Half of the adults in the UK don’t have a will. While you may have a reason for putting the task off, there are many compelling reasons to make time to write a will that could provide peace of mind.
A survey from Will Aid found that 49% of UK adults do not have a will in place. A fifth said their reason for putting it off was because they do not want to think about death. While contemplating passing away is difficult, it is important to think about what you’d want to happen to your estate after you die.
Even if you have a will in place, you should regularly review it. Over time your wishes and circumstances can change. What you wrote 10 years ago may no longer align with your goals. Whether you’ve welcomed grandchildren, inherited money, or simply changed your mind, your will should reflect what you would like to happen to your estate. It’s a good idea to review your will every five years or after big life events.
If it’s something you’ve been putting off, here are five excellent reasons to make writing or updating your will a priority.
1. A will is the only way to ensure your wishes are followed
Without a will, your estate will be distributed according to intestacy rules. This can be very different from what you want, particularly if you have a complex family or want to leave something to several people. The only way to ensure your wishes are followed is to write a will.
2. You can use a will to name a guardian for your children
If you have children, you can use a will to name a guardian for them. Despite this, only a quarter of parents have named a guardian for their underage children in their will, according to Will Aid.
Without a named guardian, a court would decide who looks after your children. In some circumstances, this may not be who you wished and could even be someone your child does not know well.
3. A will can reduce family conflicts occurring
Grief can lead to family conflicts and has the potential to cause long-term disputes. In some cases, how your estate is distributed may be contested and it could cause rifts. This may be due to one person believing they know what you would want, which sharply contrasts with what another believes. Setting out your wishes clearly in a will can provide certainty and reduce the risk of family conflicts arising.
As well as putting a will in place, it may be worth speaking to your loved ones about your wishes too. This gives you a chance to help them understand why you may be making certain decisions.
4. You can leave a charitable legacy in your will
As well as leaving wealth to your family and friends, you may want to support a charitable cause too. Your will means you can leave a legacy to causes that are close to your heart. There are several different ways of doing this, from leaving a specific sum to charity to leaving a proportion of your estate. A legal professional will be able to offer advice on the different options you may want to consider.
As well as having a positive impact, a charitable legacy can also reduce a potential Inheritance Tax (IHT) bill. If you leave more than 10% of your estate to charity, the rate of IHT paid will reduce from 40% to 36%.
5. If your estate could be liable for Inheritance Tax, a will can reduce the bill
As well as leaving a charitable legacy, there are other steps you can take to reduce an IHT bill. Writing a will can help you maximise allowances so that you can pass on more of your wealth.
You can leave £325,000 to loved ones without any IHT being due, this is known as the “nil-rate band”. In addition to this, you may be able to take advantage of an additional £175,000 allowance known as the “residence nil-rate band”. You can use this if you leave your main home to your children or grandchildren. Naming your children or grandchildren in your will as benefactors of your home can increase the amount you can pass on without leaving an IHT bill.
Depending on your circumstances and goals, there may be other things you can do to reduce IHT. For example, placing some assets in a trust and passing these on through your will may be right for you. Keep in mind that trusts can be complex and often irreversible, so it’s important to take appropriate advice. If you’re worried about IHT, there are often steps you can take to reduce the bill.
If you’d like to discuss the value of your estate and how you can pass on assets to your loved ones, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate will writing, tax planning, or estate planning.
Richard Fyfe is a Chartered Financial Planner and a Director of Fyfe Financial.