Adulting 101

Most people don't really want to think about how life goes on after they have left this world, but as Benjamin Franklin once said… "In this world nothing can be said to be certain, except death and taxes".

Thinking about life after you have gone is certainly not a cheerful thought. That said, it is something worth thinking about properly and an area that's important to get right. Writing a will and planning for the future can save your loved ones additional stress and upset, as well as potentially saving them some tax too!

As Financial Advisers, one of the early questions we ask during an initial meeting is whether a client has a will and if so what's its content. Responses tend to provide a wealth of information about the person you're talking to. From their family situation to their life preferences and views on the world. However it always amazes me how many people either do not have a will or have one but it doesn't reflect what they now want to happen. Over the years I've had various excuses including "not got round to it", "I don't want to jinx myself", "I don't have anyone to leave it to", "can't decide", "can't agree" and the one I love "I'm too young to need a will". The list goes on!

In my experience most people are aware that they should have a will, it's like a rite of passage to adulthood but something seems to hold people back. This month I thought I would try to explain not only why everyone should have a will but also why it needs to be valid and what happens if you don't have one, as it's really not as straightforward as most people think.

Wills

A will is a legal document that expresses a person's wishes regarding the distribution of their property and the management of their affairs after death.

It is important to make a will whether or not you consider yourself to have many possessions or much money. Without a will if you were to die, certain rules exist which dictate how your money, property or possessions should be distributed and this may not be as you would have wished if you were still alive to have a say.

For couples who are unmarried or without a civil partnership, you will not automatically inherit from each other unless you each have a will, so on the death of one of you this could create a serious headache and financial problem for the remaining partner.

The rules that govern how an estate is distributed if you die without a will are not flexible, and do not take into consideration your personal or family circumstances. For example, if you are married but your spouse disappears off into the sunset without you getting divorced, they would automatically receive some of your estate in the event of your death. This would also be the case if you have a will which includes them and you fail to keep it up to date.



Myth Busting Wills

"Once written a will is set in stone"

Definitely not true. You can change or revoke a will whenever you want. Should you wish to destroy a will you could burn it, tear it up or otherwise destroy it as long as the intent is clear that you wish to "cancel" or revoke it. However before you dash outside and set a fire, you can also change a will whenever your views change. It is relatively quick, straightforward and inexpensive to do and can be done at any time with what is essentially an addendum. These are referred to as a codicil so don't let "what if I change my mind" be the reason for not writing a will.

"I don't need a will my spouse will get everything"

This one is partially true depending on your circumstances.

If you are married with no children and die without a will, your spouse would inherit your estate. However without a will the process is a lot more of a faff!

For those who are married and have children, the answer is no your spouse doesn't automatically get everything. It will depend upon the size of your estate and how you own your property, but a spouse would receive £270,000 plus your possessions with the reminder then being split between your spouse and children. So the estate doesn't automatically all go to your spouse.

"My family know what I would want to happen with the children"

Nobody wants to think about not being there to watch their children grow up but sadly it does happen. By creating a will you can ensure that your wishes are followed and that there is no disputes or further turmoil for your child/children afterwards.

"My step children will inherit everything"

Whilst researching the rules this one came as a surprise to me. Did you know step children are not covered by the rules of intestacy? So unless you have formerly adopted the child or you include them in your will, a step child will not receive any of your estate.

Are DIY Will packs all they are cracked up to be?

There are a wealth of DIY style packs on the internet and in the most simple terms a will can simply be a written intent with witnesses. But before you grab paper, a pen and start dragging people in to witness your master plan, unless you know exactly what you are doing it is very easy to invalidate a will.

Some common mistakes include:

• Not being aware of what is required to create a valid will;
• Not fully accounting for your entire wealth,
• Not considering the 'what if' especially if someone predeceases you.

The list goes on so before considering writing your own will, I would suggest seeking some advice as getting it wrong can be very costly and that's without considering the tax ramifications of your proposed plan.

Do I need a solicitor to write a will?

If there is a solicitor reading this I can pretty much guarantee they are cringing at this question. This answer is… yes, no, sort of! Technically you do not need a solicitor to write a will but I would suggest proceeding with great caution unless you have the most simple of circumstances and even then, what may appear simple and straightforward to you, maybe very different in the real world. Getting good legal advice can make a very big difference to the outcome.

"Can't Decide or Can't Agree"

Having put off writing a will myself for many years, I completely understand this one. With the increasing number of divorces followed by new relationships, society not has lots of "blended" families for want of a better description. It's not unusual to have children with different parents in the same family unit, and it can be difficult to decide how each parent wants to divvy up their estate.

The best advice I can give you is to go and see a great solicitor. It's absolutely ok to go to that meeting not having all the answers, simply knowing that you need a will. If I use the example of financial advice, when a client arranges a meeting with us they know they need some financial advice, but they don't necessarily know what is the right solution. Only by discussion and evaluating the clients individual circumstances do we formulate a recommendation.

The same can be said for solicitors when it comes to will writing. This is their specialist subject and they are used to having an open discussion to help you see the pros and cons of the different scenarios, helping find solutions that are right for you and your family. So definitely don't let "can't decide" or "can't agree" be one of the reasons you don't write a will.

I am too young or I won't care I will already be dead

If we all knew how long we had left on this mortal coil, it would be great. You could work hard to earn money to play even harder. Spoiler alert! None of us know when that all important expiry date may be. So "I'm too young" would be ok if you knew you were going to live forever but generally it's just wishful thinking.

Whilst it's true that you will be dead and blissfully unaware of what is happening with your estate, by not writing a will (whether you are young or old) creates an awful headache for those you are leaving behind.

Without a will the law of intestacy will dictate who gets what. As you've not left instructions as to who will execute your will, a friend or relative will most likely be left to sort your estate. They do this by applying for a "grant of letters of administration" which allows them to 'administer' the estate. This begins a process of gathering values before distributing the estate to your heirs. Without a will this process can be time consuming as well as causing delays, at a time when your loved ones are already grieving.

"I don't want to jinx myself"

For somebody who is not overly superstitious this one is more of a challenge to relate to. That said I do prefer black cats not to cross my path so I recognise and accept that everyone's views will be different.

My question for you to consider is: Is this really your true reason for not writing your will or an excuse for not getting round to it?

I don't have anyone to leave it to

If you genuinely have nobody that you would like to leave your estate to and you pass away without a will, they will check for any distant relatives and where none are found then your estate will be given to the crown. Whilst you may be entirely comfortable with this scenario by writing a will you get to have your say. Your estate doesn't have to go to a person it could be left to charity, a local group, museums, universities, libraries, political parties… to literally anyone so whilst a specific person might not spring to mind, remember you have a wealth of other options available to you.

I have excluded someone from my will so everything will be ok

More often than not, when we talk about wills it is in the context of leaving something to someone. But actually a will is just as important if not more important when it comes to excluding someone.

Growing up my dad threatened to disinherit me countless times, most often in jest but you know teenagers, we were not all angels all of the time! Whilst my dad may have been joking, sadly in lots of family circumstances there are distinct family rifts and disputes. Most people just assume by not including an individual in your will they will automatically not get anything.

Including an exclusion clause doesn't by any means prevent a claim by a disgruntled beneficiary. However, most solicitors will also recommend that a letter of wishes is prepared alongside the will, setting out the reasons why you have chosen to exclude someone or leave them less. Although the letter does not guarantee a claim will fail, it will be used to explain the reasons behind the decisions and a solicitor would also have a detailed file note of the reasons behind the exclusion. This can be a huge assistance if a claim was ever made. As you can see it is not always as simple as it first seems and it is always worthwhile seeking legal advice in this scenario.

Last Will and Testament

In case you are still not convinced that everyone should have a will, there is also the potential that having a will can save your family inheritance tax. The Government does love to tinker with tax rules and one of their more recent additions was to enable families to pass on their main residence to children with an additional tax free allowance. Without a will and some proper planning, your estate could be missing out on additional tax savings that are relatively straightforward and easy to implement.

For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.

Will writing involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.

SJP APPROVED 09/08/2023