting your will, as there may need to be provisions included to give effect to any guidance you receive.
Your family and personal circumstances
If special provision is needed for someone in the will, it’s important to discuss this and consider all the options available, when incorporating this into your will. It could be that a special type of trust is needed, or particular provision is made for an individual and not others. It may be that you are not making provision for someone in your will, and again, being clear as to why is very important (although do not include this in your will, write a letter of wishes and set out your reasons!).
Lifetime gifting
It might be prudent for you to consider gifting sums of money or assets in your lifetime to take advantage of exemptions or reliefs. Make sure you take advice, so you understand the options available to you, and there are no nasty surprises. And don’t forget, once something has been gifted, you no longer own it.
Charitable gifting
Many people chose to give to charity(s) in their estate for many reasons, including the potential IHT savings that can be made. You could make a legacy of cash or an item or leave them a share of residue. You may want to communicate this with the charity in advance so they can factor this into their financial planning, but there is no requirement to. IHT planning is complex and the rules change regularly. Any planning should be undertaken with up-to-date professional advice tailored to your individual circumstances.”
Letter of wishes
This is a separate document to your will, and is not binding, but gives you the opportunity to provide your executors with information you think is relevant. So, it could include a list of your assets, who to contact, specific funeral wishes, or how you would like your children to be educated. It is your opportunity to explain why you have done / not done what you have in your will.
Power of attorney
If you have not made powers of attorney, then doing them at the same time you make your will is an opportune moment. Powers of attorney enable you to appoint people who will manage your finances in the event you are no longer able to do so yourself, or if you need help. You can also make a power of attorney which specifically covers your health and welfare, so you know you will be looked after if you cannot make decisions yourself. Powers of attorney end on death, and then your will takes over.
Please note:
Guest articles are provided for general information only and do not constitute financial advice. Any third-party services mentioned are separate from Flying Colours and may not be regulated by the Financial Conduct Authority.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or Will writing.
James Buchan
James has worked for Which? for over 7 years, and is the Estate Planning & Compliance manager, working across the Wills, Legal and Moneyhelpline teams. James is a member of the Society of Trust and Estate Practitioners (STEP), and before joining Which? James worked in the banking sector as a specialist trust and taxation solicitor. James has also worked for national and regional law firms. When not working, James is a keen runner and has completed several marathons.
Which? is a consumer organisation; their solicitor service connects clients with regulated legal professionals.