Common questions about wills and estate planning
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Brodies' senior solicitor Natalie Cobley, who is based in Inverness, answers some common questions about wills and estate planning.
At the start of the year, people make resolutions about improving their health, saving money, and making other positive changes. It's also a common time to look at getting your affairs in order, for example making a will.
There is no 'ideal' time to put plans in place though; any time is good – and the sooner the better. Life throws up unexpected twists and turns and you never know what's around the corner. Views like "I'm not old enough to make a will" or "I'll do my estate planning when I reach retirement " are all too common, and unfortunately they can backfire, leaving behind confusion, stress and extra costs.
Let's take a look at some common questions about wills and estate planning:
Why should I make a will?
It ensures that your estate (your money, property and other assets) is distributed according to your wishes after death. You can leave specific assets, sums of money and shares of your estate to your loved ones and to chosen charities.
It also lets you choose your team. You can appoint executors who will be responsible for winding up your affairs. If you have no will, the law dictates who your executor will be, based on a hierarchy system.
What happens if I die without a will?
This is known as dying 'intestate', and the law will dictate how your estate is distributed. The people who inherit your estate might not be the ones you would have chosen. For example, if you are unmarried but have a partner, they will have no automatic right to receive a share of your estate. The same applies to stepchildren.
There are additional administrative steps to follow in intestate cases. An executor needs to be appointed by the court. To apply for 'confirmation' (court authority to uplift and distribute certain estate assets – also known as probate), a bond must be taken out to protect the value of the estate, and in some cases a genealogy report is required. These extra steps can cause delay, complication and additional costs.
I've written my own will without the help of a lawyer; It's even signed by a witness. Am I covered legally?
While it's possible to write your own will and might seem straightforward, a small mistake such as incorrect wording or not signing it properly could cause problems further down the line. Your intentions could be misinterpreted, or worse, your will could be invalid altogether.
With professional advice, you'll have peace of mind that your wishes can be honoured without unnecessary complications. A well-crafted will should be tailored to your unique circumstances, for example having a blended family, owning a business, or having assets abroad. Trying to factor these details into a will can be challenging to handle on your own.
Will my family pay tax when I die?
Whether tax will need to be paid, and how much, will depend on the size of your estate and the nature of your assets. If your estate is below £325,000, there will likely be no Inheritance Tax due. If your estate exceeds this amount, then (subject to various exemptions and reliefs) the excess will be taxed, typically at 40%. If you have made gifts during your lifetime, this can affect the tax liability.
The specifics vary from person to person, so proper estate planning is crucial to understand and potentially minimise tax implications for your family.
How else could estate planning benefit me and my family?
Estate planning can enable a more tax-efficient distribution of your assets after death. It can protect wealth and the interests of your loved ones, especially young children and vulnerable beneficiaries, ensuring that they are financially supported and cared for.
For families with businesses and agricultural assets, it can also help to ensure continuity and a smooth transition.
What else should I think about?
As part of your estate planning, consider making a power of attorney, check that your pension nominations are in place and up to date, and think about potential residential care requirements.
