When music icon Prince died in April 2016, it prompted scores of claims on his estate which, at the time, was valued at more than £100 million. The reason for this: it turns out that the man who had written many of the world’s best-known songs hadn’t got around to writing a will.
The result was months of legal drama before the singer-songwriter’s fortune was passed to his sister. While American law around wills will be different to British law, it still raises an important point.
No matter who you are, if you die without a will it could result in unwanted legal expenses and additional heartache for your loved ones at an already difficult time. It could also result in your money going to someone you’d rather it didn’t go to.
Despite this, in 2020 a Law Society report revealed that 59% of people in the UK don’t have a will.
In November every year, many solicitors waive their fee for writing a basic will and instead ask for a donation to Will Aid, which supports charities including Age UK, the British Red Cross and Save the children. So, while this month-long offer is still available, discover four vital reasons to write a will.
1. It’s tax-efficient
Managing your estate’s Inheritance Tax (IHT) liability is central to any long-term financial plan. The tax is typically charged at 40% against any portion of your wealth that exceeds the amount of assets you’re allowed to have in your estate before IHT becomes due.
Known as the “nil-rate band” and “residence nil-rate band”, these could allow you to have between £325,000 and £1 million on death before IHT is due, depending on your circumstances. As IHT could significantly reduce the amount you leave to loved ones, always speak to a financial planner to confirm how much IHT your estate may be liable to.
A planner could also help you understand how to use gifts to reduce your exposure to the tax if necessary, and how using trusts could also help.
As financial planners usually take a holistic view of your finances, they could provide peace of mind that any gift you make will be not put your financial security at risk. This allows you to put a will in place that meets your wishes, is as tax-efficient as possible, and ensures you maintain your standard of living.
2. Provides peace of mind
Having a will means your estate will be distributed in line with your wishes, which could provide peace of mind that your loved ones’ futures will be secured.
That said, remember that your priorities could change as time goes on. Big life events such as births, deaths, and marriages could alter your priorities and require a change to your will.
So, remember to update your will regularly to ensure it’s always in line with your latest wishes and plans.
3. Reduces stress for loved ones
Losing a loved one is traumatic enough without having to sort their finances out. A report in the Independent shows research by probate specialist Exizent revealed that dealing with a loved one’s finances causes mental health problems for 40% of bereaved people.
If you die without a will, you could create additional stress for those you leave behind as there is no named executor, meaning one will need to be appointed. This could cause unnecessary additional expense and possible delays to the probate process.
Putting a will in place could mean reduced stress for those you leave behind and ensure they receive their inheritance more quickly.
4. A will means you’re in control
Sadly, we never know when our time may come, which is why having a will already in place gives you more control over what happens next when it does.
Dying without a will in place – known as dying “intestate” – means you have no say over how your assets are distributed when you’ve gone. Instead, the laws of intestacy determine how your estate is distributed, using government criteria that prioritises certain family members over others.
This could result with someone you don’t want to receive your money getting it. For example, while blood-relatives and spouses will normally inherit under the laws of intestacy, a cohabiting partner or stepchild will not.
This means that if you have stepchildren or vulnerable adult relatives who depend on you, a will could ensure your money goes to them. You can also use your will to name legal guardians for children or vulnerable relatives.
Get in touch
If you would like to discuss your estate, intergenerational planning or whether or not you have an IHT liability, please email firstname.lastname@example.org or call us on 01904 655 330.
This article is for information only. Please do not act based on anything you might read in this article. Contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down and up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and your financial circumstances.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.