Why make a Will?

The best reason is to achieve certainty of who will benefit from your Estate and to take the last opportunity to ensure your affairs are settled as you want and without any unnecessary fuss or expense.

An expertly-worded and carefully drafted Will can save thousands of pounds of tax and make sure those who would be automatically entitled to receive your Estate on death don't end up disinheriting your preferred beneficiaries.

Most simple Wills are divided up into a number of recognisable sections:

Declaration:
Most Wills start with a confirmation clause that makes it clear that this Will is the last one and that all previous Wills are revoked (cancelled).

Appointment of Executors:
Whilst it is not essential (if there is no appointment of executors the Will will still be valid but there will need to be an additional process before someone can be appointed from a statutory list of those entitled to apply for probate) most Wills then appoint one or two trusted people to be "Executors" (those who execute or administer the Will) - we normally recommend that will-writers appoint one or more of their principal residuary beneficiaries as executors - this means that anyone appointed has a vested interest in getting on with the process of administering your estate so they can get to the point where they get their share as quickly as possible.  We also suggest that you pay attention to the practicalities.  If you are in your thirties it is more sense to think of someone who is likely to survive you rather than appointing great great uncle Bulgaria who is 98.

Specific legacies:
Some Wills then list items you want to give to people in specie ("things" as distinct from money - so I leave my son Billy my grandfather clock)

Pecuniary legacies:
Some Wills then list money gifts (for example "£1,000 to the Vicar and Churchwardens to expend on the maintenance and repair of the fabric of the parish church of All Saints")

Then the most important part of most Wills the provisions for what happens to the bulk of the estate

Residue provisions:
This is what deals with the rest of the estate.  These clauses often deal with shares in residue as the amount is not specified but rather the proportions to be shared between the residuary beneficiaries.  It is very common that there may be one or more layer of "what-ifs" - for example "if my wife survives me then I leave my residuary estate to her absolutely but if she shall have died before me then I leave my residuary estate to my trustees upon trust for such of my children as shall survive me and if more than one in equal shares absolutely".

By using the right clauses you can allow for any combination of events - for example we commonly use clauses designed to allow for additional children or grandchildren who may come along after the date of the Will and to cope with unexpected events, like the unexpected death of a younger beneficiary before an older one.

The importance of estate planning:
All of these simple provisions are common but the planning of your estate is every bit as important as the choice of words. This is really where expert advice can make a significant difference to what your beneficiaries will inherit - some testators have special interests to take into account - for example a farmer may have special inheritance tax allowances available to him or her which will not be available to their non-farming spouse - provisions for disabled beneficiaries need to be very carefully made so as to ensure private provision doesn't just replace or invalidate benefits and takes account of any onwards provisions tax-effectively.

Working out who gets what is always a tricky conundrum and whilst we can give you the benefit of our advice we leave those final decisions to you.

Protecting your estate against claims for nursing home fees etc.

We are commonly asked to help plan ways of stopping the state getting its hands on your estate so you can leave more or ring-fence, perhaps, some of the estate of a first-deceased spouse for the benefit of children or similar. These provisions can be very effective but are also very specific to individual circumstances and all of them come with a cost - not just our fees for setting them up, but also achieving one benefit may lose another and avoiding one risk may take another. Let us illustrate that very briefly. At the moment the new Inheritance Tax Allowance called the Residence Nil Rate Band relief adds a new IHT allowance to the basic £325,000 each of us is entitled to on death, but only if the property is left to a lineal descendant. Governments very rarely give anything away so when it looked as though there will be up to £350,000 of additional allowance available to spouses to offset against the value of their dwelling house on death,  this seems to be straightforward good news, but the requirement to leave the property (or a share in it on a first death) to lineal descendants directly, without any sort of trust or obligation, means that there is a strong incentive to keep the house in the hands of the last survivor - and then, but only then, to leave it to children. This of course means the last survivor retains the asset value and therefore are still cash rich and vulnerable to nursing home fee claims etc.

You need also to remember that the more "clever" the scheme, the more likely it is that HMRC will try to change the rules so as to make it ineffective - its also true that seeking to save every last penny of your estate for your beneficiaries may leave you or your spouse vulnerable to unexpected events.  For example if you took a classic route and decided to change the ownership of your house with your spouse so you each own a separate half-share and can then each leave your half-shares by Will, you might each choose to leave your respective half-shares in the family home directly to your children (and provided you do not impose any trust or obligation this may still qualify for the Residence Nil Rate Band Relief) - but if one of your childen then goes through a difficult divorce and their ex seeks to claim against the share they now have in the half share of the property the survivor now lives in, at best you could be in for a difficult legal fight, and at worst you cold be homeless. 

There may also be consequences for inheriting children.  If your child or children acquire a share in your former home worth £40,000 or more then when they buy their own house they will be charged a penalty rate of Stamp Duty Land Tax - designed to raise money for government and also to discourage people from owning (or having a substantial share in) more than one home.

From personal experience I can also vouch that the best-laid plans may be ineffective if, unexpectedly, one of the intended beneficiaries dies before the Will maker.

Why use a solicitor?
Most stationers sell Will-making forms with a set of instructions.  if you are feeling brave then go for it, but be warned that one word out of place or the incorrect use of a technical term may invalidate your Will or, worse, disinherit your chosen beneficiaries.  Before you start, ask yourself why you want to make your own Will.  If the answer is to save money then do please think about that very carefully.  Most people begrudge spending money on making a Will as its just a simple document isn't it? Well no.  Go and look at the 1837 Wills Act which may help to remind you that the real problem is usually not knowing what you don't know.

We like to illustrate a simple pitfall:
If you have two gold watches (and one son) leaving a Will which says "I leave my gold watch to my son" will not end up with your son receiving either watch (you didn't say which one or make it clear in your wording which watch you intended your son to have so your executors duty to the residuary beneficiaries will be to sell both watches and hand them the sale proceeds). In the same example if you had no gold watches (and still one son) and you say "I leave a gold watch to my son" then your executors will have the duty to go out and buy one for him.

This often seems unfair but if you remember that any specific or pecuniary legacies reduce the value of what goes to the residuary beneficiaries and take our first example and then we add in the information that one of those two watches is a Waltham Mass 9ct gold mass-produced half-hunter (worth maybe £300) and the other is a vintage Patek Phillipe "grand complication" (worth maybe £400,000) you can see that the residuary beneficiaries will be very upset if the executors decided to give your son the Patek Phillipe and very happy if they decided to give the Waltham one.

 

Lastly - but very importantly

Don't forget to review your Will on a regular basis - we usually recommend that you consider at least once a year whether what you have said in your will still works to do what you want - there may be life events that change what you want to do - a gift of money to named grandchildren will not extend to cover new arrivals and the death of an executor or the loss or acquisition of new assets may need your Will to be reviewed - after all you spend a considerable amount every year to deal with your household contents insurance - and your Will deals with everything you ever owned not just the valuables you chose to insure this year.

If you want to make a Will or need estate planning advice please contact Nick Fluck; Julia Thompson or James Buxton via our contacts links