Making a will is vitally important. It is also a simple procedure and relatively cheap. Yet it is estimated that fewer than 30 per cent of the population bother. Neglecting to make a will could be a serious mistake and could cost your loved ones dearly.
What is a will?A will is a legal document intended to make your wishes clear about what should happen to your money and possessions (known as your estate) after your death. A properly drawn up will should:
- Appoint executors to oversee the administration of your estate on your death.
- Appoint guardians of your children.
- Make gifts of money or belongings to friends, relatives or charities.
- Direct your executors where to pay the assets from your estate.
- Include any direction as to the disposal of your body.
How can I make a will?A will should be in writing and witnessed by two independent people. It is important to ensure that your signature is witnessed by someone who is not a beneficiary of the will. You can get a standard will form from a stationers, although the traditional route is to go through a solicitor, who will draw up the will.
How much will it cost?About £3.50 if you use a standard will form and anything £60 to £150 if you use a solicitor, depending on the complexity of the will.
What happens if I die without making a will?This is known as dying intestate and could cause serious problems for your loved ones. For example, if you are not formally married, your surviving partner could lose your home even if you have lived together for 20 or 30 years. Instead your house could be taken over by an estranged relative who you detest, or if you have no close family your possessions could go to the Government.
What are executors?Executors are appointed in a will to be responsible for your affairs after your death. They must administer and wind up your estate and:
- Collect the deceased's assets.
- Pay the deceased's debts and liabilities.
- Distribute bequests to beneficiaries.
What about tax? A properly drawn up will may be able to reduce the burden of Inheritance Tax. If your estate, including the value of your house, totals more than £234,000 (the current nil rate band for Inheritance Tax), your estate may be liable to pay Inheritance Tax at the rate of 40 per cent of the value of your estate over and above the nil rate band.
Can I make a will and then forget about it?No, you should check that your will still reflects your wishes at least every five years, or when there are major changes in your life such as moving house, marriage, divorce, children or a dramatic change to the size of your estate. For small changes you can add an additional document called a codicil. Larger changes may need a new will.
If the will isn't updated, the intestate rules will be used to distribute everything that has been left out.
Are there special tax rules for leaving gifts to charity? Yes, bequests to charity are exempt from Inheritance Tax, no matter how much you want to leave.