Planning ahead with will writing

Writing a will can seem a daunting prospect. There’s often a lot to consider, including what wealth and assets you have, such as property, and pensions, as well as who you want to benefit from your will. While it can seem an easy task to put off, it's one of the most important things you can do, not only for yourself but your loved ones as well, giving you peace of mind that your affairs are in order.

Olly Cheng, FINANCIAL PLANNING DIRECTOR AT RATHBONES FINANCIAL PLANNING shares his five top tips to consider when will writing:

1. Ensure your will is valid

When it comes to writing a will it’s important to make sure it is legally valid. If it’s not, it could lead to a number of problems in the future. Firstly you must be aged 18 or over, it must be voluntarily written and signed by you with two witnesses present who are also over 18, and you must have the mental capacity to write the will, understand what you are doing, and know the effects of the will.  Under UK law, if you are unable to sign a will yourself, you may ask someone else to sign on your behalf in front of you.

2. Be Aware of Inheritance Tax Thresholds  

The nil-rate band, which is not technically an exemption, means that the first £325,000 of chargeable transfers are taxed at nil percent, so are effectively tax free. There is also a Main Residence Nil Rate Band of up to £175,000 subject to certain conditions such as leaving property to your direct descendants and the total estate being under £2m. Anything over the available nil rate bands can incur inheritance tax (IHT), which is ordinarily 40%. However, if you leave everything over this limit to your spouse or civil partner then you can save on any potential IHT. Calculating your IHT liability is a complex area, and you should seek professional advice if looking to reduce your tax bill on death.

3. Consider gifting to charities

Leaving any sized financial gift to charity is exempt from inheritance tax, so it’s certainly worth considering as a way of reducing your bill. If 10% of your net estate is left to charity, the rate of inheritance tax applicable on death is reduced to 36% from 40%, meaning the taxman would take a smaller cut of your estate. It also means you can leave a portion of your wealth to a good cause.

4. Keep your will up to date

Having written a will, it doesn’t mean it is set in stone forever. You are legally able to amend your will when you choose. It is recommended you revisit your will every 5 years or upon any ‘life moment’ changes you go through, such as buying a property, getting married, having children, or if you were to go through a divorce or bereavement. Life happens and things can change, so keeping your will up to date is important to give you peace of mind that your latest wishes will be carried out.

5. Think of your immediate family

Firstly, if you have a partner, whether you are married, in a civil partnership, or a cohabiting couple, it’s important to understand what may happen to the other if one of you were to pass away. Sadly, unmarried couples are largely unprotected if one should die. Unlike for married couples or those in a civil partnership, there is no legal right to property not jointly owned. If children are involved, this could also mean that your partner risks not being able to stay in the family home or have enough money to bring up your children. Furthermore, if you do have children or stepchildren, having a will in place can protect them financially and make sure they’re cared for. In addition to considering how your estate is divided up, it’s also crucial that you’ve considered who you would entrust to care for your children (under the age of 18) if you and your partner were to pass away suddenly.  

It’s a huge decision to make, so make sure you speak to those who you’d want to appoint as guardians first, but if this isn’t in a legally binding document then the decision could be left to the courts, which may not reflect your wishes.