What is a will?
A will or testament is a legal document by which a person (the testator) expresses their wishes as to how their property is to be distributed at death, and names one or more persons (the executor) to manage the estate until its final distribution.
Basically, your will tells everyone what should happen to your money, possessions and property after you die (all these things together are called your ‘estate’).
Two very important things your will does:
- Outlines who should have your money, property and possessions when you die.
- States who will oversee organising your estate and following the instructions you leave in your will – this person is called your ‘executor’, and you can name more than one person if you want to.
You can also use your will to tell people about any other wishes you have, like instructions for your burial or cremation.
Your executor is then there to do their best to make sure your wishes are followed.
Why you should make a will?
Your will tells everyone what should happen to your money, possessions and property after you die. If you don’t leave a will, the law decides how your estate is passed on – and this might not be in line with your wishes.
It’s easy to make a will – and it will save your family unnecessary distress at an already difficult time.
- A will makes it much easier for your family or friends to sort everything out when you die – without a will the process can be more time consuming and stressful.
- If you don’t write a will, everything you own will be shared out in a standard way defined by the law – which isn’t always the way you might want.
- A will can help reduce the amount of Inheritance Tax that might be payable on the value of the property and money you leave behind.
- Writing a will is especially important if you have children or other family who depend on you financially, or if you want to leave something to people outside your immediate family.
Remember: If you die without a will, the law says who gets what.
What makes a will valid?
A will is valid if it:
- Says how your estate should be shared out when you die.
- Was made when you were able to make your own decisions and you weren’t put under pressure about who to leave things to.
- Is signed and dated by you in the presence of two adult, independent witnesses, and then signed by the two witnesses in your presence – the witnesses can’t be people who are going to inherit anything from you (or their husband/wife or civil partner.)
How to start making a will
Depending on your circumstances, making a will can be straightforward i.e. you have a small family and a clear idea of who you want to leave everything to. For more complicated situations, e.g. if you want to leave money to lots of people – you’ll need to plan more carefully.
Step 1 – Make a plan
Think about what you want to leave to whom. Your will should set out:
- who you want to benefit from your will
- who should look after any children under 18
- who is going to sort out your estate and carry out your wishes after your death (your executor)
- what happens if the people you want to benefit die before you
TOP TIP: Talk to family about your will, as they might have points you may wish to consider.
You may want to seek professional advice if your will is not straightforward, for example:
- your permanent home is outside the UK
- you have property overseas
- you have a business
- you share a property with someone who is not your husband, wife or civil partner
- you want to leave money or property to a dependant who cannot care for themselves
- you have several family members who may make a claim on your will, such as a second spouse or children from another marriage
Once you have a plan look at the different options available.
Step 2 – Get your will written
You don’t necessarily have to instruct a solicitor to write your will, you can now do this using on-line services, or templates – you can buy a template document in stationery shops for as little as £10.
Wills can vary in cost, depending on how complicated your wishes are.
What is a will trust?
A will trust (or testamentary trust) is created within your will to allow you to protect property you hope to pass on to your family, once you pass away. You set up the conditions of the trust in your will and it activates upon your death.
Trusts are legal entities that allow someone to benefit from an asset without being the legal owner.
How it works
You create the trust and appoint a person – the ‘trustee’ – to manage it on behalf of those who receive the income of the trust (the ‘beneficiaries’).
Trusts can give you an element of control over assets you wouldn’t have if you gave them away outright.
There are two main types of trust that you might choose to set up:
- a will trust, created upon your death, or
- a lifetime trust, which you establish during your lifetime.
Trusts can be complicated structures with tax implications, and you should seek legal advice before setting one up.
Leaving property in a will trust
Will trusts are mainly used by couples to split ownership of the family home if they own it as ‘tenants in common’. Rather than leaving their share to each other, they each leave it to a trust, which comes into being on the death of the first partner.
Will trusts and long-term care
If you use a will trust and your partner dies, you as the surviving spouse retain a right to live in the house. If you need to pay for care, only your share of the home’s value will be assessed by the local authority.
The part owned by the trust is not counted. In this way it’s protected from care home costs. Government rules (Charging for Residential Accommodation Guide) suggest that this arrangement will not be contested as ‘deliberate deprivation’, meaning that you have deliberately split your assets to avoid paying high care-home fees.
Will trusts and inheritance
Another reason for setting up a will trust is to avoid ‘sideways disinheritance’.
This occurs when the first partner dies, leaving children from the marriage who might reasonably expect to inherit some of the family estate in due course. If the surviving partner remarries and fails to make provision for their children in a new will, there’s a risk that everything will go to their new spouse instead.
To avoid this situation, you could set up a will trust which leaves your share of the family home to your children. However, this will use up some or all your inheritance tax nil-rate band in a way that leaving everything to your partner doesn’t.
It could also create a capital gains tax (CGT) liability for trustees. So carefully weigh up your options, and seek advice, before pursuing this option.