You may not have noticed it, with the budget and the Brexit debate taking over the news, but March was make a will month.
Last month we helped over 40 families to produce a will. Bearing in mind none of us are going to live forever, it’s one piece of financial planning we all need.
What happens if you don’t make a will?
We all know that not making a will can be a major problem for those who survive us. If you don’t have a will when you die, your money, property and possessions will be shared out according to the law. The law decides who gets what and how much, and it doesn’t matter what your relationship with those people was like when you were alive.
Some parents have had to sue their own children to get a share of their partner’s estate when their unmarried partner dies.
By leaving a will that says clearly who should get your property and money when you die, you can prevent unnecessary distress at an already difficult time for your family or friends.
Without a will, the taxman might be helping himself to a far larger slice of your wealth than he could do if you had one. It frequently means big tax bills, and can even result in your family home having to be sold, instead of being passed on to your loved ones.
How to make a will
Making that will is an important part of protecting your family, and it can actually be very simple.
If your family is quite small and you want to leave everything to them, making your will is quite easy. Using a solicitor usually costs between £150 and £300, or you can buy a template document in stationery shops for as little as £10. It will include instructions on all the necessary steps to make your will legal and binding.
Start by thinking about what you want to leave to whom and then talk to your family – they may have some suggestions you haven’t thought of.
That could be all that you need to do, unless your estate which is the total of the cash, valuable investments and property you have is over the Inheritance tax threshold. It may come as a surprise when you realise that it probably is.
Inheritance tax and you
Inheritance Tax is paid if a person’s estate is worth more than £325,000 when they die. Your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold. The astonishing rise of house prices over the last few years is pushing more and more people into the Inheritance Tax bracket. When the home is the main asset, it’s not uncommon for it to have to be sold to pay off the tax bill. It can come as a nasty financial shock on top of the pain of bereavement.
The executor of a will or administrator of an estate usually has to pay Inheritance Tax six months after the person died, or start paying interest. The chancellor has recently made some concessions which will make it easier to inherit a family home, but the fact remains that the taxman will help himself to a share of your wealth.
There are ways to beat Inheritance Tax. If you leave at least 10% of your estate to charity, it will cut Inheritance Tax on the rest. You can also put some of your cash, property or investments into a trust they are no longer part of your estate. So, for example, you could set up a trust to pay for education for children or grandchildren, and it would not be liable for inheritance tax.
Getting a little help
Making a will can be simple. Providing the kind of legacy you want, and making sure your loved ones are provided for and protecting your estate Tax can be simple too – provided that you get expert advice.
‘Click here to read our recent blog “Don’t leave it too Long to Get Life Insurance“