Wills: Blog

Probate is the general term used to describe the right to deal with a deceased person’s estate. When a person dies, a representative is appointed to gather their assets, pay their debts and distribute the estate to those people entitled to it.

If a person dies with a will
The executor appointed in the will can apply to the courts for a ‘grant of probate’ to entitle them to administrator the estate. Once they receive this authorisation they can access the deceased person’s accounts and assets to begin to wind up the estate.

If a person dies without a will
If there is no will, a close relative of the deceased can apply to the courts for a ‘grant of letters of administration’. If they are granted, the applicant is known as an administrator of the estate. They are then authorised to access the estate and can begin to distribute the assets accordingly. In certain circumstances, such as when the beneficiary of the estate is a child, the law states that more than one person must act as an administrator.

Collectively, administrators and executors are known as representatives of the estate. In order to gain a grant of representation, either as a grant of probate or a grant of letters of administration, the representative must take an oath in court to administer the estate properly and correctly. They can be liable to prosecution if they carry out their duty in bad faith or act negligently.

Further, the courts will not make any such grant until all Inheritance tax liabilities have been paid. This can leave representatives in a difficult position whereby then cannot pay the inheritance tax without a grant from the courts and they cannot gain a grant from the courts until they have paid the inheritance tax. As well as inheritance tax, the representative may need to pay for funeral expenses and grant costs. Various solutions may be available to help such as bridging loans and provisions to make tax payments from the deceased’s bank accounts.

Inheritance tax in the UK is calculated by completing a set of Inland Revenue accounts which detail the extent and value of the estate. There may be no tax payable if the value of the estate falls within the ‘nil rate band’ or the assets are classed as exempt. However the representative will still have to file accounts whether there is a tax liability or not. Representatives are responsible for accurately assessing the estate and making payments, they can be held personally liable for any under payment of taxes. Inheritance tax must be paid within six months of the deceased person’s death, after which time, outstanding payments accrue interest at 4%.

Organisations such as banks or building societies will only allow access to the deceased person’s accounts once they have received a grant of representation. The grant is proof that the courts are allowing the named person to collect the deceased person’s money on their behalf.

Clearly the role of a representative is an important one and it is essential to make a will and choose an executor carefully.

Many people put off making a will, it’s estimated that two out of every three people in the UK have not written one. Having a properly drafted will can give total peace of mind to you and your family by knowing your assets will be distributed according to your wishes after your death.

It’s recommended to review your will on a regular basis to make sure it’s up to date and your assets and your wishes remain the same. If your personal circumstances have fundamentally changed, or there has been a change in legislation affecting your estate, then you may be advised to draft a new will.

Most will writing professionals would suggest drafting a new will if any of the following events occurred:

Divorce
Any gifts left to your spouse or civil partner will not be distributed and will be added back to the remainder of your estate following your divorce or decree absolute. However it is a good idea to draft a new will to reflect your new status and intentions.

Marriage
You should make a new will when you enter into a marriage or a civil partnership. All wills are revoked on marriage unless the will was drafted in contemplation of the forthcoming wedding and allows for this.

Separation
A separation has no effect on a will, unlike a divorce, therefore it is an important time to redraft your will to make sure your intentions are clear.

Birth of a child/grandchild
If you have become a parent then it’s recommended to consider the appointment of guardians for your children in your will. Guardians take on the parental responsibility of your children in the event of you and your partner’s death. You may also wish to include any new children or new grandchildren as beneficiaries in your will.

Change in executors
Your will does not become invalid if your executors have died or lack the mental capacity to carry out the role. It would therefore be wise to appoint new executors should they no longer be able to act on your behalf.

Substantial change in assets
Over time the assets you own will change. However if there is a significant change in wealth, or if you have disposed of assets you previously had planned to bequeath to your beneficiaries, then you would be advised to make a new will.

Death of a beneficiary
Again if those who you planned to benefit in your will have passed away before you, then it may be necessary to redraft your to reflect your new wishes.

It is not expensive to make a will with many online will writers offering their services from as little as £30. Not making a will is a false economy with the potential for unnecessary inheritance tax liabilities and possible family feuds. For this nominal amount you can get total peace of mind and assurance that your assets will be directed according to your wishes after your death.

Under British law, anyone can write their own will. However, there are significant risks in doing so without proper guidance and assistance. A will should be made using standard conventions to clearly state how you wish your estate to be distributed after your death. If your will is not clearly drafted it is open to be challenged and your wishes may be overruled in a court of law. In addition to this, your will must be correctly signed, dated and witnessed. Any failure to follow the correct procedure could mean your will is declared invalid.

Many bookshops and stationers now sell will writing kits that you can complete at home. Whilst this is a cheap option, the kits offer little in the way of guidance or help to the user and there is no assurance that your completed will is valid.

Solicitors and specialists in will writing and estate planning are essential if your affairs are complex or unusual. If you have business/agricultural assets, own property overseas or you’re not resident in the UK then you are advised to consult an expert who may have to draft multiple wills for multiple countries. However the obvious drawback to using a solicitor is the cost, with prices ranging from £100-£400 per hour, it can be an expensive option.

The alternative option is to use a specialist online will writing provider such as www.harmonywills.co.uk. Using our online system, you are guided through the will writing process by answering questions about your personal needs and circumstances. Your answers are reviewed by one of our specialists before we construct a will based on your situation. Through the use of Internet technologies we are able to reduce the cost of producing a will while maintaining a high quality product. All our wills are valid and provide a cost effective way to give peace of mind to you and your family.

The role of a guardian is a significant one and you should take time to consider who would be best suited to take care of your children. Guardians are people with certain rights and obligations over minors under the age of 18 when both parents have died. They assume the parental responsibility in the parents absence and take control over their schooling, health and welfare issues. They are not in charge of the children’s money, that is the responsibility of the trustees of your will, however they can be compensated for any financial loss arising as a result from carrying out their parental role.

If you have a child under 18 it is important that you should consider the appointment of a guardian when you make your will. Its particularly important in case both parents die in a common accident or if you are a single parent. It is common for most people to appoint family or a close friend as a guardian, ideally somebody who already has a close bond with your children. You should take some time to consider who would be best suited to take on the parental responsibility of your children.

There is no limit to how many guardians you can appoint when making a will but its is worth remembering that guardians must agree on decisions made regarding your child’s welfare so in practical terms its often simpler to appoint just one or maybe two. If you do appoint two then its important that you choose two people who get on well together. Your guardians do not have to be aware that they have been appointed in a will but it may be helpful to discuss it with them before making your decision.

Under British law, inheritance tax is charged to a person’s estate following their death and can be summarised as following:

1. No inheritance tax is payable on the first £325,000 of your estate. This is called the nil rate band, if the value of your assets exceeds this amount, the excess value will be liable to a 40% tax liability unless those assets are left to a spouse, civil partner or charity. This is known as an ‘exempt’ transfer.
2. Under an exempt transfer your spouse, civil partner or charity will inherit your estate free of tax. Its worth remembering that unless you make a will your estate may not automatically pass to your spouse and inheritance tax may be applied. This tax benefit may only be used on the death of the first spouse/civil partner. In addition to this, the surviving spouse/partner can also benefit from a transfer of the first partners nil rate tax band. Effectively this means married couples and registered civil partners will not pay tax on the first £650,000 of their estate. Tax is again then payable at 40% on any amount over this. It is therefore tax effective for couples to leave everything to each other and then to their children.
3. Any gifts you make to individuals are exempt from inheritance tax provided that you live for seven years after making the gift. However if you make a gift but then continue to have an interest in it (for example, you give away a house but then live in it rent free) this gift would be added back into your estate and would be liable to inheritance tax. If you died within the seven year threshold, inheritance tax is reduced after three years on a sliding scale to provide you with some relief. This is known as ‘Taper Relief’.

It is strongly advised to consult a solicitor or use a reputable online will writing service when making a will.

1.Single, Mirror, Joint or Mutual Will – Which one?

If your a single person then the choice is fairly obvious however for couples the situation is less clear. A mirror will is two single wills which simply mirror each other, that is to say, they have reciprocal terms. On the death of the first partner all the estate passes to the surviving partner and vice versa. Generally our advice would be to suggest a pair of mirror wills for most couples or two individual single wills if you require different terms. A joint will is a single document which can be revoked by either party without consent of the other. There is no real merit to make a will such as this and we do not recommend it. A mutual will may be appropriate for some people but on the whole they are overly complicated and again, we do not recommend them to most people.

2. Online Wills, DIY kits or see a solicitor?

These days there are many options for making a will and which option you choose really depends on how complicated your estate is. DIY kits are fine if your confident filling out legal forms and your estate is relatively straightforward. An internet will or online will is a good choice for most people as they ask you simple questions and construct a will based on your answers. The better online will writers will not use automated systems and will check your will for errors before it is produced. Many people are now using online will writers to make a will as it offers a convenient, simple and inexpensive to way to write your will. If your estate is complicated or you are a wealthy individual then its probably best to speak to a solicitor to make a will based on your individual circumstances.

3. Your executors

These are the people or person who will be responsible for distributing your estate after your death. They will also be responsible for paying off your debts, burial costs and any inheritance tax liability that may arise. It can be a demanding role and you will need to pick some you can trust. If you are married, your spouse will normally take on this role but its a good idea to appoint an alternative in case they are unwilling or unable to perform the role.

4. Looking after your children

If you have children then it is a good idea to appoint guardians in your will. For married couples the surviving spouse will normally take on the parental responsibility but should the worst happen and both parents die at the same time then your appointed guardians would then take on the responsibility. For unmarried couples its even more important, if the female dies, her male partner does not automatically get guardianship. Its important make a will and appoint each other to avoid difficulties like this.

5. Be specific

If you have items that are important to you and you want to leave them to certain family members you need to be clear about what the item is and who you are giving it to. For example when you make a will you may decide to give your grandmother’s wedding ring to your daughter, that’s fine but you need to be specific.

6. Storage

A will is only valid and exercisable if it can be found and is not damaged. Its an important legal document so you should store it safely. A good tip is to make extra copies of your will and give them your executors, guardians or family.