We all know we need to make a Will, but as many as 60% of UK population seem to put it off, probably because they prefer to believe that there is plenty of time to make the arrangements they need.
The Coronavirus epidemic has reminded us all that having time is something we can never be sure of. What is more, if delay means that writing our Will never gets done, our loved ones lose out as a result.
At Continuum, we know that not having a Will can cost your dependants money they may desperately need – and that the time to act is now.
Why a Will is vital
The traditional lack of Wills probably stems from the view that they are only for ‘the wealthy’. Previous generations may have had very little to leave behind. A home was likely to pass to a surviving spouse or be sold with the proceeds passed on to children under probate.
But thanks mainly to the constant increase in the price of property, things have become more complicated. Many more of us will leave this world with inheritance tax (IHT) liabilities. At 40% of everything in our estates above £325,000 (excluding an allowance for the family home) it means a substantial reduction in what you can pass on to your loved ones.
Most of us believe – or at least hope – that our money will go to the right people automatically once we die. Of course, we won’t be there to ensure it, and unless we make a Will, the law decides what happens to our worldly goods under the rules of intestacy, and the taxman will take a share.
If your estate is worth more than £250,000, your spouse will only get the first £250,000, and the rest will go to your children. Your spouse will get a life interest in half of the remaining estate – and if you are not married, your partner is not entitled to anything. If you have no blood relatives, the state might even take everything you leave behind.
Making a Will can ensure that your wealth will go to the people you care about. But it can also help ensure that they receive your wealth rather than the taxman.
A Will is one of the most important tools for intergenerational planning, which is designed to ensure that your IHT liability is kept to a minimum.
How a Will can reduce inheritance tax
Your Will can not only let you provide for your loved ones. With the proper arrangements, it can make that provision more generous, because it helps keep more of your money away from the taxman.
Using charitable donations, making the right arrangements for your pensions and using tools such as trusts, and recording your wishes in your Will, you can avoid the worst of IHT. If you have amassed enough wealth, you can use your Will to set up a trust that can provide financial support for generations to come, delivering income while leaving your capital untouched.
But you will need help from your solicitor and ideally from a Continuum adviser to arrange a Will that can use the allowances and exemptions to the full.
At Continuum, we regularly work with solicitors to advise on reducing tax liabilities through careful use of bequests and help ensure that Wills are as tax-efficient as possible. If you are determined to pass your wealth on to your loved ones rather than the taxman, talk to us today.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate Estate Planning, Wills, tax and trust advice.