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Your Will - why now is the right time to think it through

‘Finding the Will’, a report published in 2007 by the National Consumer Council, found that a staggering four out of five households with dependant children have not made wills. The importance of making a will and keeping it up-to-date cannot be stressed highly enough.

Here are just a few reasons why:

  • You can choose suitable guardians to look after your children who are under 18, should something happen to you.
  • Dying intestate (without making a will) can create huge problems for families:

If you die intestate and your estate is worth less than £250,000, your spouse/civil partner will inherit everything. If they are not the parent of your children, for example, if you have young children from a previous marriage or step-children who you continue to take responsibility for, you cannot guarantee that they will be provided for. Your children may then have to go through the painful experience of making a claim against your estate.

If you die intestate and are not married or in a civil partnership, your partner will not receive anything, unless they successfully make a Court claim.

  • Marriage/civil partnership revokes any will you made previously unless it was made specifically in contemplation of the marriage/civil partnership to your spouse/civil partner and states this in the will.

  • Divorce/civil partnership dissolution (but not separation) will revoke any benefit in favour of your former spouse/civil partner and the appointment of them as executor.

A well-drafted will can make the most of your assets, dividing them in a tax efficient way. Inheritance tax is no longer limited to the super-rich; the current threshold or ‘nil rate band’ of £325,000 per individual’s assets, which means that subject to certain exceptions tax is payable at 40% on anything above that.

Here are several ways that you can use a will to your tax advantage:

  • Spousal/civil partner exemption
Gifts made between spouses or civil partners are usually free from inheritance tax. The simplest way to avoid paying any Inheritance Tax may be to leave all of your estate to your spouse or civil partner.

  • Transferable NRB
For deaths after 9 October 2007, it is possible to make use of any surplus nil rate band from the estate of the first spouse/civil partner to die on the secondary spouse’s/civil partner’s death. 

  • NRB trusts
Instead of transferring assets up to the value of the available nil rate band, it is possible to leave money to a will trust. This could be a particularly useful vehicle if you have young children or elderly relatives who you wish to help in a flexible way. These forms of trust are useful for providing a fund that can be used for their benefit without them having rights to the fund.

  • Lifetime Settlements
You can also make lifetime settlements into which you can make gifts during your life or, by your will, on your death. By transferring assets into such trusts, you can reduce the value of your estate for inheritance tax purposes and achieve other tax savings. Now is a particularly good time to consider making a gift to a settlement especially if you are thinking of gifting an asset which may have fallen in value. By making such a gift, you may not only achieve Inheritance Tax savings, but you may also achieve a capital loss which you can use personally against future capital gains to save you tax in the future.

If you haven’t made a will, don’t delay any longer. Preparing a will is a straight-forward process and will give you peace of mind knowing that your family is well-provided for should something happen to you. Drafting a will does not have to be a drawn-out and complicated procedure.

If you have already made a will, be sure to update it regularly. As your circumstances change, so should your will.

Gaynor Jackson, Partner, Campbell Hooper Solicitors LLP

Campbell Hooper Solicitors LLP offers a full range of estate planning services (including a fixed fee initial interview).