I’ve seen a huge variety of wills in my time – some good; some not so good! How do you know if your will, or your clients’ English wills, are the best they can be, though?
Unfortunately you can’t tell just by looking at the wording. A will should be unique to the will-maker – like a bespoke suit, it needs to be tailored to the will-maker’s individual circumstances to really hit the mark. However, for certain categories of people, common themes do emerge. So, if you or any of your clients are single, divorced or widowed, here are some ideas for you:
· Best type of will for you? One which passes all your assets into a flexible discretionary will trust has much to commend it. Like a chameleon, within two years of your death occurring, its terms can be altered with minimal UK tax implications. Great if your heirs’ circumstances have a habit of changing or can’t be predicted. Also particularly useful if:
o you want to make provision for cohabitees or dependants, perhaps only for a limited time after your death, but ultimately you want your wishes to prevail over what happens to your assets, not your cohabitee’s. Maybe because you have children from another relationship that you need to look after;
o you have elderly parents you want to look after but do not want to put assets in their estates as that will increase the Inheritance Tax (IHT) bill on their deaths (or you have concerns about their capacity to deal with inheritances)
o you want to make provision for your siblings but aren’t sure about the strength of their marriages or their ability to handle your money!; or
o you want to make provision for adult children but don’t want to make their IHT position worse, for the sake of your grandchildren.
· Giving trusted will trustees a power to add to the class of beneficiaries of your will trust means that if you happen to meet someone special and don’t get around to updating your will to include them, it is not a disaster.
· Assess the potential for financial claims from cohabitees or dependants. Have you promised your assets to anyone? If these claims arise, they will always slow down progress with the estate administration and can cost your estate a lot to resolve. Having a suitably drawn will can help to close down these issues at an early stage, helping everyone involved to ‘move on’.
· Think carefully about the impact of IHT – remember no IHT spouse exemption applies to you. Consider the following:
o if, for example, a house is to be made available for occupation by a dependant, are there enough other assets in the estate to fund the IHT? Payment of IHT by instalments may be possible;
o be aware that any assets left to an heir outright may suffer double taxation – IHT on your death and IHT on your heir’s death. A flexible discretionary will trust can be used to prevent the second IHT take; and
o ensure that pension lump sum death benefits and life cover proceeds are not going to be paid direct to your estate.
o if you are widowed, will the IHT transferrable nil rate band be fully available on your death?
· If you own assets jointly with someone else, can you prove what your share is? If you do not want your share to pass to your surviving joint owner(s), ask a lawyer to double check that this will definitely happen.
The above points are particularly relevant to British individuals. Non-UK domiciliaries and Brits owning non-UK situated assets will have additional issues to consider.