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Family & Matrimonial - May 19th, 2021
Making a will is one of the more important things you can do in life. It will ensure that, after you die, your assets will be distributed as you wanted them to be.
Making a will is one of the more important things you can do in life. It will ensure that, after you die, your assets will be distributed as you want them to be and you can even make your wishes clear about the kind of funeral you would like.
If you have dependents and other family members, having a valid will in place may also be important if you want to ensure that they are cared for if the worst should ever happen. According to some estimates, up to 60% of adults in the UK don’t currently have a will.
This means that in some circumstance it could be left to the courts to decide who will benefit from their estate. Considering that writing a will is generally a straightforward and relatively cheap process, especially with the assistance of Eatons, arranging one for yourself, and your partner if you have one, is a very wise move.
To start at the very beginning, a will is a legally binding document that stipulates how your assets should be distributed after you die. It can also include your instructions about who should become the guardians of any children under the age of 18 if you are no longer around to look after them.
You can prepare your own will if you prefer, or with the help of a solicitor and, to make sure it’s valid, at the very least you should let a qualified person look over it once it has been written. It also has to be witnessed by two other people, who are not beneficiaries in the will, if it is to be valid.
While, ideally, everyone should have a will, there are certain events in life which should definitely act as a catalyst to either write one for the first time or to change one that is already in place.
Under the law, if you are married or in a civil partnership and die without making a will, your spouse automatically inherits your estate. But if you are unmarried and die before you have written a will then the rules of intestacy apply. This is a set order of who will inherit an estate when it has not been specified beforehand. In extreme cases this can even lead to the State receiving a whole estate. Even if you are married, it is still a good idea to write a will as you may want to leave some of your assets to other family members, friends, charities or other good causes.
Having children is one of the main reasons why many people decide to write, or change, their will. There are a number of motivations for this and the one that will concern almost everyone is to make provisions for who will look after the child, or children up until the age of 18, if they or their partner aren’t around any more. Some people believe that this may be the role of godparents or other family members. But, unless it is stipulated in a will, it has no standing in law and, if there is no guardian listed, the courts may have to decide where the child or children will live.
A will also gives the opportunity to leave possessions to children, step children and foster children as well as making financial provision for their future, perhaps through setting up trusts.
If you divorce and have included your ex-partner in your will, it will not be automatically invalidated. So they may still stand to inherit from you, even if that is no longer your wish.
If you had a will and your deceased partner was included in it, you may want to leave the part of your estate that you left to them to another beneficiary instead.
As already mentioned, the main reason to write a will is to ensure that your wishes are carried out as you’d like them to be. But there are a number of other benefits which may not be quite as obvious.
If you have an unmarried partner and/or have step children and do not state it in your will, they have no legal claim to the home that you have all lived in. Without a will, it will then automatically pass to your nearest next-of-kin under the rules of intestacy.
Unfortunately, inheritance issues can often lead to major rifts and arguments within families. But having a legal and clear will means that these disagreements are less likely and your wishes shouldn’t be contested.
There are a number of provisions that you can make, like setting up trusts, that can help to reduce the amount of Inheritance Tax that will be payable on your estate. There is no tax payable on anything that you leave to your spouse or civil partner and there are also certain allowances made when you leave your main property to immediate family members like your children.
This most modern phenomenon, the items that you own in digital format, also forms part of your estate. Digital assets can include everything from the photos that you’ve taken to the music and books that you have bought and downloaded from the internet. In your will you can stipulate exactly who you would like to receive them.
Many people want to leave donations to the bodies that have been important to them in their lives, for example the university they attended or the charities who represent causes dear to their hearts. A will is where they can leave a lasting legacy – and many charities rely heavily on this form of giving.
Finally, a will is your chance to stipulate who you would like to administer your affairs after you die and throughout probate. This can be a relation, friend or a professional like a solicitor. By giving them prior warning that you are choosing them will give them the opportunity to prepare for what can be quite a complicated process, as we shall see.
When someone dies and leaves an estate of money, property and other assets, probate is the word that is used to describe all the legal and financial processes involved in settling that person’s affairs.
It’s the role of an executor, or executors, named in the will to handle the administration of probate including valuing the estate, settling debts, paying any Inheritance Tax that is owed and distributing bequests to beneficiaries.
Depending on the nature of the estate, this can be the sort of process that §can be carried out on a DIY basis or, if the person’s affairs are complex, it is generally better to pay for a solicitor or other professional to take care of all the administration.
There are a number of stages to probate, which are as follows:
Once a person has died, the executor first needs to identify all of their estate including property that they own, money in any bank accounts, investments and any other assets. They also have to confirm all their liabilities such as mortgages, credit card and loan debts and even outstanding utility bills. The executor will need to write to all the companies or institutions involved and send a copy of the death certificate before this kind of information will be revealed. They will also have to look into any gifts made by the deceased in the seven years leading up to their death as these may also need to be included in their estate.
Once it has been, the executor will be in a position to calculate the net value of the estate.
Once the value has been calculated it should be possible to work out the amount of Inheritance Tax payable so a return should be sent to HMRC. This is also the time to apply to the Probate Registry to obtain a Grant of Registration. This gives the executor the legal right to administer the estate.
Once the Grant of Representation has been given, the executor is free to realise all of the deceased’s assets, settle their debts and pay the Inheritance Tax that is due as well as any income or capital gains tax that is outstanding.
Once this has been settled, it’s time to prepare the accounts showing all the payments in and out of the estate and the balance that will be left for distribution amongst the beneficiaries.
As long as there are no challenges or other complications, the final stage is to distribute the bequests as stipulated in the will.
This is a fairly simplified explanation of the whole process but gives you an idea of the general course of events in the process of probate being granted.
If you find yourself as an executor, there will undoubtedly be a number of questions that you would like to have answered. While it would always be best to receive some personal advice from one of Eatons wills and probate experts, here are the answers to some of the most common questions that we are asked.
It may be that you don’t have the time or feel that you’ll be able to carry out your duties. Fortunately, you will be able to sign a form called a Renunciation and another executor will be appointed. It might be that you still want some input in the process, in which case you may be able to have “power reserved”.
This very much depends on how complex the will and the size of the estate. Generally speaking, you can expect it to take between six and nine months from when the person dies to the final distribution of requests.
HMRC expects to receive the calculated amount of Inheritance Tax once you have submitted the value of the estate. If there is enough money in the deceased’s bank account/s it’s usually possible to get the sum released for payment. But where much of the estate is in the form of property or investments it is usually possible to pay 10% of the total due and the rest in instalments.
It’s up to the executor to take reasonable steps to find both the people or organisations or individuals owed money by the deceased or those named as beneficiaries. In the case of the former, it may be worth putting an advertisement in a publication called The Gazette which is an official public record to invite creditors to come forward. To find missing beneficiaries, if it’s not possible through family connections, many genealogists offer a tracing service.
There are special executors’ accounts that must be used for the administration of an estate and it is usually best to arrange one of these with the deceased’s own bank to avoid unnecessary complications.
As you can see, the whole area of wills and probate can be a very involved one, especially when an estate is large or the deceased had complex financial affairs.
If you want to write a will, or revise an existing one, or if you need some help and advice about executing someone else’s will, we will be happy to offer you some guidance and advice. Alternatively, we would be happy to take care of everything on your behalf.
So if you would like to know more on the subject, or ask for our help, please don’t hesitate to get in touch with us to arrange an initial meeting.