Wills

Why make a will?

It is now more important than ever that you make a Will. The reasons for this are if someone dies without a Will then the Intestacy Rules apply. If you are married with children then your spouse only gets everything up to £125,000.00 plus the personal possessions. If you have assets worth more than £125,000.00 then your spouse could lose his or her home because if you die intestate the surviving children or grandchildren are entitled to some of the estate. If you are married with no children and have no Will your spouse is entitled to everything up to £200,000.00 plus personal possessions and anything else has to be divided equally between the spouse and your parents but if they have already died then your parents share would go to any brothers or sisters or their children.

Unmarried couples should remember that their partner does not automatically inherit anything.

Inheritance tax

For inheritance tax each individual currently has a nil band rate (that is the amount they can leave before tax becomes payable) of £300,000.00. Gifts between husband and wife are tax free and therefore on the death of the first regardless of the size of their estate if everything goes to their spouse no tax would be payable. The problem is that in the normal family Will where the spouse inherits everything on the death of the first you lose one of the nil band rates. With professional tax advice it is possible to make Wills whereby on the death of the first their nil band rate is used by either making absolute gifts to children or creating what is known as a nil band rate discretionary trust so that both nil band rate are fully used which could currently mean that effectively £600,000.00 could be passed on to your family before tax would become payable and would give a potential tax saving of £120,000.00.

Lifetime gifts

You should also take advice from your solicitor as to whether or not there is any benefit in making lifetime gifts. If you make a lifetime gift and survive for seven years and provided you have not retained a benefit then normally that gift would fall out of calculation in assessing your estates for inheritance tax.

If you are in a position to do so, use of your annual gift exemption of £3,000.00 is a good idea to reduce the size of your estate.

Take legal advice

Regardless of the amount of your estate it is important to take legal advice about making a Will even if you only have few possessions or a small amount to leave. Your Will is probably the most important legal document you will ever prepare and it is essential that it is professionally drawn and is in accordance with your wishes. Once you have died obviously you are not in a position to clarify any ambiguities that may arise.

Ask us for information or a quotation

Wills and probate department

• Paul D Howden TEP
• C Richard Morley BA
• David Pell