The importance of making a will

Making a will is one of the most important steps you can take to protect your family, your assets and your wishes. A properly drafted will allows you to:

• decide who should inherit your estate, appoint trusted executors and guardians;
• reduce the risk of uncertainty and delay; and
• reduce your exposure to inheritance tax (IHT) on your death.

Without a will, your estate will instead be distributed under the intestacy rules, which may not reflect your intentions or provide adequately for the people and/or causes that matter most to you.

Choosing the beneficiaries of your estate

Without a will, inadequate provision may be made from your estate for your intended beneficiaries under the intestacy rules. Although it is often assumed that a spouse or civil partner will inherit everything in the absence of a will, this is not the case where there are other surviving close relatives. In addition, a co-habitee will not benefit under the intestacy rules at all (even if he or she is a long-term partner); nor will charities.

Minimising inheritance tax

Everyone has an IHT nil-rate band and assets falling within this band may be left tax-free on death. In addition, gifts to particular people (eg spouses) and gifts of certain types of assets (eg business property) may qualify for IHT relief. By making a will you can arrange the distribution of your estate to maximise the benefit of any applicable exemptions and reliefs.

Selecting your executors

Your executors have a vital role in the administration of your estate. In addition, they may act as trustees where assets are left on trust. By making a will you have the opportunity to select the most appropriate people to fulfil these tasks.

Appointing guardians for your children

If you have children under 18 it is advisable to appoint guardians for them should both you and their other parent die while they are still young. Such an appointment may easily be made in a will.

Providing for your children

Under the intestacy rules, minor children receive their share of the estate at the age of 18 (or if earlier, their marriage). However, a will allows you to tailor a gift to the needs of the child. This could include deferring the age of entitlement, specifying different ages for receipt of income and capital rights, or providing that the assets should ultimately be held in trust for the next generation.

Empowering your trustees

Without powers specifically granted by a will, your trustees will have to rely on laws some of which date back to 1925. These may not give the trustees sufficient flexibility to deal with the assets in the best interests of your beneficiaries.

Protecting your estate and beneficiaries

You can protect your estate from potential claims in the event of a beneficiary’s bankruptcy or divorce, or if he or she requires paid care, by providing in your will for his or her inheritance to be held in trust. A trust may also be appropriate if you wish assets to pass down to particular people after the death of the initial beneficiary.

Business succession planning

In particular, it will be important to check the company’s articles or the partnership deed to ensure that these do not include any restrictions on the transfer of your business interest to your intended beneficiaries. This will also be a timely opportunity to ensure that there are other co-directors or employees of the business with the necessary knowledge and authority to continue to run the business on your death. Having a business continuity plan in place will also be vital in the event of a loss of capacity, which could occur at any age and is a point that is often missed.

Recording your funeral wishes

Some people may have particular wishes as to their funeral and making a will provides a good opportunity to record these.

Reducing administration costs and delays

Making a will avoids the expense and delay which may result from an application of the intestacy rules.

Reviewing your will

A will should be regarded as a document which evolves over time rather than produced as a one-off exercise. Changes in personal circumstances – such as the arrival of children or grandchildren, changes in relationships, or shifts in family needs – may mean that an existing will no longer reflects your intentions. For example, marriage or civil partnership can automatically revoke a will and divorce may also affect how a will operates.

Equally, changes in the nature or value of your assets, including the acquisition or disposal of property, may require existing provisions to be revisited to ensure they remain appropriate and effective.

It is also important to bear in mind that tax rules and reliefs are subject to change, sometimes in ways that can materially affect the outcome of existing planning; provisions which were once very tax-efficient may become less so over time if they are not reviewed.

In addition, appointments of executors, trustees, and guardians should be kept under consideration to ensure that they remain suitable in light of the passage of time and any changes in circumstances.