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Making a will: remembering the basics

/ 10 July 2020

Terry Jordan

During the coronavirus outbreak, you may be among the many people who have questioned whether they have adequate provisions in place to protect their estate and their loved ones. In March alone, financial advisers deVere Group reported a 76% increase in demand for wills.

It’s probably fair to say that the Wills Act 1837, with its requirement of physically present signatories and witnesses, didn’t foresee the challenges posed by lockdown and self-isolation – but nor did it foresee the solutions offered by the digital age. The Law Society says that it has been ‘liaising with the Ministry of Justice and the Solicitors Regulation Authority about … requirements for witnessing wills, and the use of video-conferencing facilities’; there have been calls for bedside or oral wills to be permitted temporarily.

In April, Secretary of State for Justice Alex Chalk stated that ‘the government is currently reviewing the case for reform of the law on making wills given current circumstances … [it] will consider reforms to the law on wills arising from the forthcoming Law Commission report on wills [and] is committed to considering further work on witnessing documents by video-conference generally’.

In the meantime, any challenges to the writing and witnessing of a will don’t diminish the importance of having a valid will, so that your wealth can go to those whom you wish to benefit – as tax efficiently as possible.

In previous articles on wills and inheritance, we’ve explored how:

  • When someone dies without a valid will, their estate is distributed according to the laws of intestacy, and these are not always what you would expect. For instance, if a person has a spouse and two children, all the chattels and belongings of the deceased, the first £270,000, and half of the remaining estate would go to the surviving spouse. The balance of the monies would go to the children. This could lead to a significant inheritance tax (IHT) liability, as only a maximum of the first £325,000 and the residential nil rate band of any bequest to children would be exempt. Children cannot be party to a variation. When Rik Mayall died in 2014, reportedly it was without a valid will and his family faced a huge tax bill.
  • It is not just those who died before their time, such as Michael Jackson and Amy Winehouse, who can be caught out. Howard Hughes (70) and Pablo Picasso (91) both died intestate.
  • Karl Tausch’s will read simply “Vse zene” (which is apparently Czech for “all to wife”) and is said to be the shortest valid will on record. But whatever its length, a will does need to be appropriate and up to date.

Avoiding the 10 most common mistakes

When making your will, being mindful of the basics can help ensure your will’s validity, giving you control over how your estate is divided upon your death. The following dos and don’ts can help you avoid some of the most common mistakes.

Do have two physical witnesses: unless legislation changes, you are still required to sign the document in the presence of two witnesses and subsequently witness each of them signing the will.

Don’t ask a beneficiary to witness your will: witnesses cannot benefit from your will in any way, so a child or partner acting as a witness could cost them their inheritance.

Don’t make assumptions about when you or others may pass away: there is no guarantee that a younger person will outlive an older one. Make sure to cover all eventualities, even the most uncomfortable ones.

Do choose a guardian for your children: if you do not set this out in your will, the decision may go to the Family Court and your child may be placed with someone you would not have chosen.

Do consider all assets: While standard assets such as property and cars may be accounted for, don’t forget to consider others such as bank accounts, shares, jewellery, antiques or even record collections. Reassess your assets regularly, and after major life events, to ensure your will is up to date.

Don’t assume your partner will automatically get half: if you aren’t married, there is no guarantee that your partner will get anything from your estate unless outlined in your will. As a general rule, HMRC treats you as having the same relationship with a person with whom you have cohabited for 40 years as with a stranger you meet on the street: hence the propensity for deathbed knot-tying (such as Sir Ken Dodd’s marriage to his long-time partner two days before he died).

Don’t make changes that are not legally binding: you can’t make amendments to your will after it has been signed and witnessed. Instead, you will need to make an official alteration called a codicil, which must be signed and witnessed in the same way as the original will.

Do factor in debts: mortgage repayments, credit cards and other debts can heavily decrease the capital left behind for your beneficiaries. As well as factoring in any debt when specifying sums of money, you can also allocate a percentage of a property’s value to each beneficiary.

Do provide access to the original document: make sure people you trust know where the original signed copy of your will is stored, as it will be difficult for your executor to obtain a grant of probate without it.

Don’t make an exclusion without proper support: if you wish to disinherit someone who may otherwise have legal claim to your estate, you must include the reason for this in your wishes. Failure to do so means that any individual could potentially challenge the will to claim that they have been unreasonably excluded.

We’ve referred above to ‘beneficiaries’ and ‘executors’. Understanding more about these roles will help you in making your will.

Choosing your beneficiaries

You can choose any living person, organisation or charity as a beneficiary to your estate; always use their full legal name to avoid any confusion.

Bear in mind the nature of different assets and the needs of your beneficiaries – some assets will produce faster cash sums while others will be associated with longer-term or sentimental value. For bank accounts or savings, check that the beneficiary specified when you opened the account is up to date with your wishes, which will usually take precedence over your will.

Appointing your executors

An executor is responsible for the administration of your estate according to the wishes laid out in your will (as long as those wishes are within the law). You can choose from friends, family members, solicitors or accountants. Be mindful of potential problems should you choose a person who is based overseas, under 18, or someone who may not be able to effectively carry out the role.

Among an executor’s legal responsibilities are registering the death, arranging the funeral and applying for probate, which includes:

  • Identifying all assets and debts to determine the value of the estate
  • Applying for a grant of probate to confirm the legal authority to administer the estate
  • Liquidating the assets, settling debts and bills, and paying any tax due
  • Preparing the accounts and calculating the final assets remaining for distribution to the beneficiaries
  • Transferring assets to beneficiaries

The role of trusts

You can specify trustees to manage an asset while your beneficiaries receive income from it.

Spouses can arrange for half their property to go into trust upon their passing; this means that the surviving partner can continue to live in and own half the home, but the remaining half will not form part of a care home evaluation, protecting it from associated costs. A trust can also help to protect your children’s inheritance should your partner remarry.

If leaving property or financial assets to a minor, it will likely be placed in trust with their guardian appointed as a trustee to manage it until they turn 18. If you wish to outline different terms or specify different trustees, it is important to do so in your will.

Beyond the basics: how BKL can help

While there is value in basic awareness of wills and inheritance – and in simply making the choice to prepare a valid will – the basics can give way to complexities, especially where tax is concerned. Professional guidance can make it much easier to deal with these, especially at a time of emotional strain.

Our highly experienced specialists in IHT, probate and trusts work together to provide a complete and personalised service, which can include:

  • Writing your will
  • Structuring your estate for IHT efficiency
  • Trust tax compliance: self-assessment returns, IHT returns, registration on HMRC’s Trust Registration Service
  • Consultancy advice on trusts: IHT planning, offshore trusts, capital gains tax planning
  • Supporting executors or administrators by handling probate paperwork on their behalves. Alternatively, you can appoint BKL as an executor or administrator and we will manage the whole process for you

We have more details on the following pages:

You can also get in touch using our enquiry form to find out more.

Terry Jordan

Senior Adviser, Private Client

T +44 (0)20 8922 9360
E terry.jordan@bkl.co.uk

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