Putting your affairs in order
Advice from Steve Pitts, a partner at Thursfields,
who are Worcestershire-based solicitors. Steve is passionate about the
Severn Valley Railway and has joined the SVR Charitable Trust as a
fundraising volunteer.
Putting
your affairs in order can spare family or friends painful decisions and
even financial difficulties that could happen if you don't make your
wishes clear. Putting your affairs in order may also clear your mind of
lots of worries, leaving you free to concentrate on the present. In this
article, I am going to deal with the importance of making a Will.
A
Will is one of the most important documents most people ever sign yet,
surprisingly, more than two-thirds of adults die without a valid Will,
causing a great deal of uncertainty at a time of heartache and distress.
Making a Will ensures that whatever you have - no matter how much or
how little - is divided up according to your wishes. It also safeguards
the security of your loved ones and enables you to choose who handles
your possessions after your death by acting as your Executor(s).
Making a Will is important because:-
If
you die without a valid Will, there are certain rules which dictate how
your money, property or posessions will be allocated. This may not be
the way that you would have wished for them to be distributed and, if
you leave no next of kin, your estate will go to the Crown. Your
Executors (who take charge of your estate and wind it up) will also be
chosen according to fixed rules and these may not be the most suitable
to act.
To avoid these problems, it is important that you make a Will. . .
By making a Will, you can:
- Appoint someone you know and trust to act as your Executor(s).
- Nominate guardians for any young children who may be minors at the time of your death.
- Make specific gifts to relatives, loved ones, friends or favourite charities.
- Choose exactly what you want done with your property and assets after your death.
- Express your wishes about your funeral and the disposal of your body.
- Save your beneficaries from paying unnecessary tax.
Providing
for you loved ones is the most important thing to consider when writing
a Will; however, once they have been considered, you may wish to leave a
gift in your Will to support the work of the Severn Valley Railway. One
way of doing this is to include a residuary legacy to the Severn Valley
Railway Charitable Trust.
Types of gifts you can leave in your Will:
- A residuary legacy is a percentage of your estate after everyone else has been provided for.
- A gift of a fixed sum of money is called a pecuniary legacy. Please note that the value of this type of legacy will decrease over time, as the cost of living increases.
- A particular named item left as a gift in your Will is known as a specific legacy; for example, property, antiques, jewellery or shares.
- Legacies made on the basis of another event happening first are called contingent gifts. For example, your Will could state that a gift only applies if all other beneficaries in your Will die before you do.
- A reversionary
legacy is a gift which someone can benefit from in their lifetime. For
instance, your house could be left for the use of a relative. When they
die, it could pass to someone else, or to a charity.
Financial benefits of leaving a gift in your Will
Inheritance
tax is paid if the value of your estate exceeds the threshold set by
the government - currently £325,000. Inheritance tax of 40% is paid on
the amount that exceeds this threshold. So, out of every £1 over the
threshold, your beneficaries will only keep 60p; 40p will go to the
government. However, gifts to charities are generally exempt from
Inheritance Tax. If you leave a charitable gift, it will be deducted
from your estate before Inheritance Tax liability is calculated.
Assessing your estate
Before you draft your Will, you should:
- List
everything that you own - your property, shares, investments, life
insurance policies, bank balances, care and all your valuables and
possessions.
- Make a rough calculation of the value of your assets.
- Decide which people and/or charities you wish to benefit from your estate.
Drafting your Will
It
is always best to ask a legal advisor to draft your Will. he or she
will know the correct form of words and can avoid ambiguities and
misunderstandings. In the meantime, these three basic rules may be
helpful:
- Two
adult witnesses must be present when you sign your Will. They must be of
sound mind and vision. You must also be present when they sign the
Will.
- You
witnesses do not need to know the content of your Will, but you must not
use as a witness anyone who themselves, or whose spouse, will benefit
from your Will.
- The
Will should set out the arrangements for distributing all your estate.
It should appoint between one and four people as executors. It should
also dictate who is to receive any residue after the specific sums have
been allocated.
Let people know what you have doneIt
is essential that your executors know their role and where to find your
Will, which should obviously be somewhere safe, for example, with your
legal advisor or bank. Therefore, it is helpful if you brief your
executors about this and also provide them with key contacts in respect
of your bank account, insurance, investments, etc.
