WHERE THERE'S A WILL
Your Will - why now is the right time to think it through
‘Finding the Will’, a report published in
2007 by the National Consumer Council,
found that a staggering four out of five
households with dependant children have
not made wills. The importance of making
a will and keeping it up-to-date cannot be
stressed highly enough.
Here are just a few reasons why:
- You can choose suitable guardians to look after
your children who are under 18, should
something happen to you.
- Dying intestate (without making a will) can create
huge problems for families:
If you die intestate and your estate is worth less
than £250,000, your spouse/civil partner will
inherit everything. If they are not the parent of
your children, for example, if you have young
children from a previous marriage or step-children
who you continue to take responsibility for, you
cannot guarantee that they will be provided for.
Your children may then have to go through the
painful experience of making a claim against
your estate.
If you die intestate and are not married or in a civil
partnership, your partner will not receive anything,
unless they successfully make a Court claim.
- Marriage/civil partnership revokes any will you
made previously unless it was made specifically in
contemplation of the marriage/civil partnership to
your spouse/civil partner and states this in the will.
- Divorce/civil partnership dissolution (but not
separation) will revoke any benefit in favour of
your former spouse/civil partner and the
appointment of them as executor.
A well-drafted will can make the most of your assets,
dividing them in a tax efficient way. Inheritance tax
is no longer limited to the super-rich; the current
threshold or ‘nil rate band’ of £325,000 per individual’s
assets, which means that subject to certain exceptions
tax is payable at 40% on anything above that.
Here are several ways that you can use a will
to your tax advantage:
- Spousal/civil partner exemption
Gifts made between spouses or civil partners are
usually free from inheritance tax. The simplest way
to avoid paying any Inheritance Tax may be to leave
all of your estate to your spouse or civil partner.
For deaths after 9 October 2007, it is possible
to make use of any surplus nil rate band from
the estate of the first spouse/civil partner to die
on the secondary spouse’s/civil partner’s death.
Instead of transferring assets up to the value of
the available nil rate band, it is possible to leave
money to a will trust. This could be a particularly
useful vehicle if you have young children or
elderly relatives who you wish to help in a flexible
way. These forms of trust are useful for providing
a fund that can be used for their benefit without
them having rights to the fund.
You can also make lifetime settlements into which
you can make gifts during your life or, by your
will, on your death. By transferring assets into
such trusts, you can reduce the value of your
estate for inheritance tax purposes and achieve
other tax savings.
Now is a particularly good time to consider making
a gift to a settlement especially if you are thinking
of gifting an asset which may have fallen in value.
By making such a gift, you may not only achieve
Inheritance Tax savings, but you may also achieve
a capital loss which you can use personally against
future capital gains to save you tax in the future.
If you haven’t made a will, don’t delay any longer.
Preparing a will is a straight-forward process and will
give you peace of mind knowing that your family is
well-provided for should something happen to you.
Drafting a will does not have to be a drawn-out and
complicated procedure.
If you have already made a will, be sure to update it
regularly. As your circumstances change, so should
your will.
Gaynor Jackson, Partner,
Campbell Hooper Solicitors LLP