Most people would agree that making plans to secure their family’s financial future is an important and a sensible thing to do. Yet, many don’t make a will and those who do often leave it until they are nearing, or are in, retirement, or until it is too late to do so.
You might think that you are too young, you are in good health or there’s plenty of time, but consider what would happen to your estate if your life was suddenly cut short and you hadn’t made a will.
Even if you have already made a will, have you considered if it might need reviewing to ensure it is up to date and reflects your circumstances and wishes.
Making a Will Guide
Have you ever stopped to think what might happen if you haven’t made a will?
- Would your family be protected financially?
- Would your estate go to the people you want it to go to?
- Might your estate be liable to Inheritance Tax on your death and what could you do about it now?
- If you are cohabiting, but are not married, your blood family would inherit your estate on intestacy, but not your partner.
- You might be thinking that you don’t need to make a will as everything goes to your spouse anyway, but that’s not necessarily the case if you have children.
- If you marry, your will is automatically revoked. If you intend marrying you can make a will in contemplation of marriage so that your will remains valid after your marriage.
- Co-habiting with your partner is another time when you should think about making or reviewing a will, particularly if one of you owns the home in their sole name. Talk to us to ensure your interest in your home goes to the person you want or who needs the security of a home, usually your partner and any children.
- If your personal wealth has grown since you made a will then your estate could be liable to IHT on your death and a financial check and a new will could be essential. Contact us to arrange a consultation so we can help you assess your needs and priorities.
- Changes to the tax legislation can have important financial consequences for those you have provided for. If you made a nil-rate band discretionary trust will many years ago you may be surprised to know that it may no longer tax efficient, for example.
- If you have children with special needs, you may need to consider setting up a will trust specifically for them.
- You might think that you are too young to do so, you are in good health or there’s plenty of time for you to make a will, but consider what would happen to your estate if your life was suddenly cut short and you hadn’t made a will.
Why You Shouldn’t Write Your Own Will
For a will to be valid it has to comply with certain formalities when it is signed. If it doesn’t, for example there are no witnesses or the witnesses sign at different times it will be invalid and the estate will then go on an intestacy. This might mean your estate will go to your next of kin who you might not want to benefit form your estate and might not even know.
Sometimes people forget to leave the residue of the estate to anyone, or make gifts which fail to take effect or are too vague and uncertain. Your estate could end up with someone you do not know or might not like.
Do You Already Have a Will?
You may have already made a will but have you considered if it might need reviewing to ensure it is up to date and reflects your circumstances and wishes? You should consider making or reviewing your will when something life changing happens, for example, on a beneficiaries death, on divorce, you inherit wealth or marry (which revokes a will you have already made.
Changes to the tax legislation can have important financial consequences for those you have provided for. If you made a nil-rate band discretionary trust will many years ago you may be surprised to know that it may no longer be tax efficient. If you have children with special needs, you may need to consider setting up a will trust specifically for them.
Make a Free Enquiry
Now could be the time to find out more. Our lawyers at Challenor Gardiner have a wealth of experience in dealing with these and many other circumstances and will be able to guide and advise you. You will have peace of mind knowing all your affairs are in order. Contact our friendly and knowledgeable team to guide you through the process quickly and easily. All initial enquiries are without cost or obligation, so call us on 01865 721451 or, email email@example.com or complete our Free Online Enquiry contact form.
Can a Will be Varied after Death?
A will is made to give effect to a person s wishes as to how their property should be distributed after death. Sometimes, however, this does not produce the desired effect, for example, where the family circumstances have changed since the will was made.
There are a number of remedies which can be used in such cases. To rectify a will, a court can declare it invalid, or it can add or omit words to give effect to the testator s true intentions.
- A will can be declared invalid if the testator was not mentally capable or created it under undue influence from another person.
- Under the Inheritance (Provision for Family and Dependants) Act 1975, it is possible for anyone who can prove they were dependent on the testator to a material extent during their lifetime to claim a share of the estate if they have been excluded from the will. For example, a long-term cohabitee is normally entitled to claim a share. A claim under the Act must be made within six months of the grant of probate. A valid claim can be resolved either by a settlement between the claimant and the beneficiaries or by an order of the court.
- Where the will is not disputed, variation can occur if a beneficiary disclaims a gift or if all the beneficiaries agree to vary the clauses. The latter option is called a Deed of Variation and it will give the new clauses the same effect as if they had been in the original will.
- A Deed of Variation must be a written instrument and must have the written agreement of all beneficiaries. It must be made within two years of the testator s death. Minors cannot give consent. If any of the beneficiaries are minors, an application must be made to the court to obtain consent on their behalf. A variation is normally sought where the will does not provide the outcome desired by the testator s family. Examples of this are when a beneficiary does not want to inherit an asset, where a person was excluded from the will when they were led to believe otherwise or where no provision was made for some of the testator s dependants.
- A variation may also be made to clarify or improve ambiguous drafting. A particularly common reason for a beneficiary to refuse property is in order to reduce the Inheritance Tax (IHT) burden on the estate. For example, a Deed of Variation can be used to pass property to the testator s children, rather than to his or her spouse, in order to avoid IHT payable on the spouse s estate when he or she dies. The spouse might therefore refuse the gift and request that it be passed directly to the children. If the IHT bill is affected, HM Revenue and Customs must be informed within six months.
- Deeds of Variation are best suited to families who can agree on a desirable outcome indeed, they are sometimes referred to as Deeds of Family Arrangement. They are not normally suitable where the will is disputed. Their most useful function is probably as an IHT planning device where the testator has not considered this.
The Main Residence Nil-Rate Band Exemption
If you pass on your family home and estate to your children or grandchildren you can benefit from the main residence nil rate band exemption, reducing the amount of IHT payable as long as the home is not worth more than 1 million. The exemption is in addition to the general nil rate band exemption from IHT of 325,000 and has been phased in progressively. In the current tax year 2020/21 that is worth an extra £175,000.
Let’s explain that benefit in a little more detail.
Additional nil rate band
For deaths that occur on or after 17 April 2017 and additional nil rate band, the main residence nil rate band will be available when a residence is passed on to a direct descendant. The main residence nil rate band is set at:
- 100,000 for the 2017/18 tax year;
- 125,000 for 2018/19;
- 150,000 for 2019/20; and
- 175,000 for 2020/21.
The main residence nil rate band will be increased in line with the increase in the Consumer Prices Index from 2021/22 onwards. Each individual is entitled to their own main residence nil rate band, which is available in addition to the existing nil rate band, set at 325,000. As is the case with the existing nil rate band, if a person dies without using their full main residence nil rate band, the unused proportion we will be available on the death of their spouse or civil partner.
The introduction of the main residence nil rate band will eventually allow a couple to pass on a family home worth up to 1 million free of inheritance tax. Direct descendants only. The additional relief for passing on a residence will only apply where the property is passed on to direct descendants, such as children or grandchildren. The measure does not benefit childless couples as the additional nil rate band is not available where the property is left to someone other than a direct descendant. This would be the case where, for example, a maiden aunt left her home to a niece.
Although the new nil rate band is only available for deaths that occur on or after 6 April 2017, the nil rate band will also be available where a person downsizes or on or after 8 July 2015, or ceases to own a home on or after that date and assets of an equivalent value, up to the additional nil rate band, are passed on to direct descendants after death.
Transferable main residence nil rate band
As with the nil rate band exemption, in the case of married couples on the second death any unused main residence nil rate band exemption of the first spouse to die can also be transferred and set off against the value of the estate.
High value estates
Those with high value estates (in excess of 2 million) will not be able to benefit from the full amount of the additional nil rate band. The additional nil rate band is reduced by 1 for every 2 by which the estate exceeds 2 million. For 2022/21, the additional nil rate band is lost completely where the estate exceeds 2.2 million.
Need to know
The additional nil rate band is only available where deaths occur on or after 6 April 2017 and where the property is left to a direct descendent. The relief is reduced where the value of the estate exceeds 2 million.
Using your IHT exemptions wisely is an important part of estate planning. Should you want to find out more; are thinking of making a will; or might need your existing will reviewed in light of these changes then please contact us for advice.