Our clients regularly ask us about Estate Planning, so in this post we have listed a few of the most common questions. If you have any questions which are not covered by this post please do not hesitate to contact us.
1. How important is a Will?
Writing a will is very important. Without a will your family will have to apply for “Letters of Administration” and your estate will be divided under the laws of intestacy. This means your family will have no choice about who your estate can be left to.
You can read more about the laws of intestacy on the Government website: www.gov.uk/inherits-someone-dies-without-will
Writing a will is very important for anyone, but it is especially important for unmarried couples who have children, people with larger estates and people with more complex family structures.
November is “Will month”, which is a concept created by a organisation called Will Aid. In November each year, participating solicitors can write a Will for you, waive their usual fee and instead ask that you donate to charity. You can read more about Will Aid on their website: www.willaid.org.uk
2. Will my family pay tax on my estate after my demise?
The tax on estates is called “Inheritance Tax”. After you pass away your legal representatives need to send details of your total assets (such as your house) and your total liabilities (such as your mortgage) so that your net estate can be calculated. Generally your family will only pay Inheritance Tax if your net estate is worth more than £325,000 when you pass away (or £650,000 for some married couples or civil partners).
If you are concerned about Inheritance Tax you should speak to a qualified adviser, as it is very important to mitigate this tax as early as possible. You can also read more on our website: boblittle.co.uk/inheritance-tax-planning
3. I already have a will in place. Is there anything else I should consider doing?
We always advise our clients to do the following:
- If you are in a financially dependent relationship with someone (for example with your partner or your children) you should ensure there is at least one current account held in joint names. If you pass away and all your savings are held in your name then your family will not be able to access the accounts until all legal proceedings have taken place. This could leave a cash flow problem for 6 to 12 weeks, or even longer. Please bear in mind you should only open a joint account with someone you fully trust and opening a joint account could have implications for income tax.
- Check your life insurance policies to see how they will pay out on your demise and how they can be claimed. Your policies might be written “in Trust”, which means the Trustees named on the policy can claim as soon as they have a death certificate (instead of having to wait until all legal proceedings have taken place). If the policy is not in Trust your family might have to wait 6 to 12 weeks (or possibly longer) to claim on the policy. Please bear in mind that, if the policy is not in Trust, any payout from the policy will be included in your estate when any potential Inheritance Tax is calculated.
- Check your pensions to see what death benefits might be payable. Some pension policies might pay a one-off lump sum whereas others might pay an income to your partner or children. Most pension companies will ask you to complete a document called an “Expression of wishes” or a “Nomination form” – this tells the pension provider how you would like any death benefits to be split. If you do not put this document in place your provider will use their own judgement to pay any death benefits. This might mean your wishes are not followed.
- Finally, you should make a list of all your important information and tell your family about it. It is of course very important to keep this document secure. Make sure you tell more than one person about this list just in case both of you pass away close together. You should include the following at a minimum:
- Details of any savings or investments
- Where your will is stored (e.g. at home or with a solicitor/bank). Alternatively if you do not have a will you should specify this to save your family looking for one)
- Details of any life insurance policies and whether or not the policies are written in Trust
- Details of any pensions
- The name of your solicitor, financial adviser and accountant (if applicable)
- Details of any gifts you have made to friends, family or charity (including the date the gift was made, the amount, the recipient and how the gift was made, such as by cheque or by gifting an asset)
If you have any questions about the information above please do not hesitate to contact us via our contact page at boblittle.co.uk/contact