I’m going to share my top 10 tips as to creating a will to protect you and your family. Now, there’s lots of concerns and worries about making wills, and in actual fact, it’s quite simple and straightforward. This is a conversation that I have on a regular basis with many people that I coach, so I thought that I would take this opportunity to provide you with some training around creating a will and how you can protect your family.
It always interests me how we don’t like to talk about taboo subjects, and death is one of those taboo subjects, right? I know right now there’s lots of fearmongering and scaremongering going on about the Coronavirus, which is something is going on globally for all of us right now. And people don’t like talking about the what if scenarios; creating a will is one of those things. So I want to talk you through the basic principles of will writing and power of attorney.
A lot of people think “I’m young and fit and healthy, I don’t need to make a will.” Creating a will is relevant whether you’re single, whether you’re married, whether you’re not married and in a relationship, whether you’re in a civil partner relationship. There are two certainties in life, death and taxes, and we should be talking about this more openly.
What exactly is a will?
A will is a written legal document, and it sets out your wishes as to what you would like to happen in the event that something happens to you. In order for a will to be legally valid, it needs to be in writing. It needs to be signed, and it needs to be witnessed by two independent witnesses who aren’t beneficiaries within the will. So, for example, let’s say you’ve left some money to your best friend – you can’t have your best friend witness that will because it’s a conflict of interest.
Then you then need to choose executives. An executive is who is responsible for gathering together all of the information about your state. If anything happens to you, they would apply for what the court grants reprobates. They would calculate any potential inheritance tax that’s due on your estate and would pay the inheritance tax on your estates. Inheritance tax has to be paid within six months and often this is a problem. Sometimes they don’t get access to the estate until later than six months because maybe the estate is mainly property and they can’t sell the property to pay the inheritance tax bill. Typically beneficiaries will look at taking out a loan so they can pay that inheritance tax bill first.
So think about who are going to be your executives on your estate, and if you find you’re procrastinating, I would think about who you implicitly trust? Who do you think would be responsible enough to make those decisions? Obviously, if you have a will, they’re really just administering your wishes so they don’t necessarily have to make decisions, but they have to just be capable and responsible people. If you really can’t think of anybody, then sometimes people may choose a solicitor to be one of those executives, but be mindful that solicitors obviously will charge for that service. Now, if you’re going to go down that route, my suggestion would be to ask that solicitor whether they take a percentage off the estate or a fixed fee. This is really important – if your estate’s quite considerable and they take 1%, that could be quite considerable.
But for most people, they would like their partner or their spouse to inherit their estates, and then, if anything happens to both of them together or all the second death would then go to perhaps the children. If there are no children, then it may go to family members, friends, or maybe some charities. But I’m sure that you have got some kind of expectations as to who you would want your assets to go to. If anything happens now and you don’t have a will, you fall under the rules of intestacy.
So if you’re married and your estate’s more than £270,000 – for most people it will be because our houses and generally worth around that on their own, based on average house prices in the U.K – your spouse would get everything. If you have children, then your spouse would get up to £270,000 and half of the remaining estate, and then your children would get the other half, which would be held in trust for them until they reach the age of 18.
This may be what you want to happen, but intestacy rules are complicated and costly. They can create huge delays and in general they’re simply not good. For the sake of literally £150, make a will. Also remember that there is no legal entitlement for unmarried couples. If you know anybody who is living together that is not married, please poin them in this direction, because it’s one of those areas that is hugely misunderstood. Don’t make the assumption that because you’ve been living together for 20 or 30 years that you’re entitled to anything.
What do executors do?
Really, you can leave your assets to whoever you want. There may be certain things that you want to leave to particular people. It may be that you have specific requests about your funeral arrangements. Whether you want to be buried or cremated, what songs you want to have played at your funeral.
I’m just gonna touch very quickly on those of you who have an existing will and are thinking there are a couple of changes I need to make to my will. You can do what they call a codicil, which is just a fairly minor amendment to a will. I would suggest that you go back to whoever wrote your original will to do this.
If you get married, then any will that you have in existence is void. However with divorce this is not the case. The way that the law works is that your ex spouse is treated to have pre deceased you, therefore everything will just go to the children. But there have been some cases where this hasn’t happened, so my suggestion for any of you that have been through a recent divorce or who are going through a divorce or separation is to make that one of the first things that you do.
Power of Attorney
In terms of a power of attorney, think of this as like a living will. If you are unable to make decisions, what would you want to happen? This could be because of ill health or could be because you had an accident. This is where a power of attorney comes into place. Let’s say you’ve got bills coming out of your personal account, then your wife, husband, or partner won’t have legal access to that account because it’s in your name. Whether you’re married or not makes no difference. If you got your main bill account in a single name and something happens to you – you’re alive but not able to make decisions – then you’re spouse or partner is not able to make any transactions on that account. Power of attorney could be used to give your partner, wife, or husband legal access to administer and look after those accounts until you’re capable again.
There’s two types of Power of Attorney’s: one that’s called the health and welfare and that’s mostly about medical intervention. Then you’ve got one about the deals of property and financial affairs. So that’s paying of the bills. When you dropped a power of attorney, then you’ll consider both of those scenarios. It’s not a very nice thing to think about it. There’s a lot of controversy around this – should everyone be automatically enrolled for organ donations, should you be resuscitated?
If a situation happens and you don’t have a Power of Attorney, you have to go through the Court of Protection. This route is way more costly because the Court of Protection will appoint a deputy to deal with the financial affairs and that can be considerably more costly than if somebody else that you know is doing that for you.
The steps to creating a will
There are really four ways that you can get started creating a will.
- Make one yourself – You can literally go into W H Smiths and buy a will writing pack. This is the cheapest way to create a will, and actually if your situation is very straightforward and you’re procrastinating about this right now, that is an option. It isn’t something that I personally would recommend because it’s probably a little bit risky. And the reason it’s risky is because if you haven’t done it correctly, had it witnessed correctly, or you’ve missed something out, then it could be a costly mistake. But what I would say is if you’re really avoiding doing it because you can’t afford to use a solicitor right now, that would be your best option.
- Use a will writer – The only benefit of using a will writer is they are cheaper than a solicitor. However, they’re not regulated in the same way. So if you had a complaint they’re not regulated, whereas the solicitor would be regulated. We used will writer for our wills, and we made sure they were a member of a professional organisation. We were very comfortable that they were an expert in what they did and hadn’t just set themselves up as a will writer, which can happen. So if you’re going to go down this route, my tips would be to make sure that they are a member of one of these two professional organisations: The Society of Will Writers, or The Institute of Professional Will Writers. Get some recommendations from other people, and ask them what their experiences were, and maybe see if they have any qualifications.
- Use a solicitor – This, in my mind, is probably the least risky option, particularly if it’s a solicitor that deals with probate wills, estate planning and inheritance tax. If you have a complicated scenario; maybe you’ve got children from a previous marriage or lots of different assets, or maybe your estate is worth a considerable amount and is over the inheritance tax threshold. In this case I would definitely go to a solicitor, because you’ll want to consider the most tax efficient way to leave your will to the appropriate beneficiaries.
- Use a charity – A lot of wills can be made at particular times of the year through what they call Will Aid. This is normally around October to November time, and you can actually approach specific charities and in conjunction with local solicitors, they will work with that solicitor to help you draft your will. You then make a charitable donation towards the cost. There are lots of charities that participate in this, like Cancer Research and the Stroke Association, so that could be something you might want to consider.
10 top tips for creating a will and protecting your family.
1. Choose your executives.
Ideally they will be younger than you, and make sure that you’ve asked their permission first.
2. Consider if you’re going to use a solicitor
Ask them whether they work on a fixed fee basis or a percentage, because if your estate is a considerable size then paying a percentage of your estate on death is not going to be particularly great, and it could be very costly. That’s less money to your beneficiaries.
3. Consider your beneficiaries.
Who do you want to benefit from your estates?
4. Choosing your guardians
Go back through the tips I gave you above on choosing guardians if this is relevant to you.
5. Contact some local solicitors
Go and have a look at some local solicitors, maybe go into some of your social media platforms and speak to friends. Who have they used? Have they got any recommendations? If you’re going to use a will writer, check to see whether they’re a member of a professional organisation because because they’re not regulated, you have less protection.
There are lots of charities that will help you to make your will for free or a charitable donation towards it.
7. Keep your documents safe.
When you make a will, you’ll get a draft version of it first. Once you’ve read through that and you’re happy, you then sign it, have it witnessed by two independent witnesses, and then you would get a final copy of the will. Keeping that document safe is really important. Don’t keep the only copy in your house. The reason that is a really silly thing is if you had a fire in your house, your will’s gone. If that’s the only copy of your will, then that will has been destroyed. So always give a copy to your executor. Tell your family where your will is stored so they can go and find it easily, and if you have used a solicitor often they will allow you to lodge a copy of your will with them, either for free or for a nominal fee like £15 a year, for example.
8. Start organising your finances.
Think about creating an essential place where all of your financial information is captured so that your executive knows what bank accounts you have, what savings accounts you have, what investments you have, what insurances you have. If you’re in my Money Circle membership we actually put together an editable PDF document in your January 2020 Success Kit area to help you store all of your financial information all in one place, so you can use that document.
9. Write down a list of what you own & owe.
Do you have a mortgage? Do you have any credit cards? Do you have an overdraft? Do you have any loans? Write out a list of things that you own. Intellectual property, your bank accounts, your savings, your investments. Maybe some life insurance policies. Maybe some pensions. Go and check out your pension beneficiary details and make sure that your pension benefit is nominated to who you want it to go to.
10. Tell your family.
Tell your family what your wishes are and have these conversations with them. I know they’re not very nice conversations, but think about having a conversation with your family. If you don’t want to have the conversation with them, that’s fine, but at least tell them where you’re will is stored so that they could have easy access to that at the end.
1. Becca is not married but living with her partner, who is not the father of her children. Would everything go to my children or to my partner without a will? In that situation, when you’re not married and you have Children, then the likelihood is that your estate would go to your children if you don’t have a will. Depending on the age of the children as well, you may want to think about guardianship. Guardianship is one of the biggest procrastinating reasons why people don’t make a will. And I totally, totally understand this because who wants to think about what would happen if you weren’t around? But think about your responsibility as a parent, and use the below questions to help you identify guardians.
- Who are your potential options for guardians now? These are people who really absolutely love everything about your kids, and would be prepared and willing to give them love?
- Think about your own values as a parents. This is a big one – if you have conflicting values with your potential guardians, I don’t know about you, but I would not be comfortable for my children to live with anybody who had conflicting values.
- Think about location. Where do they live? In an ideal world in that situation, you want your children to have as little upheaval as possible.
- Think about the age and the health of those guardians. Ideally, they want to be of a similar age to you or younger. However, don’t rule out parents or grandparents if you can’t think of anybody else.
- Ask them. I think this is a really important step. Ask them whether they’re willing. And think about their own situation – do they have their own children? How do their children get on with your children?
- And if at the end of all of that, you still can’t think of anybody then just choose somebody who you think right now, if anything happens to me today, who would one who would I want to look after my children, make that decision and then review it later.
2. We don’t have kids, but we have a dog. Should we include something about what would happen to our dog? Absolutely. Animals are like children, right? So we have to make choices about who’s going to look after our animals?
3. What happens if we have assets abroad? If you have assets abroad, then the general recommendation is that you make a will in every country in which you hold assets. Because the rules of inheriting are different in different countries. So let’s say you have a property in France and property in the UK, you should ideally have a French will in place and a UK will. If you or your partner are not from the UK, then you also need to consider this. If you’re a UK resident and you die in the UK, you have assets in the UK, then your estate will be distributed in accordance with UK rules. Obviously, if you have international assets, they will be distributed according to the rules of those countries. So that’s definitely something to think about on the other.
4. What about what happens if my children are grown up now? Should I still make a will? Absolutely. The only thing that wouldn’t necessarily apply there is guardianship because they’re independent financially, they’re not financially relying on you. But absolutely you should still make a will, even if your children are not financially or dependent on you anymore.
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