Wimbledon's Leading Firm of Chartered Financial Planners

Your guide to writing a will

November marks Will Aid Month. We want to take the opportunity to remind you just how important a will is and explain why it should be considered a crucial part of your financial planning.

You no doubt have an idea of what you’d like to happen to your wealth and assets once you pass away. For many, it will mean leaving it to children or grandchildren. But you might also want to leave something for other family members, friends or charity. A will is crucial for ensuring your wishes are carried out.

Should you die without a will in place, your assets will be distributed according to the Rules of Intestacy. These specify a rigid order of who should benefit from your estate. It’s unlikely that these will align with exactly what you want. This is particularly true for modern, often complex, families.

If, for example, you have children from a previous relationship, have since remarried and the value of your estate is worth less than £250,000, all your wealth will pass to your surviving partner. This could effectively disinherit your children.

Despite the importance of a will, it’s a step that many in the UK are failing to take. More than half (56%) of parents in the UK with children under 18 have no will, a survey by Will Aid revealed.

Writing a will should be a task you undertake in the context of financial planning too. With the right information, you can understand what inheritance you can leave behind. This allows you to decide how you want different assets distributing.

Thinking about your legacy with wider financial goals in mind can help give you confidence and improve financial security too. Perhaps you’re worried about spending too much during your retirement years for fear of not leaving the legacy you want behind. Financial planning can give you an understanding of how lifestyle changes will affect what you leave to loved ones.

With this in mind, these are the steps you should be taking as you prepare and write your will:

1. Value your estate

It’s hard to think about the distribution of assets if you don’t know the value of them. A good starting point for writing your will is creating an up-to-date list of what your assets are and how much they’re worth. This is an area we, as financial professionals, can help you with, as well as providing an insight into how the value might change over the years depending on your retirement decisions.

2. Deciding on beneficiaries and distribution

Next, you should spend some time thinking about who you’d like to inherit your wealth. It’s likely there’s more than one person you want to leave an inheritance to. Once you have a list of beneficiaries, you’ll need to consider how you want your estate to be distributed.

You should be as specific as possible here. While you can allocate each person a portion of your estate, it may be a complicated process to distribute your estate depending on your assets. For example, if three children equally inherit a property, they’ll have to come to an agreement as to how they’ll proceed. Perhaps you have some jewellery you’d like to go to your granddaughter or a property that will suit a son with a growing family. If you have a specific request for items or assets, make it clear.

3. Assess Inheritance Tax liability

Do you know if your estate will be liable for Inheritance Tax (IHT)? If your estate’s value is more than the Nil-Rate Band and Residence Nil-Rate Band for IHT, it may change how you use and distribute your wealth now.

The current Nil-Rate Band is £325,000. If your estate is worth less than this, no IHT will be due. If you’re passing on your main home to children or grandchildren, you may also be able to take advantage of the Residence Nil-Rate Band. This is currently set at £125,000, rising to £175,000 in 2020/21.

There are several steps you can take to reduce IHT liability or help your loved ones cover the bill they may face. If you’d like to understand what IHT may be due when you pass away, please contact us.

4. Consider a charitable donation

Many people choose to leave a charitable donation as part of their legacy. If you’ve been a lifelong supporter of a cause, naming charities in your will can be an excellent way to continue this. As with all beneficiaries, you should be as specific as possible about what you want a charity to receive from your estate.

Leaving a charitable donation can have IHT benefits too. Leaving 10% or more of your estate to charities means your IHT rate will be decreased from 40% to 36% if your estate is liable.

5. Note other wishes

While the main aim of a will is to ensure your estate is distributed in line with your wishes, it can also be used to cover other areas.

If you have dependents, for example, you can name a guardian to care for your children until they’re 18, as well as someone to look after their inheritance. You may also choose to make your preferred funeral arrangements known, though this would not be legally binding.

6. Choose executors

Executors are the people who deal with distributing your estate. It’s a good idea to choose more than one executor; you can appoint up to four and those chosen can also inherit from your will.

An executor should be someone you trust and who is able to take on the responsibility of the role. It can be a friend or family member. Alternatively, you can appoint a professional executor, such as a solicitor or an accountant. A professional executor will take their fee from your estate and they can be a good choice if your estate is complex.

7. Writing the will

With your legacy plans set out, it’s time to write your will. There are several options when doing this.

You can choose to make your own will, but you should keep in mind it’s a legal document that needs to be written and signed correctly to be valid. Often, taking advice from a regulated solicitor that specialises in wills and probate is the best course of action.

Whichever option you choose, make sure your will is valid. Your will must be in writing, signed by you and witnessed by two people. Beneficiaries should not act as witnesses, and, where possible, neither should executors.

8. Storing and updating

Once you’ve written your will, there are two points to remember. The first is to store it in a safe place, this could be in your home, with a solicitor, bank, or a Probate Service, and ensure your executors know where it’s kept.

Secondly, don’t write a will and forget about it. Circumstances can change considerably; your wishes today can be very different to those you will have in a decade. It’s good practice to review your will every five years and after big life events, such as getting divorced, receiving an inheritance or having children.

While you’re writing your will, there is another task you should tick off; naming a Lasting Power of Attorney (LPA).

An LPA gives someone you trust the power to make decisions on your behalf should you become too ill to do so. An LPA can only be written while you’re sound of mind. As a result, it’s an important step to take before it needs to be used. The combination of a will and LPA can help make sure that your wishes are carried out through your later years of retirement and once you pass away.

To discuss your finances and the legacy you leave loved ones, please contact us today. We can help you put the figures in context with your wider aspirations.