“Living in the moment” has been a recurrent theme throughout the ages. Whether known as “Carpe Diem” to the Baby Boomers, or “Mindfulness” or even “YOLO” (you only live once) to the Millennials, they all mean the same thing; live in the moment and give little thought to the future.
This could perhaps explain the shocking statistics that only two in five adults in the UK have made a Will, and that the average age of a Will maker is 58. Whilst there is some wisdom in not being overly cautious about the future and enjoying the present moment, the reality is that we are living longer, and for the most part, healthier and fuller lives. So, whilst we should definitely live in the moment and enjoy what life has to offer, we should also be thinking about the future – ours and the future of those we hold dear.
Why do I need a Will?
A Will can be a powerful and useful tool.
- Control
On a simple level, it gives a person control over the distribution of their assets on death. It allows them to decide who gets what, and whether they should inherit outright or subject to a trust or subject to attaining a particular age.
- Guardians
Young parents are able to use a Will to appoint guardians for their children if they should die in their children’s minority. It can be used to set up trusts for minor children and to provide for them until they are in their thirties.
- Tax Planning
On a more complex level, a Will can be used as a tax planning tool and assist with the mitigation of tax by taking advantage of the tax exemptions, reliefs, and allowances.
- Vulnerable Beneficiaries
It can also be used to set up trusts to benefit disabled beneficiaries which can attract tax exemptions and reliefs. Trusts can also be set up to benefit beneficiaries who are in greater need than others at different points of their lives as well as protecting assets from spendthrift beneficiaries, or those going through a difficult patch such as a divorce or even addiction.
- Foreign Assets, Forced Heirship Rules, and Election
For those with foreign assets, a Will can assist in electing the laws of succession of a particular country which will to apply to their worldwide assets as opposed to some assets being subject to forced heirship rules. Some countries such as France and Italy have forced heirship rules whereby a proportion of a deceased’s person’s estate must be left to particular descendants regardless of whether or not a Will has been made. This inhibits a person’s ability to dispose of their assets freely. In England and Wales, individuals are able to dispose of their assets freely in any way they wish. To take advantage of this, it may be possible for an election to be made in their Will electing the laws of England and Wales to apply to their worldwide assets wherever situated.
- Domicile
A Will can also be used to state a person’s domicile. Although not conclusive, this is a useful statement of intent.
- Marriage
Whilst marriage revokes a Will, divorce does not but a Will can be made in contemplation of marriage.
Dying without a Will
The law will dictate who is entitled to inherit your possessions and property on your death. There is a list of relatives who would be entitled to inherit, and this will depend on whether you are married and/or have any children or grandchildren at the date of your death. If you are married with children, then your spouse/civil partner would be entitled to £270,000 of your net estate, and your personal possessions. The rest would be divided equally between your spouse/civil partner and children.
If you do not have a spouse or children at the time of your death, the other persons entitled to your estate would be any surviving parents, brother or sisters, grandparents, or uncles and aunts. This could mean that distant relatives might inherit your estate and this might not be your intention.
Key Events
Key events in your life should guide you to either consider making a Will or updating your existing Will. Some of these events are:
- Marriage or divorce
- Having children
- Buying a property
- Acquiring foreign assets
- Acquiring a new domicile of choice
- The death of beneficiaries or executors in an existing
Incapacity
One of the requirements to create a valid Will is that the person making the Will must have the capacity to do so. In the event of incapacity, and if the rules on dying without a Will (as set out above) will be inadequate, an application to the Court of Protection will have to be made for a Statutory Will to be authorised on an incapacitated person’s behalf. This can be very costly; especially if there are several beneficiaries who might be entitled to inherit. They would each be entitled to be represented in the Court proceedings and a litigation friend would need to be appointed to represent the incapacitated person. The general rule is that all the parties’ costs would be paid from the incapacitated person’s funds. Making a Will in good time can therefore save significant future costs.
Seize the Future
Thinking about one’s own demise may not always be pleasant. However, addressing the issues that may arise on death in a Will today can save those we leave behind unnecessary anxiety and expense giving them the ability to grieve peacefully and celebrate the joyous moments of our lives.
For advice on this matter and assistance in reviewing and drafting your Will according to your wishes, please contact our Wealth Planning team.
