Including a Trust in your Will can ensure that you protect the benefit entitlement of your family member, and thereby guarantee continuity and security of care. It can also ensure that you make provision for “extras” that you want your family members to have. These can include things like maintenance, up-keep, holidays, and particular equipment to enhance someone’s quality of life.
When is it the right time to make a will?
Making your Will is best done sooner rather than later. A suitable time to make your Will is when you are well, happy and free from any pressure or influence.
How do I write a Will?
The law has strict rules as to how a Will must be written and administered. If a Will fails to meet any of the legal requirements it may be declared invalid and therefore fail.
To make a valid Will you must be over 18 and be of “sound mind”, which means you are legally capable of understanding the effects of drawing up a Will.
It is extremely important that your Will is drawn up to accurately reflect your intentions, signed and witnessed.
DIY, Will Writer or Solicitors?
You can draft a Will yourself or have a Will Writer provide this service. Personally, as a professional Independent Financial Adviser specialising in Investments and Tax Planning, I recommend you take appropriate legal advice and speak to a suitably qualified solicitor. There are several solicitors in Wales, who I can personally recommend.
Consulting with a solicitor who specialises in drawing up Wills, gives peace of mind. Contrary to opinion, fees for making general family Wills are not exorbitant and often can be fixed at a pre-agreed price.
The administration required to deal with your estate after your death also needs consideration as there will probably be some costs involved. Some solicitors will negotiate a fixed percentage fee from the estate in order to pay for the execution of the Will and deal with all matters of Probate after your death. This can be written into the Will. Remember you have a choice and do not have to agree to any ‘fixed’ costs. It’s a good idea to ask about these costs before going ahead with any Will.
What about Inheritance tax?
Inheritance Tax (IHT) is the tax payable on the estate you leave. IHT is only payable if the total value of your estate is higher than £325,000 (frozen until 2015) or £650,000 for married couples or civil partnerships. This is generally referred to as the threshold.
This total includes gifts made over the previous seven years although there are exceptions to these gifts. Exceptions, such as, those to your spouse and charities; and Chargeble Lifetime Transfers where asociated gifts in the last 14 years may need to be considered.
If your estate is less than £325,000 (or £650,000 for a married couple or civil partnership) you pay no Inheritance Tax. The tax is payable only on the amount over the threshold. The current rate is 40%.
For those who have an estate over the IHT threshold it certainly pays to think carefully about planning your estate to maximise your beneficiaries legacy.
Strategies to minimise IHT may include, changing some of the assets held to those qualifying for Inheritance Tax Relief, gifts out of the estate either directly or via Trusts, by making eligible gifts. We can discuss these options on a personal basis. Taking specialist advice now could save your estate thousands later.
Have In Mind Your Financial and Life Plan Before Drafting Your Will
Before you begin the process of actually making your Will or seeing a solicitor it’s a useful exercise to write down answers to a few simple questions:
- Who do I want as my executors (these are the people you appoint to carry out the terms of your Will)?
- Who do I want to leave my estate to and in what proportions?
- Will I leave a gift to any charities?
- Do I need assets protected for my husband/wife, Estate Planning, Children, vulnerable persons?
- If I become incapacitated as a result of illness or accident who do I want to look after my affairs (appointing a person who has power of attorney)?
- What are my assets (write a list of all that you own ie: shares, property, jewellery, household items, insurance policies) and liabilities?
Jargon Busting
- Testator: this is the person making the Will. You
- Beneficiaries (Legatees): all those people, organisations and charities you wish to benefit under the terms of your Will.
- Executor(s): the people you appoint to ensure that the terms of your Will are carried out.
- Witnesses: two people who must be present when you sign your Will. They may not benefit under the terms of the Will and neither can their spouses.
- Solicitor: professional person who meets the standards set by the Law Society and is qualified to undertake legal work including Wills and Probate. Solicitors are regulated by the Law Society.
- Trustee(s):people you appoint to administer and manage any trust you set up.
- Guardian: person(s) appointed under the terms of a Will to have custody of any minor child(ren).
- Codicil: legal document adding to, or altering, an existing Will. A codicil is used where only a minor change is needed and there is no need to make a new will.
- Court of Protection: division of the Supreme Court which exists to manage the affairs of those who are incapable of managing or administering their own financial affairs.
- Estate: total value of all the assets you leave when you die, after all debts, taxes and costs have been paid.
- Inheritance Tax: payable if your estate exceeds the current tax threshold (£285,000 from April 2006). It can be avoided or reduced by leaving a legacy to a charity.
- Intestate: if you die without a Will, the law declares intestacy and decides how your assets will be distributed, regardless of your wishes.
- Legacy: gift, or bequest in your Will.
- Conditional: a gift conditional upon a certain event taking place.
- Discretionary: where you allow your Executors or Trustees to choose who will benefit under your Will.
- Pecuniary: gift of money; if it is index-linked it will help retain its value.
- Residuary: what is left of the estate after all other legacies, tax debts and costs have been paid.
- Reversionary: gift to someone for their lifetime and after their death to someone else, organisation or charity.
- Specific: gift which is identified i.e. house, car, jewellery etc.
welshmoneywiz 
Leave a Reply