Guide to Making A Will

What does a Will do?

A Will allows you to dispose of all assets

owned personally on the date of your

death, and helps avoid the often

unfortunate consequences of intestacy.

Some Wills are deliberately drafted to

dispose of limited assets – e.g. "all my

assets in the UK but not my property in

Spain". A Will has no effect prior to death

and can be changed at any time as long

as you are mentally capable. A new Will

normally revokes an earlier one.

Marriage or civil partnership

automatically revokes a Will, but divorce

only revokes clauses which benefited

your former spouse or partner.

Financial Dependants

Under English law nobody is obliged to

leave anything to anyone. But, the law

does give people who were financially

dependant on you a right to claim from

your estate if you have not provided

adequately for them. This includes a

surviving spouse, civil partner, minor

children, and possibly unmarried

partners, or others who were financially

dependant.

Does intestacy matter?

Dying without a Will, or "intestate" can

be unfortunate, particularly if you leave

a surviving spouse / civil partner and

children. The rules give a "statutory

legacy" to the spouse of £250,000 but

only income for life from half the rest.

The other half goes in trust for the

children at 18, which can give rise to

an unwelcome inheritance tax liability.

If there is no spouse/civil partner, or

children, assets go to parents, or

siblings, but not an unmarried partner.

What assets are covered?

A UK Will disposes of cash, houses/land,

investments, insurance policies, chattels

(house contents, cars, boats, animals,

jewellery) and anything else you own

anywhere in the world. It is usual to

make separate Wills in non-UK countries

where land is owned, to simplify probate

and make it easier to comply with the

"forced heirship" rules found in many

countries which can override a UK Will.

What assets are not covered?

A Will does not normally dispose of

jointly owned property, whether a house,

bank account or investments. These pass

by "survivorship" after the first death, on

production of a death certificate. Pension

benefits may often pass under a separate

Trust Deed. Family trusts under which

you benefited, pass under the terms of

the pre-existing Trust Deed or Will, and

not your Will. Life policies written in trust

are an example of assets passing on

death, but not by your Will.

Inheritance Tax (IHT) & Succession

Planning

IHT is a form of "wealth tax" on assets

transferred during lifetime or on death by

Will or intestacy. A Will can play an

"Under English law nobody is obliged to leave anything to anyone. But..."

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important part in avoiding IHT, as well as

controlling your assets by creating Trusts

for family members. The “transferable

nil rate band” introduced in 2007 allows

married couples or civil partners to avoid

IHT on assets up to £650,000 (2013/14)

but over that level complex planning

is needed to mitigate IHT, and to take

maximum advantage of the reliefs for

agricultural or business assets.

The Foreign Element

Couples of different domicile need to

take care as the exemption for assets

passing between a UK spouse to a non-

UK spouse is limited to £55,000 for

deaths up to April 2013 and £325,000

thereafter. A non-UK individual living in

the UK can shelter assets kept outside

the UK from IHT for up to 17 years, after

which their domicile is deemed to be UK,

and their worldwide assets become

liable to IHT.

Personal Representatives: Executors;

Administrators; Trustees

After someone dies their "personal

representatives" ("PRs") have legal

responsibility for their assets and

liabilities. PRs may be "executors"

named in a Will or "administrators" if

there is no Will. The PR's job is to collect

the assets, pay off debts and IHT, and

give effect to the Will or intestacy rules.

If there are ongoing Trusts under the

Will – e.g. if beneficiaries are under 18 -

the PRs are often appointed as Trustees

too, but it can be different people.

It is vital to select suitable PRs and

Trustees. Spouses or civil partners may

appoint each other, and perhaps one or

more children if mature enough.

However, appointing children can give

rise to conflicts, eg if there is a trust of

which a step-parent and children are

beneficiaries. Some parents will be wary

of appointing children who may face

divorce or be deemed "unsuitable" to

control substantial assets. Parents (if

not too old) siblings or close family

friends are other options. Failing them,

a solicitor or accountant is a common

choice. Banks are an alternative. A

precaution, if appointing an elderly

executor, is to nominate a substitute in

case they are unwilling or unable to act.

Funeral Wishes

Many people fail to express their wishes

but it is best to choose between burial or

cremation. Then, family members are

not left to make an awkward decision at

a stressful time. If you want to donate

organs for medical research or transplants,

that should also be made clear.

Guardians

If both parents die, children under 18

need legal guardians to take key

decisions – such as where they should

live, and go to school. It is usual to name

them in your Will. The people you

appoint will usually be those with whom

the children will live. Others may hold

the purse-strings as Trustees, and

manage the children's inheritance until

they come of age.

Summary

There are many aspects to consider

before attempting to write a Will.

Circumstances differ and so individual

advice is necessary. However, particular

care is needed in the case of:

�unmarried couples owning a property;

� couples of different domicile;

�people owning property abroad;

�any married couple with combined

assets over £650,000

�any unmarried couple or single person

with assets over £325,000

�anyone with pension or insurance

funds outside their estates;

�anyone who has been divorced without

achieving a “clean break”

By taking specialist advice, unnecessary

IHT liabilities may be avoided, not to

mention litigation after your death

whether from former spouses, or partners

who were financially dependant on you.

Making A Will - Continued

© Stone King LLP 06/2013

For further information on this topic please contact Rod Smith on 0207 324 1534 or email rgs@stoneking.co.uk Alison Allen on 01225 324407 or email alja@stoneking.co.uk

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