In a series of articles, intended to remind us all about why Wills are important for the future of our loved ones and for the Hospice, Nadia Cowdrey writes:
1. Many people underestimate the importance of making a Will
Make your wishes known - If you die without a Will, you will have no control over who is entitled to your estate. Many married couples incorrectly assume that all of their assets will automatically pass to their spouse when they die. This is not necessarily the case. Making a Will enables you to decide who should inherit your assets and avoids unnecessary complications.
Decide who is in charge - Making a Will enables you to decide who should administer your estate, rather than the law making this decision for you.
Care for children - If you have young children, it is important to appoint a guardian to care for them if you, and your partner (if you have one) die.
Remember the people and causes you care about - By making a Will you can provide for your loved ones, and can make gifts to charities that matter to you – a wonderful legacy to leave behind.
Save money - A professionally prepared Will allows you to take advantage of schemes which can save inheritance tax, and avoids the unnecessary expense which can arise from a poorly drafted home made Will.
2. How to prepare for a meeting with your solicitor to make or change your Will
It makes good sense to prepare in advance for a meeting with your solicitor and the main issues to consider are:
What am I worth? - When deciding what provisions to include in your Will, it is very useful to make a list of your assets, their estimated value and whether they are in your sole name or held jointly with someone else. You should also detail what debts you have, such as a mortgage, loan or any outstanding credit card balances.
Who should I provide for? - Decide which individuals and charities you wish to benefit. The Martlets Hospice, for example, relies heavily on bequests made in Wills and gifts to charity are exempt from Inheritance Tax. Consider who may be financially dependent upon you; and equally who might reasonably expect to be provided for in your Will such as your partner, spouse, former spouse who you are financially maintaining or children. It is useful if you make a list to take with you to the meeting recording beneficiaries full names, addresses and their relationship to you (if any). You should also record if any are under the age of 18.
If you own or have an interest in a property, where are the deeds? - To give proper advice, or to enable certain provisions of your Will to take effect, your solicitor may need to check the deeds to your property. If you have them at home, take them with you to the meeting or advise the solicitor where they are held. If there is a mortgage on the property, then your lender will have them. Your solicitor will obtain them from your lender, if necessary.
Do you hold assets/ property abroad? - Tell your solicitor about any foreign assets and make sure that you take a copy of any foreign Will to the meeting. It would also help if you provide the name and address of your foreign lawyer.
Have you made a Will before? - If you have made a Will before, take a copy of your last Will to the meeting. If only minor alterations are required, it may be possible to deal with these by preparing a codicil which supplements or alters the Will.
How long will the meeting take? - This will depend upon your particular situation and requirements, and whether there are Inheritance Tax issues to consider. Most meetings will last at least 30 minutes, although they often take an hour or so.
Should I ask the solicitor any questions before I make an appointment? - Yes, you should ask them to: confirm that the solicitor/adviser you will be seeing specialises in this area; confirm the approximate charge, although bear in mind that it is not usually possible for a solicitor to give an accurate estimate until you have met to discuss your specific needs; send you a questionnaire, if they have one, which should cover most of the points in this article.
A Gift in your will to the Martlets does not cost your family as much as you might think.
Many people choose to include the Martlets in their Will in recognition of the care received by them or another family member from the Hospice. However there are tax advantages too, which are easy to see from the following example:
Mrs Smith is a widow with two adult children. Upon her husband’s death, she inherited his whole estate, and now owns a property worth £624,000 and has savings of £100,000. She is considering making a gift to the Martlets in her Will, but does not want to significantly reduce what her children receive.
Following advice from a solicitor, she makes a Will leaving a legacy of £100,000 to the Martlets and leaves the residue of her estate to her children equally.
The tax position and cost to her estate of including the legacy:
Total Estate (ignoring debts and expenses) £724,000
Less Her Inheritance Tax Allowance [2008/09 threshold] (£312,000)
Less her husbands transferred Inheritance Tax Allowance (£312,000)
Less charitable exemption applicable to the Legacy (£100,000)
Amount Liable to Inheritance Tax Nil
Children inherit £624,000 & the Martlets inherit £100,000
The tax position if she left her whole estate to her children instead:
Total Estate (ignoring debts and expenses) £724,000
Less Her Inheritance Tax Allowance [2008/09 threshold] (£312,000)
Less her husbands transferred Inheritance Tax Allowance (£312,000)
Estate Liable to Inheritance Tax £100,000 @ 40%
£40,000 Tax Due
Children inherit £684,000
As can be seen from this example, if Mrs Smith includes the legacy in her Will, the Martlets receive £100,000, but the actual cost to her children would only be £60,000, as the estate would save £40,000 inheritance Tax. You should not take or refrain from action based upon this article alone. Each individual is unique, and bespoke advice should always be taken from a solicitor specialising in Wills, Trusts and Inheritance Tax.
Nadia Cowdrey is a solicitor and partner in the Tax, Trusts & Estates Team at Griffith Smith Farrington Webb. She is also a full member of the Society of Trust & Estate Practitioners and Solicitors for the Elderly.
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