Having a Will is the best way of securing what happens to your estate when you die as, without one, the law will determine who inherits your assets. If you make a Will you can also make sure you don’t pay more inheritance tax than you need to.
If you die without a Will, you are said to have died ‘intestate’. In this instance, an administrator is elected to deal with the distribution of the estate however it is the law that determines who gets what. If you’re the person’s next of kin, e.g. their spouse (or civil partner) or child, you can usually apply for a grant of representation to be the administrator of the estate. However, if you were the partner of the deceased but weren’t their spouse or civil partner when they died, then you cannot apply for a grant of representation and are not automatically entitled to any of their estate.
The rules of intestacy are quite extensive and depend on various factors such as whether you are married and if you have children. For example, if you are married with children the first £250,000 of your estate will pass straight to your spouse. The remaining amount of the estate is divided in two, with half going to your children when they turn 18 and the remaining half being used to provide an income for your spouse. On your spouse’s death the remaining value of the estate will be passed to your children.
However, if you are not married, have no children and your parents have previously passed away then your estate in its entirety will pass to your brothers and sisters if you have any. Having a Will will ensure your estate is distributed as you intended and also reduce the burden on your family of having to go through intestacy proceedings.
In addition to the protection provided by having a Will, you can also take advantage of inheritance tax planning strategies that will help to reduce your exposure to IHT and ensure as much of your assets as possible are passed onto your loved ones. There are a number of options available to you, such as investing in shares that qualify for business property relief (BPR), the use of Trusts and more simply by making use of gift allowances. You can read more about the rules of IHT here.
There is also a way of protecting how your assets are managed whilst you are still alive, should the unfortunate happen and you are no longer capable of doing so yourself.
Electing a Power of Attorney (PoA) is the most straight-forward route to ensuring your estate is managed by someone you trust. A PoA is usually a family member or close friend; they don’t need to be a financial expert, but they can work with your financial adviser to ensure that your finances continue to meet your ongoing needs.
Without a PoA, banks and other organisations will not accept instructions from anyone who has not been legally instructed to do so, even if they are your spouse or another immediate relative. The court procedure that ensues can be a costly and lengthy process and again, may not result in your estate being managed as you had original planned.
Most people will often not consider granting a PoA until they are older however, should you become ill or be involved in an accident which renders you incapacitated, having a PoA in place now will ensure that your financial and property affairs, and also your personal welfare, are left to someone you can trust.
If you would like advice on writing a Will or granting a Power of Attorney, please contact your Finura adviser.
The Financial Conduct Authority does not regulate will writing, taxation and trust advice. Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.
Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.
You are now departing from the regulatory site of Finura. Finura is not responsible for the accuracy of the information contained within the linked site.
As tax year end approaches, there is still time to make use of your available reliefs and allowances.
This tax year end planning checklist covers the main planning opportunities available to UK resident individuals and will hopefully help to inspire action to reduce tax for the 2023/24 tax year and to plan ahead for 2024/25.
As tax rate band thresholds are changing, understanding the impact on high rate taxpayers and the economy is crucial.
It was recently revealed in the media that the amount we need to enjoy a ‘moderate’ retirement has increased by £8,000 per annum, a 38% increase, in just one year.