The benefits of having a will in place are well-documented, although if you don’t have a will, or haven’t updated it in some time, you’re not alone. A recent survey from MoneyAge has found that 51% of adults in the UK currently don’t have a will in place.
Of those with a will, 43% haven’t updated it since it was first written.
A will can be a fantastic way to:
- Allocate your assets to loved ones
- Nominate legal guardians for your children
- Divide your estate as painlessly as possible
- Reduce your liability for Inheritance Tax.
If you don’t have an up-to-date will, there’s a chance your loved ones won’t receive the wealth you intended for them. So, continue reading to discover why having an up-to-date will is vital.
It ensures your assets pass to the people you want them to
Perhaps the most obvious benefit of having an up-to-date will in place is knowing your assets will pass to the people you wish.
If you die without a will in place, or “intestate”, you’ll have no say over how your assets will be distributed. Instead, the laws of intestacy will dictate how your estate is divided.
This is especially important if you have a partner and you’re not married. While your blood relatives and/or spouse will usually inherit according to the laws of intestacy, a cohabiting partner and any stepchildren you have will likely not.
Your will is the perfect way to dictate where you want your money to go after you pass away, giving your loved ones more financial security after you die.
It could mean less hassle for your family
After you die, your family will need to administer your estate. This can be a stressful process, especially while they’re dealing with the grief of your passing. So, having a will in place that clearly outlines your wishes may make it easier for your family to make any necessary arrangements.
For instance, if you don’t have a will, dividing your estate could be incredibly stressful and time-consuming, and it could take longer for your assets to pass to your loved ones.
It could help avoid disputes
As mentioned, it’s a common occurrence for families to experience periods of heightened stress and grief after you die. As such, the dividing of an estate can be the perfect storm of stress and emotion, which can, unfortunately, often lead to disputes.
Indeed, data from IBB Law shows that 75% of people are likely to experience a will or inheritance dispute case at some point in their life.
Disputes can have lasting adverse effects on your family – they could permanently damage relationships or even cause schisms in the family, not to mention costing thousands in legal fees.
With a will in place, these disputes could potentially be avoided, making the process of dividing your estate as simple and painless as possible.
Even if you already have a will, you’ll need to update it regularly as your circumstances change. For example, if you remarry your existing will is automatically revoked. So, if you don’t write a new one, your estate could pass to the “wrong” people and cause arguments or disputes.
You can assign guardians for your children
While you may think your will is only used to allocate your estate, it can also be used to express your wishes about what will happen to your children after you die.
If your dependents are below the age of 18, you can use your will to nominate legal guardians. If you don’t nominate a guardian in your will, a family court would need to decide what happens to your children and their care could be left in the hands of a person you wouldn’t have chosen.
Even if you do have a will, it may be worth updating it regularly to fit your current circumstances – for example, as you have more children.
You could potentially mitigate an Inheritance Tax bill
When you die, the total value of your estate will dictate the amount of Inheritance Tax (IHT) that will be payable.
As of the 2023/24 tax year, the IHT threshold stands at £325,000, though you can also benefit from the additional £175,000 “residence nil-rate band” if you leave your home to a direct descendant, such as a child or grandchild.
Then, anything left in your estate above this threshold will typically be subject to the standard IHT rate of 40%.
With a well-written will, you can often reduce your IHT liability. For example, suppose you specify that you want your home left to a direct lineal descendant. In this case, you could make full use of the additional residence nil-rate band, substantially reducing the IHT liability of your estate.
Wills can help you to make your estate plan as tax-efficient as possible.
It ensures that nothing is left behind
After you die, there will be plenty of paperwork relating to your finances that your family will need to deal with.
If you haven’t clearly outlined your assets in your will, your family could miss something they didn’t know existed, such as a previous pension, an old savings account, or even any protection you had.
When your will is in place, you can clearly identify your assets and distribute them to your beneficiaries. This could ensure that your family doesn’t miss out on any of your hard-earned wealth.
This is another great reason to update your will regularly. If you have acquired assets later in life and fail to update your will to include them, they could be missed out entirely when your estate is divided.
It can give you peace of mind
Another beneficial reason to have a will in place is that it gives you the peace of mind that your affairs will be dealt with in the way you desire after you die. You can rest assured that your loved ones’ future is secure, and you can start living in the present.
For instance, if you die without a will, the intestacy laws will rule on issues ranging from the guardianship of your children to the dividing of your estate. If you write a will now, you can regain control and relax, knowing that the right people will receive your assets after you die.
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This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.