In this article, we’re going to take a look at some of the most common things people tend to forget when writing a will…
People often choose to write a will to guarantee their loved ones will have control over their property, money, and belongings after they die. With this comes a lot of planning.
When writing a will, most people remember to appoint an executor and decide who their estate is going to. That said, it’s all too easy to forget about things such as alternate beneficiaries and digital assets. Inheritance is another big one that a number of people tend to overlook, so it is therefore important to get help from inheritance tax planning solicitors.
In this article, we’re going to take a look at three of the most common things people sometimes to forget when it comes to writing a will, to ensure your loved ones don’t miss out on anything. Take a look…
1. Inheritance Tax
In the UK, the standard inheritance is set at 40% for an estate above the £325,000 threshold. Moreover, if you’re under the threshold, you’re exempt from paying these fees. Despite only 1 in 20 properties incurring inheritance tax charges in the UK, it is important to look into it, as your estate includes a lot of different things including, your property, possessions and assets.
With proper inheritance tax planning comes a number of benefits including reducing or altogether avoiding the fees. Below we’ll take a look at some of ways you can do this:
Gifting
It goes without saying, the best way to avoid inheritance tax is to not own anything. While you’re probably not going to want to give everything you own away before making your will, with careful planning and the help of solicitors, you could offer gifts to your loved ones over the years so that you don’t have to pay inheritance tax.
In the UK, you can give away as much as £3,000 worth of gifts every year to your spouses before you’ll get taxed. These transfers are part of your ‘annual exemption’.
However, it is important to note that inheritance tax is due on any gift for the first seven years of ownership. Moreover, as each year passes, the amount of tax is reduced.
Transferring Property Ownership to Family Members
If you don’t want to gift your home or other assets through your will, you may want to consider passing it on to someone else. This is known as a ‘transfer of equity’ and, with the help of solicitors, passing on your property ownership means tax will not be incurred and your property won’t be counted when your estate is valued.
Putting Your Life Insurance in a Trust
Life insurance is considered to be part of your estate, so it can therefore be taxed if you meet the threshold. To avoid this, you can put your life insurance ‘in trust’ so that any pay out goes directly to your heirs instead of your estate.
2. Alternate Beneficiaries
You may have your mind set on who you want to inherit certain parts of your estate. But, what happens in the unfortunate event that they pass away first or they’re found to be incompetent of managing your assets?
Before deciding on a beneficiary, it is important to consider their capability of inheriting assets and managing them properly. To do this you should look at different contributing factors, such as their age and mental capacity.
In the event the beneficiary is found to be incompetent, it can be sometimes difficult and costly to find a solution and, in some cases, the laws of intestacy are enacted. Due to these reasons, it is important to consider a backup plan in the event the primary beneficiary predeceases the testator or is found incapable of managing your assets.
3. Digital Assets
Most people these days have some kind of online presence – whether it’s a social media account or email address. This sort of existence in the digital world means you have digital assets.
It is therefore important you state what you want to happen to these accounts in your will, as well as providing passwords and account numbers. Even though an Instagram account may not have economic value, it could be painful for your loved ones to see notifications such as birthday wishes posted if not everyone is aware of your passing.
Planning Your Will
Mistakes can be fairly in common in wills, from vague and incorrect wording to forgetting about things, such as the provision of pet care and digital assets. These mistakes can sometimes have devastating consequences, such as disputes arising which can be timely and costly. In the worst cases, your loved ones may miss out on your estate.
We’re fully aware writing a will is no easy or straight-forward task. However, with careful planning and the help of a solicitor, your will have the effect you intended.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a lawyer/solicitor if you’re seeking advice on writing a will. We are not liable for risks or issues associated with using or acting upon the information on this site.
