Wills
Unless you make a Will, you cannot guarantee that your belongings will be distributed as you want when you die. It is surprising the number of individuals who do not have a Will and who die without making sure that those whom they wish to benefit from their estate after their death do so. As a result, many unnecessary complications arise, adding to the grief of the bereaved and the expense of winding up the deceased person's estate.
If you die without a Will ('intestate') the law decides who will receive your possessions. If you are married and die intestate, it is a common misconception that the surviving spouse inherits everything. This is not always the case and depends on the size of the estate; brothers and sisters and parents may make a claim. If you are not married but living with your partner and die intestate, your partner receives nothing.
Only a legally adopted child is classed (in law) as a son or daughter. Stepchildren need to be protected and named in the Will of their step-parent, if that step-parent wishes them to inherit as their natural child would.
Anyone over the age of 18 (12 in Scotland) can make a Will. Apart from the wish to choose to whom you leave your estate, you should also consider the following reasons for writing a Will:
- Marriage/Civil Partnership - You should make a new Will when you get married or enter into a civil partnership.
- Divorce/dissolution of civil partnership - You should make a new Will if you get divorced or your civil partnership is dissolved.
- Separation - You may have separated from your spouse/civil partner and wish others to receive the benefit of your estate.
- Guardians - If you have children under the age of 18 (16 in Scotland) you may wish to appoint specific individuals as guardians and you will want to provide for such children allowing the guardian to control the money which is left to your children until they have reached the age of majority. If no one knows what you would have wanted, the Court will decide on the future of your children and it may not be what you or your children would have wished.
- Executors - You may wish to appoint specific persons whom you trust to administer your estate after your death.
- Inheritance tax - You may wish to structure your Will in such a way as to reduce your inheritance tax liability.
Trusts
If the proceeds of a life policy are paid to your estate on death, there can be a long delay before the money becomes available to your dependants and there could be inheritance tax to pay on the proceeds. Writing an insurance policy in trust avoids these problems by ensuring that the policy pays out direct to your dependants, bypassing your estate altogether. Clients need to bear in mind that should they die and they leave more than 312,000 pounds in their estate there will be a tax payable at a rate of 40% of any surplus.
