Benefits of a Will
Having a will means that you decide who benefits from your estate on your death but also the way you make your will could save significant amounts in tax especially for married couples and civil partners.
What happens if you die without a valid will
The law dictates who inherits, known as the intestacy rules. If there is a surviving spouse they receive a legacy of £125,000 from the estate if you also have children and £200,000 if there are no children but there are parents and/or brothers and sisters. A consultation paper has proposed increases in these amounts to £350,000 and £650,000 respectively but this has not yet taken effect
What happens to the remainder depends on whether there are children. If there are children, they take one half of the remainder outright (or on statutory trusts if under age 18). The surviving spouse gets a life interest (right to income) in the other half with the capital passing to the children on the spouses death. If there are no children, other relatives in a prescribed order take the rest.
It is therefore a misconception that a husband and wife are automatically entitled to the whole of each other’s estates on death.
Further remarriage revokes a previous will whilst a divorce removes from the will reference to the divorced spouse.
Practical reasons for making a will
- Those you wish to benefit will in fact benefit after your death
- Your estate can be distributed faster and often with fewer costs
- Where there are children under age 18, you can specify guardians for them in your will and you can control the terms of the trust under which the monies are held and who will act as trustees
- If you wish to specify successive interests, for example, someone to have an income for life and after their death for someone else to benefit this can be done by way of a trust in your will
Tax reasons for making a will
In general terms Inheritance Tax (IHT) is payable on an estate with a value in excess of the "nil rate band" (currently £300,000) if it passes other than to your spouse (or charity).
The setting up of a trust within a will can avoid an estate passing into the estate of a beneficiary and adding to their IHT liability or being frittered away or becoming assets under attack in a divorce situation.
Whilst the government have doubled the spouses nil rate band to a current rate of £600,000 thereby removing the necessity for the nil rate band will for IHT purposes there are still tax advantages in the use of a trust following the death of the surviving spouse
Therefore do not hesitate to take advice with a view to reviewing your will and or putting in place a valid and suitable will
Contact Rowe Cohen 0161 830 4600 or Pamela Wilson direct on 0161 830 4672
Or email p.wilson@rowecohen.com