Contemplating the draft of a will forces you to confront your own mortality. While not a pleasant topic, it’s prudent to make decisions on how you wish to distribute your wealth rather than leaving it to chance. Let’s explore five essential considerations when composing your will.
Understand your personal wealth
You don’t have to pinpoint the exact value of every possession down to the last penny, but it’s important to have a clear idea of your assets. Not only is this crucial for establishing testamentary capacity, but it also helps assess potential inheritance tax implications for your beneficiaries.
Typically, if you’re married or living together, many assets are jointly owned by your spouse or partner. It’s advisable to discuss and assess your combined worth together. If you’re unmarried or not in a civil partnership, the individual inheritance tax thresholds (nil-rate bands) are lower.
Every individual has an inheritance tax threshold, currently set at £325,000. This is the value of assets that can be passed on to beneficiaries without incurring inheritance tax. If everything is left to a spouse or civil partner, their threshold upon your death increases to £650,000. Unmarried couples do not benefit from this combined threshold; each maintains a £325,000 threshold. Consider incorporating a nil-rate-band discretionary trust in your will—speak to one of our advisors for more information.
Transferring your main residence to direct descendants (children, grandchildren, etc.) provides an additional £175,000 inheritance tax allowance.
Understanding your wealth helps calculate potential inheritance tax liabilities. While there are ways to mitigate this tax, solicitors can’t make it disappear magically.
It’s also essential to consider the details of pensions and life insurance when drafting your will. Typically, these benefits are designated and fall outside your estate for will purposes.
Wills often use complex, traditional language, but they are straightforward documents. A professional will writer or solicitor can clarify any unfamiliar terminology.
Consider your options carefully
When making decisions about the contents and beneficiaries of your will, it’s crucial to proceed thoughtfully. Ensure that your choices reflect your own wishes and are not unduly influenced by others. It’s important to acknowledge that family dynamics can be complex and subject to change. You might feel compelled to exclude someone in a moment of tension, but it’s wise to deliberate on such decisions.
Life is dynamic, and your will can be adjusted to accommodate significant events. You have the flexibility to modify your will as many times as needed during your lifetime, provided you have the mental capacity to do so.
Choosing executors
Whom do you envision being responsible for carrying out your wishes after your passing? These individuals are your executors. Depending on the complexity of your estate—not just in terms of value but also the number of assets—administering your estate can require significant effort, organisation, and time. It’s crucial to select someone who is capable of handling such responsibilities.
You might choose your spouse or partner to be your executor, and vice versa, but it’s prudent to designate an alternate in case they are unable to fulfil the role. If you and your partner are creating wills together, consider what would happen if both of you were to pass away simultaneously.
You have the option to appoint a solicitor as your executor, although this is not mandatory. An executor can opt to engage a solicitor to manage your estate if they feel incapable of fulfilling the duties themselves.
What about your children?
If you have children, you have the option to leave your estate to them. For children under 18, you can establish a trust and appoint trustees to manage the assets until they reach adulthood. You might want to include specific instructions in the trust, such as delaying their inheritance until they are older or allowing the trust to provide for their needs while they are minors.
If you have children under 18, it’s essential to carefully consider whom you will appoint as their guardians. This is a significant decision and a considerable responsibility for anyone you choose. It’s advisable to discuss this with potential guardians before naming them in your will.
If you do not have children, you may want to determine the distribution of your estate to other beneficiaries.
Funeral wishes
Consider your funeral preferences, which can be detailed in your will. You have the option to specify the type of funeral you desire, whether it be burial or cremation, with preferences for graveside services or committal. You can indicate your preferred burial location or specify where you wish for your ashes to be scattered. Additionally, you can outline instructions for any wake, viewing, or memorial service you wish to be held.
Furthermore, you can make decisions regarding organ donation, whether for transplant purposes or medical research.
Are you ready to write your will?
Approximately 60% of people in the UK have not drafted a will, often because they prefer not to dwell on such matters. However, ensuring that you and your family have a will is incredibly important should the unexpected occur.
Your will communicates your wishes regarding the distribution of your possessions, money, and property—collectively referred to as your ‘estate”—after your passing. Without a will, the law dictates how your estate is distributed, which may not align with your intentions.
Creating a will is a straightforward process and can spare your loved ones unnecessary distress during a challenging period. A will facilitates the smooth handling of your affairs according to your wishes.
If you are prepared to draft your will, reach out to one of our will & trust planners today.
