Three reasons why you should make a Will:-
- To appoint an Executor. An Executor is the person responsible for arranging your funeral and dealing with your estate. If you do not appoint an Executor the law will state who can apply. There is a list set out in law of relatives who can apply to be your Executor. This may not be the same person as you would choose. You may wish to appoint a good friend, family member of a professional.
- To appoint Guardians for your children in the event that those with parental responsibility have died. Without this formal appointment there is no certainty for your children.
- To ensure that your wishes are carried out and to ensure that those who you wish to benefit receive your assets and personal belongings.
Other benefits of making a Will include appointing Guardians for your children in the event that should those with parental responsibility die (usually the father and mother of a child), you appoint someone whom you trust to be Guardian(s) of your children under the age of 18.
This is a very personal choice to all of us and without a Will there can be nothing formal or enforceable.
The Inheritance and Trustees’ Powers Act 2014 has brought about some changes to the law of Intestacy (where a person dies without having made a will).
If you die intestate leaving a spouse and children the statutory legacy will apply whereby the surviving spouse (which now includes same-sex married couples) receives the first £250,000 of your estate and the remainder is divided between your children and spouse (one half to your spouse absolutely and the other half divided between your children equally).
If you die intestate without a spouse, then the children will benefit on the statutory trust. Where a person dies intestate and there is no spouse or children then the order of entitlement is as follows:-
- Parents absolutely (and equally if both are alive), but if none, then to,
- Brothers and sisters of the whole blood (i.e. the children of the same parents as the deceased) on the statutory trusts, but if none, then to,
- Brothers and sisters of the half blood (i.e. those who share one parent with the deceased) on the statutory trusts, but if none, then to,
- Grandparents absolutely and equally if more than one, but if none, then to,
- Uncles and aunts of the whole blood (i.e. brothers and sisters of the whole blood of one of the parents of the deceased) on the statutory trusts, but if none, then to
- Uncles and aunts of the half blood (i.e. those with one parent in common with one of the parents of the deceased) on the statutory trusts if none, then to
- The Crown, Duchy of Lancaster or the Duke of Cornwall as “bona vacantia”.
The only way to ensure that your wishes are carried out is to make a will.
Appointing specific personal representatives to deal with specific situations such as where you have a business and you wish to provide for the continuation of that business.
There are many other benefits to making a Will including complex family or financial situations which are discussed further below (see asset protection and will trusts).
It is possible to provide for specific funeral arrangements which can be particularly important to some clients.
A Will can allow others to enjoy opportunities that you never had by passing on your estate to particular individuals whom you wish to benefit.
The Civil Partnership Act provides a legal registration for same-sex couples, which puts their relationship on a par with married couples.
From March 2014 it has been possible for same sex couples to enter into marriage. Civil partners therefore have the right to inherit if a partner dies without leaving a Will.
The Civil Partnership Act, however, does not apply to non same-sex cohabitees. Therefore, if you are cohabiting, the intestacy rules do not recognise cohabitees and without a Will your cohabitee will receive nothing. Your partner (cohabitee) will have to make a claim under the Inheritance (Provision for Family and Dependents) Act 1975 claiming financial dependence if appropriate.
Further if you had children with your cohabitee then they will automatically benefit under the intestacy rules and both your cohabitee and children would have to have separate legal representation.
This is expensive and obviously a situation that should be avoided. A simple will is all that is needed to ensure that your partner and your children are provided for.
If you would like further advice on any of these issues please do not hesitate to contact us
Transferable Nil Rate Band
In 2007, the government introduced the transferrable nil-rate band, which provides that the unused proportion of the first to die can be passed to the survivor. Therefore, on the second death a surviving spouse can leave £650,000 free of inheritance tax.
The new transferrable nil-rate band provides a simple way of saving on inheritance tax. However, those married couples who made nil rate band discretionary trust wills prior to 2007 should not rush to redraft them without first obtaining legal advice. There are many benefits to keeping such trusts within Wills. Such trusts can offer some solutions to complex family arrangements and some level of asset protection.
Residence Nil Rate Band
The new Residence Nil Rate Band (additional IHT threshold) was introduced in 2017 giving an additional £100,000.00 to married couples/civil partnerships in respect of deaths after 6th April 2017. By 2021 it will be possible to leave an estate owned by a married couple/civil partnership up to £1 million free of inheritance tax provided it is left to your lineal descendants. This is a very complicated piece of legislation which has left many legal professionals scratching their heads. As very often is the case, what on the one hand seems advantageous on the other hand there are many drawbacks.
The maximum available amount will go up yearly.
For deaths in the following tax years it will be:
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
For later years, the threshold will go up in line with inflation based on the Consumer Prices Index.
If you would like to know if your current Will and estate will be able to take advantage of this additional IHT threshold please contact email@example.com