Making a will: what you need to know
Writing your will won’t be the most uplifting moment in your life, but it’s vital in securing your family's financial future.
The point of a will is to decide how you want to distribute your finances, assets, estate and any personal possessions if anything were to happen to you. Too often you hear about families fighting over an inheritance and who gets what after a family member passes away. Without a will it’s impossible to ensure that your assets and finances are divided as you wish.
Last month a story appeared in the media regarding manufacturing tycoon John Barry Wild. In an effort to avoid inheritance tax, Wild poured his wealth into a trust fund rather than a will. What eventuated after Wild’s death was a bitter family battle as to who was entitled to what share of his fortune.
Without a will, his assets were largely left in the hands of the board of trustees. It was up to them to distribute payments rather than through the legal system via a will.
Wild’s idea was based on the notion that by having your assets placed into a trust for the use of future beneficiaries, the inheritance tax can be largely, or even totally, removed. To give you an idea of how much can be saved by using a trust instead of a will, an £800,000 estate for a married couple may be taxed up to £60,000.
However, if you’re married, the inheritance tax may be mitigated anyway.
Granted, Wild’s case is an extreme one. But it’s highly possible that, had they had a will, the family may have avoided fights over the distribution of his wealth.
That said, a will covers many more aspects of a person’s life than just their wealth.
The guardianship of a person’s children is a huge factor to be considered. If the children involved classify as minors and they are left without a nominated guardian, there’s a possibility they’ll be taken into care by the local authority. In this case, if there’s a dispute between family members regarding the custody of the children, social services are then given the responsibility of selecting who gets guardianship.
As for personal belongings, if you haven’t included instructions as to who you would like to receive them, then they will be regarded as residue of the estate. Essentially, this means that your prized possessions, including any family heirlooms, may not be passed down to the person you wished.
It’s important to consider how your direct family will be affected if you don’t have a will. Without one, your spouse may not assume total control over your estate if something happens to you. If you have children, your spouse is limited to £250,000 of your will, and if you have no children, that number rises to £450,000. But this only applies to married couples. If you have a partner but are unmarried, then they’re not entitled to receive anything without a will in place. It’s better to be prepared just in case something does happen.
In life, you look forward to the major milestones – buying a house, getting married and having children. These huge life changes bring a new level of responsibility into your life, and part of this responsibility entails providing protection and security for them. A will ensures that the most important parts of your life (spouse, children and finances) are looked after and/or left in safe hands if anything were to happen to you. While a lot of people assume a will is for elderly people, the sad fact is that death can occur at any time. These binding legal documents can help to avoid any potential problems or family disputes (like Wild faced).
If you currently find yourself in the position of having experiences any of these milestones, then you should ensure you have an up-to-date will written. It’s simple and once it’s done it only has to be updated if you choose for it to be (for example, if you receive a large inheritance or you end up getting divorced).
So, now you know why you need to make a will and what needs to be included in it, it’s time to have one written. You can find more information about making a will here.