Why do I need to make a will?
You need to make a will to make sure that any money, property, or assets you hold will go to the people or causes that you want them to after your death.
By making a will you can:
- Choose who you want as executors, to administer the distribution of your assets and wind up your affairs after death.
- Prevent financial complications and difficulties for your family.
- Set out the arrangements you would like for your funeral.
- Make sure the people you love, such as an unmarried partner or a dependent, get the provisions you would like them to have.
Who gets my property if I don't make a will?
f you don't make a will you will be said to have died intestate. Your estate will be divided up according to the rules of intestacy which can be complex.
As a common law spouse, will my partner inherit my estate?
If you are not married to your partner and you don't leave a will, your partner is not entitled to inherit any of your estate. The terms "common law husband" and "common law wife" are legally meaningless. You can make sure your spouse is provided for by making your intentions known in your will.
Do I need to change my will if I get divorced?
Yes, you should review your will on a regular basis - every three to four years, to take account of changes in your circumstances. You should definitely review your will when:
- you get married, separated or divorced
- you have children
- you move house
- one of your executors dies or wishes to stop being an executor
If you need to make major changes to your will, it is best to have a new one drawn up. We can make minor changes for you by adding a codicil.
You do not need to change your will if your address changes, or one of your beneficiaries or executors changes names – but you should let us know any new addresses/names so we can update our records.
What happens when I decide to make a will?
You will need to discuss the following with your solicitor:
- what is in your estate, including property, cars, personal possessions, investments and insurance policies, pensions and any businesses you own
- who do you want to share your estate with? Consider your family first of all. You may also want to share it with friends, organisations or charities. There may be conditions you want to attach
- decide if you want to leave any legacies to individuals or organisations. (A legacy is a gift of a specific amount of money)
- you may also want to make a gift to someone, such as a particular item of jewellery or furniture
- if you have children under the age of 18 you should appoint legal guardians for them
- consider providing for anyone who is financially dependent on you, including children and former husbands or wives. If you don't, they may have a claim against your estate
- give instructions for your funeral, including whether you want to be buried or cremated
- appoint executors of your will. These are people who will carry out the administration of your will after your death. You can choose family members, friends or professionals. You can appoint your solicitor at Vanderpump & Sykes as an executor for you. Remember to check that your chosen executors are happy to take on this responsibility
Can an executor be a beneficiary of my will?
Yes. You can choose up to four executors - most people have two. It helps to choose at least one person who is financially experienced, and it's sensible to choose people who you would expect to outlive you.
Why do I need to use a solicitor to make my will?
You don't need to use a solicitor to make your will, but without one you risk the following:
- producing a will that is not legally valid
- making a will which does not take into account all the issues and factors that you might need to address
- producing a will that is badly worded, and therefore does not dispose of all your assets properly
- missing out on minimising inheritance tax (relevant for anyone with an estate worth more than £312,000)
By discussing your affairs in detail with an experienced solicitor you can make sure that your will covers all aspects of your assets and responsibilities. We can also help you set up trusts for dependants.
How long does it take to make a will?
The more straightforward your affairs, the quicker it will be for us to draw up your will. However, many people find that their affairs are more complicated than they realised once they start to discuss their situation in detail. We will advise you on the length of time once we have all your details.
We generally allow between 7-10 days to send a draft will to you once you have completed our will questionnaire and other relevant forms. Once you are happy that the will is correct, we will produce a final draft for you to sign, and provide you with a copy to keep yourself.
What if I need to make a will in a hurry because of illness?
When it's vital for you to make your will very quickly, for example if you are seriously ill, we can visit you and produce a will for you to sign within a few hours.
Do I have to come into your offices?
We usually like to see you for at least one visit, either when we take instructions, or when you are ready to sign your will. This helps us to ensure that you are happy with the contents of the will, and that it is correctly witnessed. We will keep a copy of the will for you free of charge.
If you are in hospital or find it difficult to leave home, we can arrange to visit you, at an extra charge.
Can you help me if I want to challenge someone else's will?
If you believe that you have a claim against someone else's estate, or that their will is invalid, you can make a claim against them. Our litigation department handles claims of this sort.
What is a living will?
Some people are recording their wishes about what should happen to them if they become too ill to make decisions for themselves about how their lives should be run. No one can request that their life be ended, but they can state whether they want to stop treatment that could delay their death, or have treatment that would reduce their suffering but might bring an inevitable death sooner. They would nominate a person to administer this living will on their behalf.
A living will is not currently a legally binding document, but the wishes expressed in them have sometimes been followed.
What is Probate?
Probate is a general term used to cover the process of administering someone's estate.
When someone dies, their assets are frozen. If their estate is worth more than £5,000, the Executors, appointed under their Will, need to apply for a Grant of Probate.
A Grant of Probate gives an Executor the authority to deal with assets in the estate. They will need to show this to banks, building societies and other organisations holding the deceased person's assets.
What happens when someone dies without making a Will?
This is known as ‘intestate’. The next of kin usually need to administer the deceased’s estate by applying for a Grant of Letters of Administration.
A Grant of Letters of Administration gives authority to handle the deceased person’s assets.
Assets must be distributed according to the rules of intestacy, which can be complex. Additionally, default rules apply meaning that things may not work out as expected.
Where an estate is paid if no Will has been made.
The best way to be sure of what happens is to make a Will.
Vanderpump & Sykes are able to help with writing a Will and provide comprehensive advice to ensure your Will is tax efficient.
What does an Executor do?
Depending on the size of the estate, the Executor's job can be very time consuming and involve the following:
- Registering the death
- Arranging the deceased’s funeral
- Gathering details of the deceased’s investments, money, property and possessions
- Collecting in the assets by closing financial accounts and selling any property
- Paying any debts or liabilities owed by the estate, including inheritance tax
- Transferring the assets to the beneficiaries of the estate
Vanderpump & Sykes are able to help you with the above tasks
What is Inheritance Tax?
Generally, Inheritance Tax is payable on death at 40% of the balance above the nil rate band threshold.
It is possible to change the way assets have been left, to minimise the amount of Inheritance Tax payable and/or to reduce any liabilities for care home fees.
Getting professional advice on tax can be extremely cost effective. Vanderpump & Sykes can assist you. Certain investments and life assurance policies can be paid to beneficiaries before the rest of the estate is distributed. You can set these up for yourself when planning your Will or tax affairs.
What happens if beneficiaries cannot be traced?
A common mistake made by family is to assume that they will inherit the share of a missing beneficiary because they cannot be found. This is not the case. The most cost-effective and quickest way to find beneficiaries is to seek the advice of an experienced genealogist. In most cases, the missing beneficiaries will be found. If not, Executors can take the following action:
- Insure against the possibility of a missing beneficiary coming forward
- Apply to court for a Benjamin Order, which authorises Executors to distribute the estate as the court directs
- Pay the missing beneficiaries share to those known, but in return the beneficiaries promise to repay the inheritance if the missing beneficiaries come forward
- Pay the missing beneficiaries’ inheritance into court
For further information on how Vanderpump & Sykes can help you with Probate, please contact us on: 020 8370 2899.
What is a trust?
A trust is a legal arrangement whereby you hand over some of your assets (eg shares, money, property) to be looked after by someone else (known as a trustee), on behalf of another person, (known as the beneficiary.)
You can specify how you want the trust to be administered, and say when the beneficiary is entitled to take possession of the assets in the trust fund. Eg many people leave money in trust for children, for them to take possession of it once they reach a certain age.
Once you have put assets into a trust fund, however, they no longer belong to you and you cannot continue to benefit from them.
There are many different types of trust. We can advise you on the most appropriate type of trust to set up to meet your needs.
Why should you set up a trust?
Common reasons for setting up a trust include:
- to help reduce inheritance tax for your family
- so your beneficiaries can have access to your life assurance polic(ies) without having to wait for the Grant of Probate
- to take care of assets on behalf of children or young people
- to pay for school fees or education
- to reduce your tax burden through careful financial planning
- to look after assets on behalf of someone who is too disabled, sick or old to do it themselves
Who will manage the trust ?
You will need to choose trustees to manage the trust. Trustees need to:
- invest and manage the assets
- keep records and make payments
- administer the trust according to the rules of the trust
- prepare tax returns
- deal with the sale of assets
You can appoint us to act as trustees on your behalf, appoint someone who is financially experienced and willing to act as a trustee for you, or appoint other solicitors or trust companies.
What is an attorney?
An attorney is a name for someone who acts on behalf of another person. You can choose your own attorney. They may be a family member, friend, or a professional person. It’s preferable, but not essential, that your attorney has an understanding of your affairs and circumstances.
Is there more than one type of power of attorney?
There are two types:
General Power of Attorney
This allows your attorney to deal with all of your financial affairs. However, if you lose your mental abilities, your attorney must stop acting on your behalf
Enduring Power of Attorney was replaced by Lasting Powers of Attorney -1st October 2007Lasting Powers of Attorney ( "LPA" ) allows the creator to appoint someone to make decisions regarding their personal welfare and long term care and treatment, as well as their finances. The new LPAs will not be valid unless they are registered with The Court of Protection.
How do I appoint an attorney?
A Power of Attorney must be set out in writing. A Lasting Power of Attorney must be in a certain format, as set down in law. We use pre-printed forms to ensure the correct format is used.
Your and your attorney will both need to sign the Lasting Power of Attorney form.
Why would I need to give a Lasting Power of Attorney?
The most common reasons are when you :
- become unwell
- become forgetful
- find dealing with your finances too cumbersome
- do not trust your next of kin and would like someone else to be in control of your finances
What should I consider when choosing an attorney?
- remember that you can still continue to deal with your own affairs even if you have appointed an attorney. If the time comes when you no longer have the ability to carry on, the attorney can step in to act on your behalf
- you can appoint more than one attorney
- you can restrict what your attorney can do for you. Eg you can direct that your attorney deals only with the sale of your house, but not with your bank accounts
- if you lose your mental abilities then your attorney can deal with your affairs at a time when you no longer know what is happening
- your attorney is obliged to inform the Public Guardianship Office (the court) if they believe you can no longer deal with your affairs
- you can cancel the attorney’s appointment any time before you lose your mental capacity
- it is extremely important for you to trust your attorney and their family. If you think your attorney would ever use your money for his/her own purposes than you need to reconsider whom to appoint
What happens if I do not appoint an attorney?
If you lose your mental abilities and no Lasting Power of Attorney is in place your next of kin will need to apply to the Public Guardianship Office for a Receivership Order. The court directs how your assets will be dealt with. Your next of kin are obliged thereafter to obtain the Court’s permission before making any major decisions when dealing with your affairs.
What are the main differences between giving a Lasting Power of Attorney and applying for a Receivership Order?
The main differences are:
- the cost of preparing the Power of Attorney is significantly less
- it is much quicker to complete a Power of Attorney, which is finalised once both parties have signed and dated it. The application for a Receivership Order may take six weeks or more
- your attorney has comparative freedom to make decisions on his/her own without the overall involvement of the courts, unlike under a Receivership Order
What issues do I need to consider before transferring my property?
There is nothing to stop you from transferring your home to whomever you like but you must consider the following issues before the transfer has taken place:
If you transfer your property to a child who then divorces, their share of the property may form part of any divorce settlement. This may result in the property which you are still living in being sold, or a mortgage taken out against it. An alternative arrangement could be where one divorcing party agrees to pay off the other.
The person(s) to whom you have transferred your home may use their interest in the home as security for a loan. If repayments are not made, the lender could take action against the property to recover the money owed.
If the person to whom you have transferred your home becomes bankrupt, the trustee in bankruptcy would certainly call in their assets, which would include their interest in the property. If the person is in business, the likelihood of bankruptcy increases.
If you yourself became bankrupt within a period of 5 years from the date of the transfer of your property to someone else, which is a gift, the trustee in bankruptcy can apply to a court for an order to reverse the gift.
You may reach an age whereby you need care, whether or not that care is provided for you at home or elsewhere. You may be keen to prevent the capital in the property from being spent on home fees, but do you really want to be left at the mercy of the local authority, when the cash from the sale of the property may provide you with a great deal of comfort?
If you transfer your property to a child, you need to think about the possibility of that child dying before you. If this happened, his/her entitlement forms part of their own estate and will be given to those beneficiaries named in that child’s will, or if there is no will, to their next of kin.
What are the tax implications of giving away my home?
Inheritance tax is paid when a person’s estate exceeds £312,000. Tax at a rate of 40% is paid on the amount which exceeds this figure.
If you continue to live in the property after the date of the transfer of your property, the total value of the property on your death will still remain a taxable asset within your estate, even though you have given away your rights over it.
You need further advice if your estate is taxable.
Capital Gains Tax (CGT)
If your children already own a house which is their main residence, then on the sale of the property, their sale proceeds may be subject to Capital Gains Tax (CGT).
Can I get money from my home without selling it?
Safe home income plans
If you transfer your property to someone else, you can no longer use it to generate future income for you. There are insurance plans which allow the older generation to borrow against the value of their home whilst they are still living in it. This can provide you with an income whilst preserving something to pass on to your children.
What should I do if I wish to go ahead and give away my property?
People often leave the decision too late. To transfer your property you should:
- not leave the decision until the time it becomes inevitable you will need some sort of care
- consider using a trust. It is argued that if you place the property into a trust which contains powers to permit you to continue to reside there, then you are not actually depriving yourself of anything. The consequence is that the local authority may find it more difficult to argue that you have deliberately deprived yourself of your property
Quite how this would stand up in court we do not know because as yet there have not been any test cases.