According to the Law Society, there has been an increase in the numbers of people making a Will during the last year. I’m one of them. Making an updated Will had been on my ‘to do’ list for a long time. I think the fact we’re in a pandemic has focused many of our minds on drawing up this all-important document. Also, many of us have found ourselves with more time to put our affairs in order.
Despite all this, a recent Law Society survey found that 60% of us don’t have a Will. Furthermore, just 29% of us have a Will that reflects our current intentions. So, if you don’t have an up-to-date Will, perhaps making one should be a New Year resolution for 2020?
Why make a Will?
There are lots of good reasons to make a Will. It makes it much simpler for your executors to sort out what happens to your money, property and possessions. You also get peace of mind that your children or other family members will be provided for if you die. It can also help you reduce the amount of Inheritance Tax (IHT) that is payable on what you leave behind (we’ll come back to this in a minute).
It’s also important to remember that, if you don’t leave a Will, your estate will be shared out according to intestacy laws. The Gov.uk website has a calculator that lets you work out who inherits the estate of someone without a Will. Many people don’t realise that, if they are not married or in a civil partnership, their partner is legally entitled to nothing under intestacy laws. Just as bad, if you die with no close relatives, your whole estate could end up being given to the government!
Inheritance Tax planning
Making a Will is an important part of planning for Inheritance Tax. If your estate is worth over £325,000, anything over that amount normally attracts IHT at 40%. There are a few exemptions that can reduce IHT. These include:
- Spousal exemption – anything you leave to a spouse or civil partner does not attract IHT
- Giving to charity – if you leave something to charity, IHT is not payable on the bequest. Also, if you give 10% or more of your estate to charity, the IHT on the rest of your estate will be calculated at 36% instead of 40%.
However, it’s important to remember that making a will is just part of good IHT planning. For example, if you make a substantial gift during your lifetime, that gift won’t be caught in the IHT net if you subsequently live for seven years. There are also various other exemptions and reliefs, but we strongly recommend you talk to an Inheritance Tax expert at THP.
How do I make a Will?
if you want to make sure you leave your estate to the right people in the most tax-efficient way, it’s important to get expert advice. While many people ask a solicitor to draw up a will, it’s wise to talk to your accountant first. At THP we offer a specialist Wills, Trusts and Legacy Planning service to help ensure your wishes are followed and to find strategies to keep your tax liabilities low. We can offer this in tandem with our Inheritance Tax Planning service.
While making a Will isn’t the most cheerful prospect in these strange times, it’s arguably more important than ever. So make it your New Year resolution to provide for your loved ones and favourite charitable causes in your Will. Get in touch with us to get started.