We explain how writing a will could lessen the financial burden for your loved ones when you die.
Surely your money will go to your nearest and dearest when you die, even if you don’t have a will? Sadly, that is not always the case, in fact dying without a will could bring severe financial difficulties to your loved ones, as this example shows.
Jane and Tom have been together for a decade, they are not married, and share their mortgage/family home in Surrey with their five-year-old son, Josh.
If Tom dies without making a will, Jane and Josh could find their home and lifestyle at risk.
It is a common misconception that everything automatically passes to a surviving partner. In fact, as Tom and Jane were never married, Jane would not inherit a penny.
If they owned the family home as ‘Tenants in Common’, Tom’s share of the home falls part of his estate, rather than passing to Jane.
Instead five-year-old Josh would receive his father’s share of the house, and any other assets after Inheritance Tax (IHT), had been paid. It may be necessary for the family home to be sold, just to cover the tax bill. The remainder of Tom’s assets will be held in Trust for Josh until he turned 18 years old.
This article and information provided is to help you make your own decisions, but it is not personal advice. If you are unsure seek advice.
The Importance of Wills.
If somebody dies without a will, what happens to their estate can differ significantly from what they would have chosen. Assets will follow Government rules, known as the Rules of Intestacy. Under these rules only spouses or Civil Partners, and some other close relatives can inherit the estate.
The system for working out who will inherit what is complex, and affected by the value of the estate, whether or not there is a surviving partner (married or in a Civil Partnership), and the existence of any blood relatives. There are even circumstances where the estate passes entirely to the Crown, without anything going to carers or co-habiting partners.
A professionally drafted will is the first step towards making life easier for those you leave behind. You cannot reduce the emotional blow of losing a family member or partner, but having a valid will can lessen the administration and financial blow. It also gives you greater control as to who receives what and when.
Taking action today to formalise your wishes, means your loved ones aren’t forgotten or ignored when you are gone.
You can also limit the IHT that may have to be paid.
Pass Money to your Loved ones Sooner.
Each tax year anyone can give away up to £3000 IHT free, but there are also lesser known gift allowances. For example, £5000 when a child gets married (£2500 for each grandchild). £250 to any number of individuals, provided you have not already given them a gift using a different exemption.
Outside the exemptions, any gifts you make will normally fall outside your estate, provided you live for seven years after making the gift. So, planning early can help reduce your estate IHT liability. Tax rules can change, and the benefits can change on the individual circumstances.
Don’t leave it until it is too Late.
If you are planning to pass on as much of your wealth as possible to your family, don’t put it off – get planning as soon as it makes sense for you. The first step is to make sure you have a valid will.
In such circumstances, please contact and we will assist.