If you die without having made a will, your assets are automatically distributed according to the Rules of Intestacy. This may well have undesired consequences.
When making a will, you should firstly consider who your executors will be. These are the people you trust to administer your estate according to your will.
You should next consider who you want to benefit from your estate. Your spouse or partner is typically the first beneficiary, other beneficiaries may include children, relatives, friends, charities.
Your will can name classes of beneficiary (e.g. all your grandchildren).
Gifts can be put in trust rather than made outright. For example, you might use a trust to control assets that are being passed to children (or young adults) or to individuals who are incapable of looking after their own financial affairs.
When preparing a will, we always consider the Inheritance Tax position of your estate.
Inheritance Tax (IHT) is chargeable on your estate if it exceeds the IHT nil rate band (NRB) (currently £325,000). If you leave your residence to your children, you can claim an additional £150,000 (As of April 2019) known as the Residence Nil Rate Band (RNRB). Inheritance Tax is charged at 40% on the value of your estate in excess of the nil rate sum.
Effective planning can substantially reduce the amount of tax that will be payable on your estate. If your estate is likely to exceed the nil rate sum, it is worth discussing how family trusts and other planning options could benefit you.
If you are shielding or self-isolating it can be challenging to follow the normal legalities of making a will – namely it being witnessed by two people. In response to this, the law (the Wills Act 1837) will be amended to state that whilst this legislation is in force, the ‘presence’ of those making and witnessing wills includes a virtual presence, via video-link, as an alternative to physical presence.
The legislation will apply to wills made since 31 January 2020, the date of the first registered Covid-19 case in England and Wales. The legislation will apply to wills made up to two years from when the legislation comes into force (so until 31 January 2022), however this can be shortened or extended if deemed necessary, in line with the approach adopted for other coronavirus legislative measures.
The advice remains that where people can make wills in the conventional way they should continue to do so.
Douglas Jones Mercer Solicitors.
16 Axis Court, Mallard Way, Swansea Vale, Swansea SA7 0AJ 01792 650000
Chelston House, 103 Newton Road, Mumbles, Swansea SA3 4BN 01792 304090