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Guide to Making A Will
What does a Will do?
A Will allows you to dispose of all assets
owned personally on the date of your
death, and helps avoid the often
unfortunate consequences of intestacy.
Some Wills are deliberately drafted to
dispose of limited assets – e.g. "all my
assets in the UK but not my property in
Spain". A Will has no effect prior to death
and can be changed at any time as long
as you are mentally capable. A new Will
normally revokes an earlier one.
Marriage or civil partnership
automatically revokes a Will, but divorce
only revokes clauses which benefited
your former spouse or partner.
Financial Dependants
Under English law nobody is obliged to
leave anything to anyone. But, the law
does give people who were financially
dependant on you a right to claim from
your estate if you have not provided
adequately for them. This includes a
surviving spouse, civil partner, minor
children, and possibly unmarried
partners, or others who were financially
dependant.
Does intestacy matter?
Dying without a Will, or "intestate" can
be unfortunate, particularly if you leave
a surviving spouse / civil partner and
children. The rules give a "statutory
legacy" to the spouse of £250,000 but
only income for life from half the rest.
The other half goes in trust for the
children at 18, which can give rise to
an unwelcome inheritance tax liability.
If there is no spouse/civil partner, or
children, assets go to parents, or
siblings, but not an unmarried partner.
What assets are covered?
A UK Will disposes of cash, houses/land,
investments, insurance policies, chattels
(house contents, cars, boats, animals,
jewellery) and anything else you own
anywhere in the world. It is usual to
make separate Wills in non-UK countries
where land is owned, to simplify probate
and make it easier to comply with the
"forced heirship" rules found in many
countries which can override a UK Will.
What assets are not covered?
A Will does not normally dispose of
jointly owned property, whether a house,
bank account or investments. These pass
by "survivorship" after the first death, on
production of a death certificate. Pension
benefits may often pass under a separate
Trust Deed. Family trusts under which
you benefited, pass under the terms of
the pre-existing Trust Deed or Will, and
not your Will. Life policies written in trust
are an example of assets passing on
death, but not by your Will.
Inheritance Tax (IHT) & Succession
Planning
IHT is a form of "wealth tax" on assets
transferred during lifetime or on death by
Will or intestacy. A Will can play an
"Under English law nobody is obliged to leave anything to anyone. But..."
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important part in avoiding IHT, as well as
controlling your assets by creating Trusts
for family members. The “transferable
nil rate band” introduced in 2007 allows
married couples or civil partners to avoid
IHT on assets up to £650,000 (2013/14)
but over that level complex planning
is needed to mitigate IHT, and to take
maximum advantage of the reliefs for
agricultural or business assets.
The Foreign Element
Couples of different domicile need to
take care as the exemption for assets
passing between a UK spouse to a non-
UK spouse is limited to £55,000 for
deaths up to April 2013 and £325,000
thereafter. A non-UK individual living in
the UK can shelter assets kept outside
the UK from IHT for up to 17 years, after
which their domicile is deemed to be UK,
and their worldwide assets become
liable to IHT.
Personal Representatives: Executors;
Administrators; Trustees
After someone dies their "personal
representatives" ("PRs") have legal
responsibility for their assets and
liabilities. PRs may be "executors"
named in a Will or "administrators" if
there is no Will. The PR's job is to collect
the assets, pay off debts and IHT, and
give effect to the Will or intestacy rules.
If there are ongoing Trusts under the
Will – e.g. if beneficiaries are under 18 -
the PRs are often appointed as Trustees
too, but it can be different people.
It is vital to select suitable PRs and
Trustees. Spouses or civil partners may
appoint each other, and perhaps one or
more children if mature enough.
However, appointing children can give
rise to conflicts, eg if there is a trust of
which a step-parent and children are
beneficiaries. Some parents will be wary
of appointing children who may face
divorce or be deemed "unsuitable" to
control substantial assets. Parents (if
not too old) siblings or close family
friends are other options. Failing them,
a solicitor or accountant is a common
choice. Banks are an alternative. A
precaution, if appointing an elderly
executor, is to nominate a substitute in
case they are unwilling or unable to act.
Funeral Wishes
Many people fail to express their wishes
but it is best to choose between burial or
cremation. Then, family members are
not left to make an awkward decision at
a stressful time. If you want to donate
organs for medical research or transplants,
that should also be made clear.
Guardians
If both parents die, children under 18
need legal guardians to take key
decisions – such as where they should
live, and go to school. It is usual to name
them in your Will. The people you
appoint will usually be those with whom
the children will live. Others may hold
the purse-strings as Trustees, and
manage the children's inheritance until
they come of age.
Summary
There are many aspects to consider
before attempting to write a Will.
Circumstances differ and so individual
advice is necessary. However, particular
care is needed in the case of:
�unmarried couples owning a property;
� couples of different domicile;
�people owning property abroad;
�any married couple with combined
assets over £650,000
�any unmarried couple or single person
with assets over £325,000
�anyone with pension or insurance
funds outside their estates;
�anyone who has been divorced without
achieving a “clean break”
By taking specialist advice, unnecessary
IHT liabilities may be avoided, not to
mention litigation after your death
whether from former spouses, or partners
who were financially dependant on you.
Making A Will - Continued
© Stone King LLP 06/2013
For further information on this topic please contact Rod Smith on 0207 324 1534 or email rgs@stoneking.co.uk Alison Allen on 01225 324407 or email alja@stoneking.co.uk
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