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Your Money > Pensions Articles > Seven reasons to...
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By Sarah Modlock
For most of us mere mortals, a will is something we put in the same bracket as a pension - something to think about when we get older. But just like a pension, if we leave it until it is needed, then it really is too late. Law Society research reveals that at least one in three UK adults do not have a will. Many people assume that in the absence of a will, their partner will get everything. Others think it is only something you need if you are very wealthy. Not so. Whether you are worth millions or hundreds, it makes sense to have a will so that your estate (what you leave when you die) can be processed efficiently, your spouse and any dependants can be protected and your possessions can be disposed of according to your wishes. So here are seven good reasons to have a will: 1. Your money could end up being taken by the government If you are unmarried and have no close relatives, your estate goes to any distant relatives, or to the government takes it. Most people wrongly assume that a live-in partner will automatically inherit but if you die without making a will then they may not be legally entitled to anything from your estate. So even if you do not have much to leave, I bet you wouldn't want to see it go to the government and the tax man. 2. Because your family could face financial turmoil If you never get round to it and die without a will, it is called dying 'intestate'. In England and Wales the rather antiquated intestacy rules do not recognise unmarried partners or step children. Even for married couples, it can take many months before those left behind are able to gain access to bank accounts, savings and even life insurance and in the meantime, bills could be piling up at a a difficult time. Earlier this year the law was changed to provide higher automatic inheritance levels, known as 'statutory legacy', for spouses whose husband or wife dies intestate. From 1st February 2009, if a person dies intestate the amount left automatically to his or her spouse or civil partner changed from £125,000 to £250,000 where there are children, or from £200,000 to £450,000 where there are no children. Experts have welcomed the change - the first since 1993 - but emphasise that it is still important to make a will, particularly if you are unmarried or separated but not divorced and this change in the law only applies to married couples and those in civil partnerships, not unmarried couples. As many as 3,600 people a year are said to be at risk of having to sell their homes to meet claims on their partner's estate, particularly if they had children from a previous marriage. With intestacy, after the spouse has received his or her legal share, the rest of the estate is shared by children or grandchildren. If there are none, surviving parents will get a share. If there are none of these, any brothers and sisters who shared the same two parents as the deceased will receive a share (or their children if they died while the deceased was still alive). 3. A will allows you to control who will inherit what This is particularly important if you have children, grandchildren or even a large family who may all try to make a claim on your estate. It's amazing how feelings can run high when there is some cash to be had. And if the thought of someone greedy getting their mitts on your estate would have you turning in your grave then the best way to avoid it happening is to make a will. The Law Society files include the following anecdote: A Kent man said in his will 'To my first wife Sue, whom I always promised I would mention in my will……Hello Sue'. 4. You can name a guardian for your children If you have young children, you can name a guardian to care for them in the event of them being left without any parents. Since a guardian takes the place of a parent, making a will gives you the option of choosing someone you believe will offer the best care for your children if you're not around. 5. You can minimise inheritance tax Making a will gives you the opportunity of minimising the inheritance tax liability and is particularly important if you have substantial assets. IHT is only due if your estate - including any assets held in trust and gifts made within seven years of death - is valued over the current inheritance tax threshold (£312,000 in 2008-09). The tax is payable at 40% on the amount over this threshold so it is well worth minimising the exposure where possible. You may be tempted to save money by drawing up your own will but is this really the place to be frugal? Thousands of hours of court time are spent on cases involving home made wills. The fact that it is possible to buy a DIY will kit does not mean it is the way forward. The best way is through a solicitor, accountant or IFA, who should ideally be a member of STEP (the Society of Trust and Estate Practitioners - www.step.org) or be a chartered tax adviser. You may also be interested in Will Aid: www.willaid.org.uk. 6. You can review your wishes - especially when you get married or divorced Your will can be changed and superseded throughout your lifetime - something which is particularly important when you get married as any existing will is automatically revoked upon marriage. Equally, if you divorce, your former spouse will be removed from your will because the law supposes that you would not want them to inherit your estate. And of course having children may prompt changes. You should review your will regularly to reflect any major life changes, preferably every five years. It's also possible to die partially intestate. This occurs if you fail to deal with all of your property in your will or if someone who was due to inherit in your will dies before you or if you divorce and your ex-spouse's legacy becomes invalid as a result. It's therefore important to keep your will up to date. 7. You can express your preferences for what happens after your death It may seem morbid but if you have strong views about your funeral arrangements, your will is the place to specify details, whether it is burial rather than cremation or cocktails and caviar at the wake. So if you have a secret wish to have Duran Duran songs played at your funeral rather than the usual Ave Maria, make a will. Useful links: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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