Estate Planning – Going back to the basics

Thinking about our own demise isn’t a pleasant thought. We are hard wired to think about what we want to happen during our lifetime; it’s completely natural to only think ahead to a world that you are still very much involved in. However, it is very important for a variety of reasons as to why you need to think about the “what if I weren’t here” scenario, what would you want to happen?

Estate planning can cover a variety of topics including Inheritance Tax (IHT), but the initial step is writing a comprehensive Will to ensure that in the event of death, your assets are passed on in accordance with your wishes.

In September 2020, Canada Life conducted research that evidenced 59% of all UK adults did not have a Will in place; that’s a staggering 31 million people whose assets will be subject to the laws of intestacy, which can be quite a mentally exhausting process for loved ones trying to deal with the estate, not to mention an expensive process.

It is quite common to think that the best time to write a will is when your buy your first property or have children. Regardless of your current situation, realistically the best time to write your will is now and to review periodically, or if a significant event occurs, to ensure it is up to date.

What are the benefits to writing a will?

The death of a loved one is a difficult time for anyone but having a will can help to set out a clear path for them to follow, taking away some of the stress of administering the estate. Let’s look further into why writing a will is a good idea:

1.??????Children are left in the care of your chosen guardian in the event of your death. If you die intestate, it is ultimately up to the courts to decide what is best for your children and this may not be in line with your wishes.

2.??????Your possessions, savings, and even digital assets (photos, videos, documents) are passed to the persons whom you intend to receive it. You can specify who gets what and this gives you more control and this doesn’t necessarily have to be individuals, but also charities and organisations.

3.??????Help to avoid disputes between loved ones when you’re not here. It is not uncommon for family members to argue about the estate of a loved one and unfortunately a will does not always solve this issue. However, it does make clear your intentions and prevents anyone second guessing what you would have wanted.

4.??????Setting out your funeral arrangements. This includes whether to be buried or cremated, through to requests in the service such as asking attendees to wear a certain colour or even choosing your favourite song at the service.

5.??????Many of us have pets these days and for many of us they are family members, so of course we would want them to be looked after too. This was in the press recently with regards to what happened with Queen Elizabeth II’s Corgis, but understandably, we would want our pets looked after and you can set this out in the will.

6.??????Mitigate Inheritance Tax – this works hand in hand with financial planning, but will help to ensure that your estate is as tax efficient as possible.

Wills are particularly important for unmarried couples as they will not automatically receive anything under the Laws of Intestacy. Further to this, if an unmarried couple has children, the children will receive the estate.

It is also important for individuals who have remarried, particularly when children from a previous relationship are involved. Any will that was written prior to marriage is automatically revoked, so it is important to monitor this, especially if you want your children to benefit from your estate.

Who do you want to carry out your wishes?

A person who carries out the wishes as stated in your will is known as the executor. This is a person who you personally choose, and their job is to administer the estate accordingly, including paying any debts and taxes.

The executor can be a family member or friend and you must ensure that this person can take on this responsibility. You can choose more than one executor, which can not only help ease the burden, but also provides a Plan B should one of the executors be unable to fulfil their duties.

Some people do appoint professionals, such as solicitors, as executors which may be appropriate for complex estates. Solicitors will charge for their expertise though, so it is important to establish whether the estate really needs professional expertise as this could unnecessarily diminish the estate.

How do I get a will written?

At high level, a will has to be in writing whilst of sound mind by a person 18 and over with two witnesses who do not stand to benefit from the estate, directly or indirectly (i.e., married to a beneficiary).

DIY will kits are available, however, it is not unusual for these wills to be invalidated or contested. It would be sensible to seek the services of a professional solicitor, who would not only ensure that all the legal obligations are met, but also raise questions that you may not have previously thought about.

In financial planning, we encourage you to include your loved ones in these discussions of estate planning as this will help them to understand your thought process and perhaps provide some valuable insight from them too.

At Alexander Grace, we like to work in conjunction with your solicitor to ensure that everything and everyone works in conjunction with each other, which provides a holistic experience and will help not only you, but your loved ones when you are no longer here.

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Source of Research: 31 million UK adults don't have a will in place (canadalife.co.uk)