wills
SOURCES OF HELP AND ADVICE FOR WILL-MAKING AND TAX-PLANNING
Due to the success of my commercial legal work it has become impossible for me to offer a will writing service. I'm afraid that there just isn't enough time for me to efficiently write wills of a standard with which I am happy. You may still refer to my web site for free help on this subject and I am pleased to recommend the alternative firms below, who will be delighted to help you.
1. My associated firm in Tenterden, Pengelly & Rylands
- (contact: Rosalind Johnson)
- 39-41 High Street, Tenterden, Kent TN30 6BJ
- Tel: 01580 762248
- Fax: 01580 763307
- Email: RosalindJohnson@pengelly-rylands.co.uk
Their fees are -
For a straightforward single Will with no requirement for tax advice: £100.00 + VAT.
For a pair of straightforward Wills with no tax advice for husband and wife: £150.00 + VAT
If it turns out that matters are not straightforward, or if tax advice is needed, the work actually involved will be charged for at £175 + VAT per hour - Rosalind Johnson will warn if this is the case, and will estimate the likely total fee
For wills incorporating discretionary trusts or similar IHT planning, the normal fee is £525 plus VAT for a pair of Wills plus £160 + VAT for the severance of a joint tenancy of property, if required.
2. More locally, Buss Murton in Cranbrook (contact: Jeremy Lester)
- 31 High Street, Cranbrook
- tel: 01580 712215
- I do not know what their fees are
3. For a low cost service, the Richard Cook Advisory Service in Lewes
- Brochure available on request; (contact: Richard Cook, who was formerly,
- but is not now, a solicitor)
- 5 East Street, Lewes, East Sussex BN7 2LJ
- Tel: 01273 472460
- Fax: 01273 472460
- Email: richardcook@mistral.co.uk
They reckon to charge £80 (no VAT) for a straightforward single with no requirement for tax advice; £95 for a pair of straightforward Wills with no tax advice for husband and wife. Fees for work involving tax advice would need to be discussed direct
What happens if I don't make a will?
Can I provide for my children?
What points should be covered in a will?
OK I'm convinced! What do I do next?
Why make a will
Making a will makes your wishes count.
A properly made Will is a legally binding document specifying the wishes of the person making it (the "Testator") for the distribution of the Testator's assets ("estate") on his or her death. Items that can be left by a Will include land and houses, money, investments and savings, furniture, jewellery, motor car and items of sentimental value.
Many people think that the whole subject of making a Will is taboo and will not discuss or think about it at all. In fact, making a Will is not a morbid affair; it will not be tempting fate: you will be safeguarding the future of those you care for.
Unless you make a Will, you cannot guarantee that your belongings will be distributed as you want when you die. Instead, your estate will be distributed strictly in accordance with the rules of intestacy.
More than half the people in Great Britain die without making a Will (i.e. they die "intestate"). 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. The distress and expense comes just at the time when the family is least able to cope with it.
What happens if I don't make a will?
Many married people assume that everything they own will pass on their death to their husband or wife, even if they have not made a Will. In fact, this would only happen if there were no other close blood relatives (parents, children, brothers, sisters, nieces, nephews, cousins). If you are married with children and die without leaving a Will, your husband or wife would inherit all your personal belongings and the first £125,000 of your estate. The rest of your estate would be divided in half, your husband or wife receiving the income only of half the estate and having no entitlement at all to the other half. That other half would pass to your children, and they would receive the capital of the first half when your husband or wife died.
With the current value of most houses, it is easy to see that a husband or wife could end up not inheriting the house or flat that has been home. If the property is in joint names, this may not happen: it depends upon the nature of the joint ownership.
If an unmarried couple live together and one dies leaving no Will, the survivor would receive nothing under the intestacy rules. He or she would have to apply to the Court for appropriate provision to be made, causing delay, expense and worry.
If you die without a Will and without any close relatives, all your estate would be taken by the government.
Can I provide for my children?
If you have children, a Will is the only certain way of providing for them after your death. This is particularly vital for young children. In your Will, you can appoint guardians, leave money on trust for them until they reach a suitable age (decided by you) and generally ensure that they are cared for as well as is possible in the circumstances.
Can I provide for my pets?
Rather than leave matters to chance, you can provide for your pets in your Will. For instance, you can leave a money gift to a charity animal sanctuary with a request that your pet is given a home for life at the sanctuary, or found a new loving home by them.
Alternatively, your Executors can be instructed in the Will to find a suitable home for any pets, and you can set aside money to pay for the upkeep of those pets.
Can I save tax?
All of your estate, except the first £223,000, will be taxed at 40%. This first £223,000 is soon used up, particularly if your own your own home. A Will can avoid or reduce the Inheritance Tax liability, for your beneficiaries' benefit.
Can I write my own will?
It is well known that lawyers make more money out of fighting over defective home made Wills than out of making Wills themselves. Common pitfalls include ambiguous statements, illegible hand writing, incorrect witnessing, unwitnessed alterations and a failure to cover foreseeable changes in circumstances.
Using a solicitor to prepare your Will should avoid all these problems, giving you peace of mind.
How much does a will cost?
Getting a solicitor to make your Will need not be expensive. A single Will can cost as little as £100; two Wills (one each for husband and wife) about £130. Complicated Wills take longer to prepare, and will cost a little more. A solicitor will also be able to advise on Inheritance Tax Savings and estate planning generally, possibly saving many thousands of pounds. The cost of the Will pales into insignificance by comparison.
In addition, there may be out-of-pocket expenses, but these tend to be rare, and your lawyer should warn you in advance of them. The main possibilities are Land Registry fees (if ownership of a property has to be adjusted), Companies Registry fees (if shares in a private company are to be left by Will), and similar expenses.
When should I make a will?
The short answer is, "Now". The best time to make a Will is when you are healthy and clear sighted, so that you ensure that you achieve what you want.
When should I review my will?
You should update your will to take account of any relevant changes -
- - changes in family circumstances
- - changes in financial circumstances
- - changes in others' circumstances
- - changes in tax law
- - changes in family circumstances
changes in family circumstances
Marriage automatically revokes a Will (except in special circumstances). Divorce renders a gift to the divorced partner ineffective. On separation or setting up home together, you should review your Will.
The birth of a child or grandchild; a child reaching majority, getting married or divorced; a child cohabiting or separating; adoption of a child (or grandchild); a death in the family. All these changes mean an existing Will might need altering.
changes in financial circumstances
If you move home, inherit property, sell assets mentioned in your Will, start or finish a business, enter or leave a partnership, form or wind up a company, you should make appropriate changes to your Will.
If you move to live abroad, work abroad or buy property abroad, your English Will may need altering. You might also need to make a foreign Will.
changes in others' circumstances
The death, disability, old age retirement or emigration of an Executor, Trustee, or Guardian warrants review of a Will. If a beneficiary dies, or if a beneficiary's financial needs have changed, you should consider reviewing your Will.
changes in tax law
If your present Will includes tax-planning provisions, they may need updating: changes in your circumstances, in the values of your assets, in the tax thresholds and in the tax law generally may create totally unexpected (and undesirable) results if your Will is not kept up to date.
If your present Will does not include any tax-planning provisions, perhaps it should. Inheritance Tax is levied at 40% on the part of an estate (or married couple's combined estate) over £223,000 in value. Much, if not all, of that "nil tax band" is used up by even the most modest family home, so most people have scope for saving tax. There are many ways to save tax - one or more may be right for you.
What points should be covered in a will?
Who should I appoint as executors and trustees?
Can I appoint guardians for my children?
Can I choose who to leave my business to?
Who should I appoint as executors and trustees?
The most appropriate executors and trustees in a particular case will depend upon the circumstances of that case: with a simple Will, it is best to appoint a friend or relation of the testator (the person making the Will) since this avoids paying extra professional fees. In a complicated Will, it may be appropriate to appoint a professional advisor as a trustee. If the trust is to continue for a long time, it may be worthwhile appointing a bank's Executorship Department, but this is rarely good value for money.
The ideal solution may in some cases be to appoint a friend or relation and a professional advisor.
In all cases, the sort of questions to consider are:-
Is the proposed executor trustworthy? This is not simply a case of ensuring that the executor is honest. The testator should also consider whether the executor can be relied upon to administer the terms of the Will in the way that the testator would want.
Is the proposed executor competent? The level of competence required will depend upon the level of complications in the Will. A simple Will will not need an expert as an executor, whereas a complicated Will may. Even in the case of a complicated Will, executors can always obtain appropriate professional advice, of course, so this does not mean that it is essential to appoint a professional advisor as an executor.
If the executor will charge for his services, will the benefits of employing him as executor justify the charges likely to be made?
Yes you can, for instance to choose burial or cremation, but a will is often not the best place - it may not be read until after the funeral. If you want to donate your organs, then a donor card should be carried anyway.
Can I appoint guardians for my children?
Yes, section 3 of the Guardianship of Minors Act 1971 provides that, on the death of the parent of a minor, the surviving parent will be guardian of the minor either alone or jointly with any guardian appointed by the deceased parent. Appointments can be made by Deed or by Will. When a Will is prepared, the point should always be considered. A testamentary guardian can be appointed to act jointly with the surviving parent or can be appointed to act only on the death of the second parent.
Can I choose who to leave my business to?
In some cases, it may be best to leave a gift of a business as a going concern to a beneficiary or to give trustees powers to run the business after the testator's death. If this is not done, the business would have to be sold promptly, probably for less than it's worth.
Yes, particular items can be given to beneficiaries as keepsake gifts or because they have intrinsic value.
What can't a will do?
Making a Will gives protection to your family if you die, but what happens if, for instance, you are severely injured in an accident? You may be mentally and/or physically unable to manage your affairs - who would look after them for you? It is possible to make an "Enduring Power of Attorney", appointing one or more people (the same people as your executors, for instance) to act on your behalf in appropriate circumstances.
How can a will save tax...
- for married couples with adult children?
- for married couples with young children?
- for individuals and married couples with no children?
Tax saving should not always be the first priority. Particularly where husband and wife are making Wills, they normally wish to provide for each other as their first priority and then to provide for their children, with possible tax saving schemes coming third or even lower on the list. This needs to be borne in mind throughout: it is no good having a clever tax saving scheme if this means that the widow or children are penalised in other ways.
How can a will save tax for married couples with adult children?
In the case of a married couple with adult children who have no claims to dependency on their parents, there are a number of possible solutions:
- If the joint assets of husband and wife are small (particularly if they are less than the level at which Inheritance Tax bites), then there is no scope for saving tax, and the appropriate provision would probably be for each spouse to give the whole estate to the other, with a gift over to the children equally if the spouse predeceases the testator.
- Where the joint assets are high enough to result in an appreciable amount of Inheritance Tax being paid on the second death (if for instance the joint assets are in excess of £250,000) and if it is thought that half of the joint assets would provide adequately for the surviving spouse, it may be a good idea to divide the joint assets equally between the parties and for each to give his half direct to the children.
- As a variant of 2.2, where half the joint assets would be insufficient to support the surviving spouse, it may be possible for the joint assets to be apportioned equally between the parties and for each to give legacies to the children, possibly up to the Inheritance Tax free limit, with the residue going to the surviving spouse.
- Where the joint assets are not very great and the couple's home is part of the assets, (for example a house in joint names worth up to about £400,000 and income-producing assets in addition) it is worthwhile considering severing the joint tenancy in the house, and each party giving his share in the house to the children (with the residue of his estate to the surviving spouse). This has the advantage of hiving off an Inheritance Tax free asset of up to £231,000 without reducing the potential income of the surviving spouse. This is more beneficial to the surviving spouse than giving a money gift of £231,000 to the children with the surviving spouse having the house in its entirety.
However, the following points should be borne in mind:-
- This solution can only be used if the children are trustworthy and the parties do not have a psychological block against the survivor not owning the matrimonial home. To ensure the arrangement is tax-effective, there must be no understanding or arrangement to restrict the children's ability to deal with their share in the home, even while it is needed as a residence by the surviving parent.
- This solution will only be tax effective if the gift is by Will: if the gift is made during the testator's life and he continues to live in the house, this would constitute a reservation of a benefit to himself and would result in no tax advantage arising from the exercise.
- As a variation, the half share in the house can be given (either to Trustees or direct to the children) on trust for sale. Again, there must be no conditions (eg: preventing the house being sold without the surviving spouse's consent).
- Where it is not practicable or acceptable to the parties for the joint assets to be divided equally between the husband and wife, so that for example the husband has £300,000 and the wife has £50,000, consideration can be given to the wife giving everything to the children and nothing to the husband, the husband giving perhaps £50,000 to the children and the rest to his wife.
How can a will save tax for married couples with young children?
Another common situation is that of a married couple with children all of whom are under eighteen and in full time education. Both husband and wife are content that the whole of their estate should pass to the survivor and confident that the survivor will make proper provision for the dependant children, but they may be concerned what would happen if they both die while the children are not self sufficient.
It is possible to give a "class gift" to the children whereby the Trustees would have powers to lend capital to the children before they reach 18. Normally, it would be better to create a discretionary trust for the children with the unallocated funds being distributed amongst the children once they all attain majority. This gives greater flexibility than the traditional provision, and since the needs of the children during their formative years will vary, it may be appropriate for the children to be treated unequally by the Trustees. The object of the discretionary trust is therefore to provide for the children in the same way as their parents would have done had they been alive.
Where either spouse receives a substantial salary and is in pensionable employment, Inheritance Tax may be a relevant consideration, particularly if a large sum will become payable from his pension fund if he dies in service. In these cases it is worthwhile considering the terms of the pension scheme, which often provide that a lump sum payment on death can be paid to dependents of the deceased at the discretion of the pension trustees. The employee can be invited to nominate his preferred beneficiaries. Because the lump sum payment falls outside the scope of Inheritance Tax, it would be a waste of a tax free sum of money for it to pass to the deceased's wife, and it may instead be appropriate to nominate the deceased's children as beneficiaries of the death in service payment, making provision for the widow by Will.
How can a will save tax for individuals and married couples with no children?
There is no real scope for avoiding tax on non-exempt gifts in these circumstances. Gifts to charities and (within limits) political parties can be exempt from tax, but it is not really possible to do much in the way of tax saving otherwise.
There is often scope for funding (not avoiding) the tax by means of various life insurance and trust schemes. Your lawyer can explain the principles involved in more detail as part of a specific discussion.
Of necessity, this is a very brief review of various possible Inheritance Tax saving or funding schemes. Your lawyer will be happy to talk them through with you in more detail, if you wish. He or she will need basic details of the values and types of assets you own, and of your family circumstances. An initial discussion may well be free and without obligation.
OK I'm convinced! What do I do next?
A lawyer can prepare a Will for you to suit your individual circumstances, advising you on particular problems or suggesting ways of minimising the effect of Inheritance Tax on your estate. You'll find a list of alternative firms here.
I strongly recommend that the first step should be a "financial health check" by an independent financial adviser on your behalf. This would normally be carried out without charge or obligation. If you do not already have a suitable adviser, I would be happy to recommend one.
Important Disclaimer
These notes are a general statement of the law - there may be errors or omissions. I do not accept responsibility for any loss resulting from reliance on them - please see my full disclaimer
