Q. Who can make a will?
A. Anybody of sound mind aged over 18.
Q. I don’t have any money, so why should I make a will?
A. You’d be surprised: most of us are worth more dead than alive, but even if you don’t have much estate, the will can also allow you to appoint an executor and also a guardian for any children.
Q. I’m married and have young children. What happens if I don’t make a will? A. Irrespective of whether you have children or not, the State, in the absence of a will, determines who gets what. In this case, your wife gets everything up to £125,000 plus your personal possessions. Anything left is split - half to your children when they reach 18 years of age and half in trust during your spouse’s lifetime. On your spouse’s death, the other half then goes to your children. If you have a house in your own name, it is possible your wife or husband would not inherit the whole of the house. Also, you must ask yourself if 18 is too young for your children to inherit.
Q. I am unmarried but live with my partner. Does this matter?
A. It is important you remember that your partner is not related to you by law if you are unmarried and they will not inherit any of your estate under the Intestacy Provisions. The law may one day change to protect partners but it has not done so yet.
Q. I have just married / I have just been divorced. Are any changes needed to my will?
A. Congratulations if you have just tied the knot, but unless your original will was made in contemplation of marriage, you’ll have to make another as the old one will be revoked.
Commiserations if you have been or are getting divorced. Proper financial arrangements will have to be made for your spouse in the divorce but you may not have to make a new will as, from 1982, changes normally occur to the effect that your former spouse is omitted from your will. However, it would be better to draw up a new will and to take detailed advice.
Q. What about my business?
A On your death, whether you are a sole trader in partnership or own shares in a family limited company, your share of the business and goodwill will have a value and form part of your estate on which your heirs may have to pay taxes. Your solicitor, your accountant and your financial adviser can all help you in mitigating tax and there are certain exemptions that benefit the small businessman. What you should have a good idea of is the succession on your death. There is little point leaving your business to your offspring if they are not interested in it. It may be that your manager would be delighted to buy it, and perhaps an option might be included in your will for him or her to buy the business at an agreed valuation. That is one of many possibilities about which you should take advice if you have not already done so.
It may well be essential that the business continues to produce an income for your surviving spouse, and your professional advisers can certainly give you guidance, but really it is something for you to think through and discuss with your business partners, managers and shareholders. Your advisers working as a team should be able to point out ways of saving inheritance tax, ensuring the business passes to your family intact as far as possible while setting up a machinery, probably backed by insurance, whereby your surviving partners can purchase your share. None of us likes to think what is going to happen to our business if we are suddenly called to the big market in the sky but we do owe it to our heirs and partners.
Q. Will I have to pay inheritance tax?
A. You may leave everything to your spouse and no tax will be payable (provided the spouse is domiciled in England and Wales). You may also leave the first £275,000 of your estate to your children or other relatives. The estate has to be fairly substantial to take part of both exemptions. This is a complicated area and your accountant and your solicitor can help and may suggest setting up a discretionary trust in your will. Don’t forget the lifetime annual gifts - and leaving your estate to charity is another option.
Q. Do I need a solicitor to make a will?
A. Not strictly but the pitfalls in making your own will are many. The requirements of the Wills Act 1837 are very exact and you have to make certain that the formal requirements of the will are followed. For your peace of mind it is worth consulting a solicitor. Also, the language has to be precise. You do not want to fall into the trap of the testator who left everything to ‘Mum’ when he meant his wife. In the event, his estate went to his elderly mother.
Q How long will it take to make a will?
A. Most wills are fairly straightforward. If you have a business, you may wish to discuss the business with your accountant, but even so, a will can be drawn up very quickly and usually very cheaply.
Q. I have done my will. Is there anything else I need to be concerned with?
A. Yes. Look at it every year. All our lives change: you may win the lottery; you may decide to sell the business on or close the store; you may have more children; or your partner may leave you. Again, you’ll be surprised how easily most of these changes can be dealt with by your solicitor.
Please note this article gives general advice. For specific instances seek professional help.