Where There's a Will Inverness
Where There's a Will
Making a will is important for everybody, yet millions of people in the UK die without ever drafting one. In fact, the Society of Independent Financial Advisers estimates the figure to be as high as 76 per cent.
Dying without a will, or ‘intestate’ in legal terminology, means that your estate will pass according to the rules of intestacy. This will not necessarily be as you intended and is certainly not in the most tax-efficient way of passing on your assets, as it could mean that tax-saving opportunities, such as the benefit of the nil-rate band, may be lost.
The perils of intestacy
Andy Kirby, senior tax and trust manager at law firm Moore Blatch , points out, ‘The importance of a will is not just to make sure that the people you want to receive your assets do so. Equally important is ensuring those that you don’t want to receive your assets don’t.’
It is not the case, as commonly thought, that if a person dies without a will the entire estate will automatically go to their spouse. The reality is that by dying intestate you run the risk of the majority of your personal wealth going to the state.
For example, if you die leaving family members who are financially dependent upon you (such as a spouse or children), the law stipulates who will inherit your estate.
So, the surviving spouse is entitled to £125,000 of the estate free from inheritance tax and a life interest in half the remainder of the estate. The children take the other half of the remainder of the estate and the capital comprising the spouse’s life interest fund when the spouse dies.
However, if you die leaving no dependents at all, the government gets everything – probably not what you want to happen.
Unmarried couples are most at risk of losing property, personal possessions and cash if their partner dies without leaving a will, as current inheritance laws do little to protect new family structures.
Reviewing your options
‘The right time to make a will is as soon as you have assets to dispose of or individuals you want to provide for,’ explains Kirby. ‘There will be certain trigger events that will always mean that you need to consider your will position, such as co-habitation, marriage, divorce, birth of children and grandchildren, or a significant change in your wealth base.’
According to the National Consumer Council , four out of five parents who have not yet made a will are gambling with their children’s future. Should both parents die unexpectedly, the courts may be left to decide who should look after their children.
‘It is important to have a will, even if you feel that you don’t have substantial assets, simply because it will outline the legal guardianship of your children if something happens to both parents,’ advises Julia Whittle, principle at Punter Southall Financial Management.
And, of course, an added benefit to drafting a will is to avoid inheritance tax (IHT). For many this can be a daunting prospect if you don’t know where to start but it needn...
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