You may have read or heard about the statistics surrounding Wills: 59% of people in the UK do not have a Will in place.
But is that a concern expressed by professionals or just a statement to attract business? For the individual thinking of planning for the future, it is a good idea for you to consider what putting a Will in place actually means to you.
Wills: things to consider beforehand
How do I plan my daily life?
- Society is now complex and diverse, with a need to manage both incomes and savings efficiently.
What are my priorities?
- Because of the current economic situation, you may be focusing on short-term planning for now. However, it makes sense to at least consider what may happen when you die.
Who do I wish to provide for when I am no longer here?
- Is it family?
- Who do you consider to be your family? Is it family in the traditional sense? Times have changed, and the definition of family now means something different to each individual
Do I have anything in place to make things a little easier for those close to me when I die?
Does the UK have any legislation to confirm what happens to an individual’s assets when they die?
Yes and No. In short, the situation is different depending on whether a person has a Will in place or not.
Generally, a Will follows the wishes of the individual. However, if there is no Will, the Intestacy Rules are followed instead. These rules state that only married or civil partners and some other close blood relatives can inherit, in set proportions.
Thus, where there is no Will, even in what is referred to as a “traditional family”, the provision for a surviving husband, wife, or civil partner can be very different to what is usually stated in a Will. Thus, having a Will in place makes sense if you want to ensure your family receives the inheritance you want them to receive.
Do UK Laws provide any allowances to help offset any taxes that may apply on death?
Yes, each individual potentially has the following allowances which may be claimed:
- Spouse/Civil Partner Exemption – this exempts all transfers of value to the surviving Husband/Wife/Civil Partner from taxation.
- The Nil Rate Band (NRB) is an allowance of £325,000 but can be reduced or extinguished if gifts are made within seven years of death.
- An additional Main Residence Nil Rate Band Allowance – for deaths after 5th April 2020, an allowance of up to £175,000 can be claimed where the deceased owned an interest in “the family home” and makes a gift of that asset to direct descendants in their Will. If the value owned is less than £175,000, then it is the lower amount which can be claimed.
On the death of the survivor of a married couple or civil partner, any unused Nil Rate Band or Transferable Nil Rate Band Allowance of the first to die can be claimed additionally. There are rules that apply and a process for doing so, which a lawyer specialising in Wills and Probate can assist you with.
I have been paying into a private pension. Is the value of this taken into account as part of the value of my estate when I die?
It can be if you have chosen to have the pension payable to your estate.
If you have named beneficiaries in an Expression of Wishes and notified the pension provider of this, then it could be that the value of your pension pot is outside of your estate for Inheritance Tax purposes.
Will and Estate Planning.
Bold statements that 59% of people do not have a Will in place are in essence unhelpful. Instead, when considering putting a Will in place:
- Attention should not only focus on what you would like to happen when you die but also;
- Focus on the value of assets you have and whether they are held tax efficiently;
- What allowances may be available to be claimed to offset any Inheritance Tax charge;
- What allowances are not available and the potential for those to be available at a later date
(this is very relevant and can have a significant effect where a relationship is formalised by Marriage or Civil Partnership)
Overview
When planning what should happen in the event of your death, additional awareness of the legislation in place can help you understand what is or may be available to be claimed. Such awareness can ensure that those who you wish to benefit from your Will can legally receive their inheritance with as small an amount as possible being suffered in Inheritance Tax.
We would be very happy to assist you in planning for the future to ensure that you not only have a Will in place, but also that all relevant factors have been considered to help you make an informed decision about which type of Will is suitable for your circumstances.
Speak to a specialist on 0330 058 4011
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