Wills & Estates

A Will is a legal document, that states how you wish your estate to be divided after your death. The estate is administered by executors who distribute it to the people or organisations named in the will, known as beneficiaries.

Who is affected?

Everyone who has an estate is affected in some way because they will have possessions that will endure after their death and which will pass to succeeding generations. The only requirement for a person to make a will, subject to certain exceptions, is that he or she must be mentally capable and 18 years of age or over.

What happens if I don’t make a will?

If a person dies without a will, then they die intestate. This means that the estate is divided up according to specific rules that are set out in UK law. The distribution of the estate under these rules is dependent on the circumstances of each case. It is determined by who survives the deceased person (eg spouse, spouse and children, spouse and other relatives but no children). The distribution of the estate is unlikely to carry out the wishes of the person who has died and may not be tax–efficient. Assets that you hold jointly with another person may pass automatically to the survivor. For more details about the rules of intestacy, please contact us.

How does a will operate?

Once a person has died, the executors need to present the will, together with a statement of the deceased person’s estate (including any capital gifts that they have made within the last seven years), to the local Probate Office.

The executors will need to pay the court fees, which will vary according to the value of the estate. They will also need to pay an estimate of any inheritance tax (IHT) due at this stage. The court will then issue a grant of probate that enables the estate to be administered and distributed.

The executors then commence their task of administering the estate, including settling outstanding debts and tax liabilities of the deceased person. The will may direct the executors to make specific bequests or legacies which they must do in priority to other distributions.

Once the specific gifts have been made there may be property remaining, which is known as the residue. The will then directs the executors what to do with the residue, for example, it may be held on trust, perhaps for a surviving spouse. Alternatively, it may pass to named individuals (eg the surviving spouse) or may pass to specified charities.

Can a will be altered once made?

Yes, a will can be changed as many times as you like. This can be done by effecting a codicil, which is a document appended to a will that amends it. However, it is usually preferable to revoke the will and replace it with a new one. Wills are automatically revoked by marriage (including a civil partnership), except in the case of a will that states that it is made in contemplation of marriage or a civil partnership. On divorce, the former spouse is excluded as a beneficiary and executor.

How often should a will be reviewed?

Wills should be reviewed regularly to ensure that they are up to date with changing family or other circumstances and that they reflect current wishes. They should also be reviewed in the light of any changes in the tax regime. For most people a review should be done at least once every five years.

Can a will be altered after my death?

Yes, at the present time, wills can be changed up to two years after the death of a person by a deed of variation. This can be a simple process, but becomes more complicated if there are minor children involved. If their share of property is to be reduced, then it will almost certainly be necessary to seek approval of the court. A deed of variation can also create income and capital gains tax issues and it is therefore, far better to get the will right rather than leave it for the beneficiaries and executors to amend after the death of the individual.

Can wills save tax?

Yes, carefully written wills can be very tax–efficient. The exact circumstances of each case and the wishes of the individual must be considered before the will is drafted. The will should normally seek to make full use of IHT exemptions, reliefs and the nil rate band wherever possible.

What steps should I take?

The first step is to make a rough note of what is in your estate, together with its value and any liabilities. Is there jointly owned property to consider such as the family home? If so, how is this owned? Is it owned jointly or does each spouse own a specific fraction? Are there shares in the family company to consider? Do you have life assurance and, if so, who benefits? Are there any children for whom guardians should be appointed?

The next step is to decide how you would like your estate to be distributed after your death (ie who should be the beneficiaries).

Who should I nominate as executors?

This is a very personal decision. Essentially, you will probably want to choose trusted family members or close friends. You should check that the people you nominate are willing to act for you. You might also wish to include a professional executor, though this may be dependent on the complexity of your estate. Trusts and wills are often written on very flexible terms allowing trustees greater discretion in their management.

The increasing complexity of estate and tax law, as well as the reluctance of many people to become involved in decisions that require not only a professional competence but also an independent detachment from family dynamics, means that an independent executor company may be the best choice – especially as the company is always there and doesn’t die, retire or take holidays.

What duties do my executors have?

The executors are responsible for managing all matters affecting the estate between the date of death and the completion of the distribution of assets to beneficiaries. This is called the period of administration. Tax returns will have to be completed in this period for any income or gains. They must settle the deceased’s and the estate’s tax debts for which they are personally liable and issue tax deduction certificates to beneficiaries where estate income is passed on to them.

Do wills apply everywhere?

Wills are usually only operative in the country for which they have been written. If you have assets abroad, such as a holiday home, it may be necessary to have a separate will made to cover those items specifically. You should take local legal advice if this applies to you. This factsheet summarises the legal position in England and Wales. Different legislation may apply in Scotland, Northern Ireland and other jurisdictions.

What if I lose mental capacity?

It does not matter if you fall ill physically or mentally after you have made a will. If you were of sound mind at the time you made your will then your wishes will be honoured subject to the comments made on the previous page about marriage, civil partnership, divorce and alterations by the beneficiaries. However, you may wish to set up a power of attorney to enable someone else to manage your affairs, should you be unable to do so later in life.

What other matters should I consider?

Wills are only of use if they are validly made and can be found and verified when your estate has to be administered. Therefore, it is important that the will is prepared by a competent person, normally a solicitor, who understands your wishes and that you ensure it is kept safe for use after your death.

Who should I contact?

It is important that you and the appointed executor(s) understand the implications of making a will. You need to confirm what is in your estate and what the particular IHT implications are of you owning a particular piece of property. You should ensure that all areas are considered so that your executors can administer your estate efficiently and in accordance with your wishes and instructions.

If you would like advice on any of the points covered in this factsheet please contact your Independent Financial Advisor or Find an IFA.

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