The importance of creating a Will cannot be emphasised enough. As well as ensuring that your family is provided for once you’ve passed on, it also acts as a way of tying up the loose ends of your legacy.
In drawing up a Will you’re essentially leaving instructions on how to settle your estate in your absence. Some would prefer not to wait to ensure their family is better off, and take steps to be a living benefactor. The Money Advice Service recommends making a Will to ensure that your final wishes are carried out, but if you wish to combine those wishes with living gifts then it can easily be arranged with your financial advisor to ensure that everything is in order.
Planning a Will
Without a Will, the government decides who inherits your estate via the laws of intestacy. If you’d prefer to have that choice for yourself, then you should speak with a legal advisor about setting up a Will. Without specifically naming those who you wish to entrust your assets and possessions to, the laws may see it go to a distant family member rather than someone else you want to benefit.
Planning a Will also means you can decide who is responsible for carrying out your final wishes- from funeral arrangements and plans for your earthly remains, to settling the estate. This is a huge responsibility for those you’ve named so it’s worth discussing it with them first. Have a read of the Making a Will page on the GOV.UK site so you understand what’s involved.
It’s important to make sure your Will is as up-to-date as possible too, as changes in circumstances like a financial gain or loss, or the loss of an executor or beneficiary named in your Will, means it will need to be updated.
If you want to help your beneficiaries enjoy the fruits of your fortune while you are still there to share it with them, then it is possible to give cash gifts from the proceeds of your estate. You can give away up to £3,000 in one lump sum as a gift to someone each year, as well as small gifts of £250 to any number of people within one 12-month tax period.
Not only are these generosities a great way to help out or treat your loved ones, but in doing so you reduce the value of your total estate which means that, once you’re gone, the payment of inheritance tax on your estate will be smaller too.
Inheritance tax is a one-off payment based on the overall value of your estate at the time you’ve passed on. Paid at 40% of the amount of your total estate’s value over £325,000, by spending your proceeds while still living, you could end up paying much less on it. For example, an estate valued at £335,000 would require an inheritance tax payment of £4,000 – 40% of the £10,000 above the threshold. You can find some useful advice on lowering your inheritance tax bill on Saga Legal Services.
It’s important to consider your options for helping loved ones when you’ve gone, even if you’re planning to distribute some gifts while still alive. Wills enable you to legally declare your legacy and have the people you care for granting your wishes.