How do I make a will?

We’ve produced a handy guide to why and how you should make making a will a priority.

Why make a will?

A will is the only sure way to make sure that your assets will go to the people you want in the way you want. A will also shows that you have thought about others and can avoid delays in sorting out matters after your death – especially if you die at a young age and possibly in tragic circumstances.

Do I need a will?

Without a will the law says who will inherit what. More often than not the law may not reflect your wishes or provide adequately for your circumstances. For example:

• Provision for one’s spouse/civil partner and children can be arbitrary depending totally on the value of your assets;
• Children have to reach the age of 18 before they can inherit outright;
• Trusts might be imposed when not wanted;
• Unmarried partners will not inherit from each other under these rules;
• If there are no children then one’s spouse’s/civil partner’s family may inherit the whole estate on the death of the survivor of you;
• The person who is to be responsible for implementing your wishes is inflexible;
• These laws make no provision for guardians of young children, friends, charity, people with special needs; and
• More tax may go to the government than need be the case.

How do I make a will?

We can prepare a will for you. There are various matters that you will need to consider when giving us instructions to prepare your will, which we have summarised along with some comments on the common ways in which people like to leave their assets.

Funeral wishes

The first item normally included in a will is a statement of your funeral wishes- i.e. burial or cremation. It is better to leave any further detail in a note to be left with your will. This note can then be amended, by you, informally, at any time, without having to change the will itself. We suggest that a copy of the note goes with the will for safekeeping.

Executors

You will need to consider who are to be your executors. These are the people who  carry out your wishes as specified in the will. They should obviously be people you trust and, preferably, about the same age as, or younger than, you (although they must be 18 and mentally capable). This is so that they are likely to be alive when you die. We always recommend that you make provision for the possibility that one or more of your preferred choices is unable to act for any reason, by nominating one or two substitutes. If there is no one in particular that you wish to specify, we at Anthony Collins Solicitors will willingly act. With many years experience in dealing with estates, we are able to handle most, if not all, of the paperwork and relieve the family of that task. We also bring an impartiality, which may well be desirable.

Guardians

If you have children under 18, you should consider appointing guardians to look after them should one or more of them still be under 18 on the death of the surviving parent. The guardians may be different to the executors and should obviously be people who are willing to take on the responsibility and who you trust to bring them up as you wish.

Your assets (commonly called “your estate”)

You should then consider to whom you wish to leave your estate. You may want to leave everything to one person, which often happens as between husband and wife or civil partners, in which case it may well be sensible for that person to be the only executor. In this type of situation we would normally recommend that the recipient (or “beneficiary” as they are legally called) only inherit your estate if they survive you by 30 days.

This not only prevents your assets being distributed under the beneficiary’s will and therefore, possibly going to people you would not have wished, but may also save your family inheritance tax.

You may want to leave your estate to an individual, but ensure that, on their death your estate then passes to one or more people of your choice. This might typically arise where you want your estate to pass to your partner and then to your children on your partner’s death. By leaving everything to your partner or someone else outright, they are then free to do with it what they wish, even ignoring any specific instructions you may have given them.

In these circumstances your wishes will probably best be achieved by creating a trust under your will, such that your partner, or whoever, becomes entitled to occupational rights and the income from your estate during their lifetime and then, on their death, the estate passes as you have directed. Modern trusts can be extremely flexible and we will happily discuss this aspect in more detail if you wish.

If your estate is small it may be inappropriate for you to leave it in trust, because of the costs of running trust. We will happily discuss this with you if you wish. It is of course possible to leave everything equally or in other proportions between more than one person e.g. between your children, or brothers and sisters, if you wish.

You may also wish with children or grandchildren for instance to specify the age at which they are to inherit. We would normally recommend the age of 21 or 25. Although this will have tax complications, by that age, hopefully, the individual will be able to handle their inheritance wisely. In those circumstances a trust might arise and so you will need to have at least two executors.

Legacies

It is also possible to leave specific items, or specific amounts of cash, to specific individuals or charities in your will. These specific gifts are called legacies, If you wish to leave legacies we need to know:

• the full name(s) and address(es) of the individual(s) and or charity/ies;
• the amounts in question and/or a detailed description of any item(s) to be given;
• for an individual we need to know if s/he has to reach a particular age before they become entitled;
• for a charity we also need to know the registered charity number; and
• for a charity we will assume the gift is for the charity’s general purpose unless you say otherwise.

Administrative provisions

Finally we will include certain technical clauses in the will to ensure that your wishes can be carried out as smoothly as possible after your death.

This is only a brief outline and there may be other matters that will need considering in conjunction with your will. For example, are there any “rights of appointment” that you may have under someone else’s will or under a life insurance policy/pension scheme?

Or what is to happen to any property or bank accounts you own jointly with someone else? We suggest that you make a note of any such additional matters or queries to discuss them with us.

Tax planning

For some, the value of their estates will be such that they want to give away assets in lifetime or to redirect an inheritance. This can often be done very tax effectively. Again we can advise on this.

Powers of attorney

As well as making a will, you may also want to consider a power of attorney. This document will enable you to say who will look after your finances and/or make personal decisions on your behalf if you become unable to do so for yourself. If you do not have these in place there can not only be delays in dealing with matters but you also have no control over who makes those decisions for you. Without one the cost of dealing with your affairs may also be more costly because the courts become involved. A health and welfare power of attorney will enable attorneys to deal with GPs, the NHS and social services on your behalf.

Regular reviews

Planning is not a one-off exercise. Your situation will change as children are born, they grow older and have families of their own and also as your own wealth (hopefully!) grows. It is important to review your will and powers of attorney at regular intervals to make sure that they correctly reflect your wishes. Furthermore the tax rules may change making other changes necessary.

Wills for families with disabled children/dependants

Some of us will have children who are born disabled or members of our family may have an accident and become unable to deal with their affairs. In these situations specialist advice is needed and, at Anthony Collins Solicitors, we can provide this.

We set out below some specific aspects that are relevant when making a will if you have disabled children. This is as relevant to young children as adult children who suffer a disability so that they are not able to handle their affairs.

Should I leave anything to my child?

There are some circumstances when a legacy to a child will be of no assistance to anyone but the local authority or Department of Work and Pensions. If the child concerned is living in residential accommodation funded by the local authority (means tested) then an inheritance might well take him/her out of the benefit system. The result will be that the money you have left your child will be slowly dissipated in the payment of home fees. It has been said that, in these circumstances, if you fail to provide for your child the local authority might make a claim on your child’s behalf for provision out of your estate. Although this possibility cannot be ruled out, no successful claim has been reported to date.

If I would like to leave something to my child what is the best way of doing this?

This will depend on the amount of money you intend to leave him/her and also his/her capacity to handle money.

If your child lacks capacity to handle his/her own financial affairs an outright gift to him/her will lead to additional complications. It will be necessary for someone to apply to the court of protection to act as the child’s Deputy to obtain the necessary authority to look after the money on the child’s behalf. (This is assuming that your child has not executed a valid enduring or lasting power of attorney at a time when s/he had the necessary capacity).

If your child does lack capacity to handle his/her own financial affairs then the best way to leave him/her a legacy is through the medium of a trust.

• An informal trust – one method used in these circumstances is to leave the legacy to someone else, e.g. a close friend or another child of yours in the confidence and on the understanding that they will use the money for your child’s benefit and not their own. Technically this money will belong to the recipient and therefore s/he will be free to dispose of it as s/he thinks fit and it will also pass on his/her death with his/her own estate.
• A formal trust – a formal trust can be established by will or even during your lifetime. It will enable you to appoint trustees to look after the money for your child and you can set out in the trust the terms on which you would like the money to be held.

What type of trust should I use?

There are three main possibilities as follows:

A life interest trust

If you use this type of trust your child will automatically be entitled to the income for the remainder of his/her life or until an earlier event that you specify in the trust. You will need to say what is to happen to the capital on the death of your child or when the earliest specified event occurs. It is possible, using this type of trust, to give the trustees powers to advance capital to your child should the need arise.

The income will be treated as your child’s for tax purposes, but the trustees will be responsible for any capital gains tax due at the trust rate, although trustees have the benefit of a capital gains tax exemptions of half the individual rate.

A discretionary trust

If you use this type of trust you name a number of potential beneficiaries, including your child. The trustees then have an absolute discretion as to how much income/capital to appoint from time to time to any of those beneficiaries. It is usual to provide a memorandum of wishes with a discretionary trust to give your trustees some guidance, for example you might say in your memorandum of wishes that the fund has been set up to benefit your child and that on his/her death you would like the monies to be divided in a certain way. Such a memorandum would not be binding on your trustees but it is unlikely that your wishes would be ignored. Both the income and capital gains of a discretionary trust are taxed in the hand of the trustees at the trustee rate.

Trusts for the disabled

The rules changed in 2013. This is a type of life interest trust under which income can be accumulated. If any payment of income or capital is made it must be made to (subject to certain small amounts) or applied for the benefit of the disabled person. For these purposes a person is disabled if s/he;

• Is incapable by reason of mental disorder, within the meaning of the Mental Health Act 1983, of administering his property or managing his affairs; or
• In receipt of an attendance allowance under the Social Security Contributions Benefits Act 1992; or
• Is in receipt of a disability living allowance under the social security contributions and Benefits Act 1992 with the care component at the middle or higher rate; or
• Is in receipt of the personal independence payment (daily living component at either the standard or enhanced rate).

If it meets these requirements it will be treated as a life interest trust. The benefits are mainly related to inheritance tax and therefore this may be an appropriate trust to use where you are thinking of leaving a substantial legacy to your child.

Having decided what I want to do, how do I proceed?

You should consult a solicitor to make sure that you have covered all the options available to you. The solicitor will then be able to help you with the drafting of a suitable will/trust.

As well as setting up trusts under one’s will for a disabled child it may be appropriate to consider setting up a trust during your lifetime perhaps as part of an inheritance tax planning exercise.

This note is not intended to be a comprehensive statement of the law and the possibilities open to you but to give you an idea of some of the options available. If you need more specific advice, we would be happy to assist.

Other services for families with disabled children/dependants

We also act as financial deputies through the court of protection for many disabled people. We have probably the largest team in the West Midlands specialising in this type of work. In addition, our specialist services include helping you recover damages if you or a family member has been injured, or needs help getting the educational or other types of support that you need. If someone is being pressured against their will to do something we can often help.

Information for your will and personal profile form

If you would like to instruct us to prepare your will or if you simply wish to discuss the matter further with us, please complete the personal profile form. This will help us obtain the necessary information to advise you properly in connection with your will and provision for your family after your death.

Please note that we cannot take instructions from third parties unless we subsequently attend, personally, on our client.

Whilst considering your will we would suggest you review your affairs generally and, in particular, lasting powers of attorney, declarations of trust and living wills, as well as your insurance and pensions cover as appropriate.

For further information

To find out more, take a look at the wills and estate planning part of our website. Alternatively, contact Donna Holmes below.

 

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