Wills – Top 10 Questions and Answers
1. Wills – Who Can Make One?
Anybody who is over the age of 18 and is legally an adult – and who is of sound mind. In other words they have the mental capacity to understand what they are doing.
2. Wills – What Happens If I Don’t Make One?
This is called dying Intestate. There are specific rules laid out in law that will be used to determine who will inherit and how much they will receive. This may not be what you would have wished and will probably cause a lot of arguments over who gets what.
3. Wills – Do Your Debts Die With You?
This is a very commonly held myth, to some extent it is true, but the situation is of course complex, let’s look in more detail.
If you have debts when you die including credit cards, bank loans or mortgage balances – then these have to be paid first from your estate as a priority before your beneficiaries can receive anything at all. Your debts are only written off if you leave behind nothing at all.
Three simple examples will make this clear.
- You have debts of £100,000 with no assets. There is no money available so the debts are written off and the banks and/or mortgage companies are out of luck.
- You have debts of £40,000 and you own a home worth £200,000. Clearly in this case there is money available, though the home may have to be sold if there are no cash savings. The debts are settled and your beneficiaries get what is left.
- You have debts of £150,000 and you own a home worth £120,000. In this case the home will need to be sold, all the money will be put towards the debts – starting with the mortgage if any – there will be £30,000 of debt written off and your beneficiaries will receive nothing.
4. Wills – How Much Is Inheritance Tax?
Otherwise known as Death Tax, this is what you – actually the people you want to leave it to – have to pay if the total value of your estate (home, savings, shares, valuables) exceeds the tax man’s limit. Every person is entitled to leave a certain amount free of tax (Nil Rate Allowance or nil Rate Band), anything more than that is charged at the going tax rate. For the tax years through to April 2020 these are fixed at £325,000 and 40% charge.
5. Wills – What About My Children?
If you leave children who are under the age of 18 then the law says that they need a Legal Guardian. Your family (brothers and sisters or parents) will more than likely volunteer to take on the responsibility. Unfortunately as you never got round to documenting your wishes they will have to make an application to court – it is not guaranteed that they will be successful.
6. Wills – I’m Not Married, What About My Partner?
When unmarried partners split up who have been together for a while the law now says that assets you acquired together should be (generally) equally split. It is not the same when you die though, any unmarried partner that you leave behind has no legal rights to inherit anything at all. Even worse, if you were in a previous relationship – married but never divorced – then your “ex” will be entitled to everything you own even if you haven’t seen them for years or decades. Your partner would be homeless.
7. Wills – I Am In Poor Health and Need Care?
If you are already in need of residential nursing care then you have left it too late and there is very little that can be done. Assuming that you are still fit and healthy then you can create a Family Trust and convey part of your property into it. If care is then required you legally don’t own all of your home and the trust cannot be compelled to sell it’s share, preserving the value for your beneficiaries.
8. Wills – What If My Children Divorce?
Anything left to your children outright become part of their estate. If further down the line they then get divorced everything you left to them is valued up and included in the divorce settlement. In other words your children will lose half of their inheritance. Use of a family trust removes this possibility.
9. Wills – What About My Favourite Charity?
Many people support charities and most people have a favourite one that is close to their heart. It may be that while alive you can’t spare the money that you would really like to give to them but after you have died it is important that they receive a bequest. If you don’t make a Will and write it down then it is entirely up to the goodwill of your beneficiaries if this goes ahead or not.
10. Wills – I’m An Unmarried Parent?
If you are the mother then you automatically have parental rights unless these are removed by the courts. If you are an unmarried father there are no automatic rights granted. It is possible that should your children’s mother die you could see your children taken into care.