Why is having a will so important?
As COVID-19 leaves many of us working from home surrounded by our families and loved ones, it is inevitable that we start to think about how well we are prepared for our futures. Even though our Solicitors are working remotely, we are still here to help you plan for your future by creating your Will and providing tax efficient advice. Even if you are self-isolating, we can take instructions from you online or over a telephone call and draft your Will.
When do I need a Will?
We recommend that you create or review your Will when your circumstances change. This could mean after you have bought property, are contemplating marriage or divorce, having young children or obtaining assets such as investments. Particularly in the current climate, many people are creating or reviewing their Wills because of the increase risk of illness.
Why do I need a Will?
It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having one. Without having a Will in place by the time you die, there are certain rules, known as the ‘Rules of Intestacy’, which apply to your estate that are beyond the control of those around you. These rules can result in people not benefiting from your Will that you would otherwise have wanted to.
While the prime purpose of a Will is to ensure your estate reaches the right people, having a Will also enables you to protect your estate in certain ways and provides the opportunity to review your current tax position.
Protecting your Estate
It is important that your estate is protected as best it can be after your death. We can create various Trusts in your Will that act to protect your estate in accordance with your intentions. Trusts also have the potential of being tax efficient.
For example, a Trust can prevent a member of your family from using their inheritance for reckless or extravagant means, or from simply using it in a way you have not intended. The Trust could mean that a family member can only receive a certain amount (or a certain benefit) from the inheritance at a time, and, after their death, the remaining inheritance passes to someone else. This could mean protecting your property so that it ultimately is inherited by your children, whilst still allowing your spouse or partner to live in the property for their lifetime.
A Trust can also be used to protect your estate from falling into the hands of an unintended recipient, such as a soon to be ex-spouse of one of your children. For example, if you leave a simple gift to your child when you die, this could inadvertently end up going in part to your child’s spouse if they were to divorce. However by creating a Trust, your Trustees will have control over the inheritance. Your child will have the benefit of the capital and income of the Trust, but will not be responsible for the entire sum, thus minimising the risk of losing the inheritance in divorce proceedings.
If you wish to leave an inheritance for a member of your family that is vulnerable, such as someone under the age of 18, a Trust can ensure the young person is adequately provided for without the young person themselves being in charge of the inheritance before they reach the age of 18 (or 25). Another provision we can include is the appointment of guardians for your young children should they be without their parents.
If you wish to leave an inheritance for member of your family or friend that has a disability, a Trust can provide funds for the benefit of the person with a disability that are tax efficient. A properly constructed Trust of this type will not interfere with their means tested benefits.
When we discuss the creation of your Will, we will also always seek to look at your tax position and advise on any steps that you might take to mitigate tax.
We are able to take you through many different tax reliefs that you may benefit from, including
- Reliefs available to married couples.
- Reliefs resulting from donating 10% of your estate to Charity.
- Reliefs from owning Business or Agricultural property.
We are also able to discuss using exemptions such as your Nil Rate Band and Annual Exemptions. These reliefs and exemptions can ultimately mean paying less tax on your death, and therefore leaving more to your family and friends.
How does Social Distancing affect the creation of my Will?
Social Distancing will not affect the drafting of your Will but can cause inconveniences in executing your final Will.
To execute your Will, you will need to sign it in the presence of two independent witnesses. This must take place in person and your witnesses cannot be people named in your Will. This can cause some inconvenience while we are being asked to remain at home with our families. The best guidance on this is to sign your Will in the presence of neighbours, in an open space, such as a garden, where your neighbours can still visibly see you sign the Will, and vice versa.
So should I create a Will?
Our advice is that everyone should have a Will, no matter their age or circumstance. Especially at a time like this, it is important we all feel secure that our families will be suitably cared for when the time comes and creating a Will is a way to do this.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
One of the most important things anyone can do is to secure the future for the ones they care about. We can’t know what will happen to us but writing a will and getting sensible advice on UK inheritance tax laws and about how best to pass on assets is an essential part of that planning process.
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Or call to speak to a member of our Private Client team +44 (0)1276 686 222
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Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.