The vast majority of people know they should have a will, but put it off because they believe that the people they would wish to inherit will automatically do so, or that it isn’t important right now.
In the absence of crystal balls, leaving it until it’s too late poses all sorts of problems. Not only does dying “intestate” involve a lengthy and sometime complex legal process, some of your estate could go to the wrong people, including Her Majesties Treasury!
Making a Will enables you to plan exactly what will happen to your assets when you are no longer here to enjoy them, and removes the constant niggle in the back of your mind that comes from not having one!
“Mirror” wills are quite common. These generally provide for 100% of an estate to pass to a surviving spouse, and subsequently on second death the assets pass “absolutely” (directly) to your chosen beneficiaries. Whilst this is better than having no Will, it exposes your wealth to numerous risks.
Where there is a remaining spouse –
- Care Costs – If the surviving spouse needs nursing care then the whole estate, including the family home, would be susceptible to the cost of that care.
- Marriage After Death – On first death all of the assets become solely owned by the surviving spouse. What if the surviving spouse remarries? Half of the inherited estate could be lost in any divorce settlement, or even worse, all of the estate could be lost, disinheriting your children.
- Creditors or Bankruptcy – if the surviving spouse was subject to creditor claims / bankruptcy then the whole of their estate is fully at risk (including the inherited assets)
- Inheritance Tax (IHT) – IHT would have to be paid on any amount inherited in excess of the current ‘Nil Rate Band’ and so there is the potential to pay IHT on the same assets twice.
Where there is no remaining spouse -
- Protection Due To Divorce – If your children/grandchildren/chosen beneficiaries are subject to divorce proceedings after inheriting, then half of the inheritance is often lost to divorce settlements.
- Creditors or Bankruptcy – If any of your beneficiaries was to be subjected to creditor claims/bankruptcy then the inherited estate is fully at risk.
- Inheritance Tax – If the assets are passed directly to children or grandchildren, then the assets would be classed as being within their estate. So as estates grow through the generations, they are repeatedly subject to Inheritance Tax which can be avoided with sensible planning.
At the same time as making a will, you should consider trusts to address the risks mentioned above and protect your estate. Contrary to what many people believe, Trusts need not be complicated, nor do they restrict access to your estate to the people meant to benefit from it. With the use of a simple trust you can ensure that your home, savings and other assets can be protected for the benefit of future generations, eliminating some of the major risks to your assets.
Reeves Wills and Estate Planning
Once we understand what you have in place already and your present arrangements and wishes, our specialists will make a recommendation on how best to protect the wealth you acquire during your lifetime. We work in partnership with a S.T.E.P (The Society for Trust & Estate Practitioners) registered company to make sure we provide you with expert advice on how to comply with the often complex law and tax rules surrounding trusts, estates and Inheritance.
Speaking to someone to ensure your Wills & Trusts are in place to preserve your welfare and estate for you and future generations is easy with Reeves Independent, just use our contact form or call us on 0191 281 9862 for a FREE initial conversation!