‘Don't wait. The time will never be just right’.
(Napoleon Hill 1883 – 1970)
Whatever your age, an up-to-date, professionally prepared Will is incredibly important and, in fact, the only way to ensure that your wishes can be fulfilled while your family and friends are cared for in the way you intend. You should review your Will at least once a year but imminent changes to Inheritance Tax (IHT) mean it would be wise to review your Will as soon as possible.
1. Make sure you have a valid Will reflecting your current wishes
Your Will determines who you wish to benefit from your estate and who you trust to handle your affairs according to your wishes. Without a Will you die ‘intestate’, which means the Courts distribute your estate according to the rules of intestacy. This can add significant delays to the process and takes no account of individual needs or your wishes, which can lead to frustrating and difficult times for those you leave behind.
If you had a valid Will but marry or remarry, your original Will is automatically revoked. This will leave you intestate and you must have a new Will written.
The rules of intestacy can also lead to more of your estate being subject to IHT, meaning less of your hard earned assets being passed to your loved ones.
2. Understand shifting laws affecting your Will
Taxation and legislation change constantly, much of which you may never hear about. As tax treatment depends on individual circumstances, it is important to regularly review your Will with a professional, so they can advise of any changes that affect you and identify any amendments you can make to mitigate or benefit from those changes.
This will allow you to maximise the estate you pass on to your nearest and dearest.
3. Be clear of the Tax implications on your Will
A professionally prepared and maintained Will offers you the opportunity to mitigate inheritance tax liability. As an example, many older Wills may have wordings that mean you won’t benefit from the Main Residence Nil Rate Band that will apply from April 2017. This could mean that you pay up to £70,000 more in IHT than you might need to.
Unless you want the government to get a larger share of your estate, make sure you regularly review your Will with somebody who knows the rules and regulations inside out – make sure you are always the informed one.
4. Reflect any change in circumstances as soon as you can
Major life changes such as separation, divorce, death or changes in family and financial circumstances should be also accurately reflected in your Will. What you once wished for may no longer be appropriate and in some cases become the exact opposite. Conversely, things you hadn’t previously thought of become important to you.
As your life changes, make sure your Will reflects your views on those changes.
5. Charitable donations and subsequent Inheritance Tax reductions
The rate of Inheritance Tax is 40% on anything above the threshold which may be reduced to 36% if 10% or more of the estate is left to charity. Many people choose in their Wills to donate to charities close to their hearts. If your circumstances change it’s very important to ensure any charitable donations can be made where they ought to be.
6. Make sure you and those around you remain comfortable
A Will is a powerful document. It ensures that:
- Your money, property and possessions can be distributed rightfully and in accordance with your wishes
- Your younger children can be looked after by the appointed Guardians that you choose
- Your estate can be passed as smoothly and tax efficiently as possible to family and loved ones
- Legacies can be left to the charities that mean something to you
- Funeral arrangements can be effectively planned and fulfilled
- Your family and loved ones are secure with the comfort (both during your life and after) that they will be cared for by you, in accordance with what matters to you
- You can enjoy your life (and everything in it) knowing you are in complete control and one day, everything you own will be passed on to the right people to care for it.
Ermir Pashaj Dip PFS, IMC
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