How to make a will: Covid sees a spike in Will writing
The number of expats making financial plans in case of accident, illness or death saw a huge increase in 2020. The biggest increase was among under-40s.
Almost three times as many people wrote their wills compared to 2019 – as many are reflecting more on our mortality since the pandemic began.
Death is difficult to think about, but it’s really sensible to be planning for the future as it helps your family down the line.
Making a will?
If you want control over what happens to your wealth and possessions when you die, you will need to make a will.
Having a will gives you control over what happens to your money, possessions and property after you die – and it is the only certain way to ensure that your spouse, partner or relative inherits what you intend them to.
If you care about saving your family both time and money, as well as potential arguments after you pass away, then writing a will would be wise.
A will makes things much easier for your loved ones as it helps to avoid arguments, and if your family knows what and where your assets are, it saves them time and money at a time when they are wanting to grieve rather than worry about sorting out admin or getting funeral affairs in order.
Writing a will might also be sensible if your estate would be subject to inheritance tax.
In the UK anyone can pass on £325,000 of cash and assets tax-free, but if you give away your home to your children (including adopted or foster children or grandchildren) then this threshold can increase to £500,000.
So for a married couple with children, it is possible to pass on £1million in total.
One of the main reasons you should write a will is to protect your wealth for your chosen beneficiaries and to ensure the people you wish to benefit do so in the most tax-efficient manner.
How do my relatives find out about my will after I die?
Having made a will, a sensible thing to do is tell a close friend or family member about where it can be found.
You should always tell someone you trust where your will is stored while you’re still alive, as not doing so can make things difficult for your family and may even mean that they’re never able to find it.
Some people like to give their executors or family members photocopies of the will and tell them where the original is stored.
Risks of not making a will?
If you die before making a will, any assets that can be found will be divided up following the rules of intestacy.
These are a set of traditional laws that define exactly who gets what. However, these laws may not divide your estate up exactly how you would have liked – particularly if you want to leave money or assets to people outside of your immediate family.
Step-children and unmarried partners may be overlooked; your partner may be left homeless; your children may be left with no legal guardian, or your money may even go to the Government.
Having your estate divided in this way could also lead to court applications and disputes, especially when there are children involved.
Having children under 18, for example, can cause complications and litigation.
If you are married, and one of you dies without a will, your partner will inherit your personal belongings up to £270,000 but only 50 per cent of the remainder, meaning the children receive the other 50 per cent at the age of 18 – which could be an issue.
Failing to make a will may just mean your loved ones will ultimately lose out.
lt can cost families thousands of pounds when a loved one dies without a will, often due to assets they can’t find or don’t know exist.
Making a will? A five-step guide
1. Work out what assets you own
The value of your assets and how those assets are held, for example in property, shares and so on, will determine whether your estate might be taxed upon your death.
It is worth putting together a schedule of your assets and liabilities with at least approximate values, before attending a meeting to make a will.
We will consider what tax relief might be available, and the most appropriate and tax-effective way of structuring your will.
2. Decide who will benefit from your will
Many wills are disputed because family members are left shocked and angry by the contents once a loved one has passed away.
This can lead to costly disputes and the will writer’s decisions being scrutinised and potentially changed.
This is why, once you’ve written your will, you must communicate its contents with your family and friends to ensure there are no surprises down the line.
If the contents of the will could be seen as potentially contentious, it is often advisable to prepare a letter of wishes to be kept with it, setting out why you have made the decisions you have in your will and why certain people might be excluded.
3. Choose your executor
Ideally, you should name more than one person to act as your executor, as this minimises the risk of both executors passing away before you.
You can also choose one or more substitute executors if the executors you have named are unwilling or unable to act.
Executors are the individuals who will carry out the terms of your will and sort out your estate when you die.
They should be individuals you trust implicitly, must be over 18 at the time of your death and must be mentally capable of doing the job.
If naming more than one executor, ensure that the executors will be able to work together as far as you can.
It might be sensible to appoint at least one professional executor, although there will be costs associated with this. An executor can also be a beneficiary of your will.
4. Find two witnesses
Any witness should be independent, so they should not be a beneficiary of the will a spouse or civil partner of a beneficiary.
Any gift you make to the witness or their spouse or civil partner will fail.
You must have a minimum of two witnesses and they must both see you sign or acknowledge the will in their presence before signing the will themselves.
A recent announcement from the UK Government allows virtual witnessing of wills from 31 January 2020 to 31 January 2022, or other time as the government may decide. The will must still be physically signed by the witnesses and the person making the will.
5. Keep your will updated
In my experience, many people often forget to update their will after a significant life event and risk the document not outlining what they want it to do.
This doesn’t mean that you have to make a new will, as often the changes are quite straightforward.
Once you’re married, any will made prior to your wedding day will be automatically revoked – so if you do separate from your partner, changes need to take place to reflect the change in your circumstances.
It is not unusual to come across situations where an individual has passed away after divorcing but has failed to update their will, resulting in their former partner still benefiting from their estate.
About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), a Fellow of the Association of Professional Sales (F.APS), a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.
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Originally published by Thisismoney.co.uk.