With the best Will in the world
Posted: Saturday 8 May 2010
When you find out your child-free party days are over due to the imminent arrival of an addition to your family, there is a lot to organise with NCT classes, which pram most resembles a lunar cruiser and what name to choose which your child will not want to change the second they are old enough. Lurking somewhere might be the notion that you also need to review your Will. Admittedly, considering your own mortality is not something most people relish, and it is even more likely to be put on the backburner when you simply cannot decide where your estate should pass on death, or who should be guardian to your children. As for once your little bundle of joy has arrived, it is sometimes hard enough to finish a sentence uninterrupted, never mind review your financial arrangements.
However, having children is one of the landmarks in life when it is so important that you review your affairs even if very little needs to be changed. This review should look at:-
- Updating existing Wills, or putting Wills in place if there are none;
- Whether Powers of Attorney are in place;
- Life cover – including mortgage protection and other lump sums, income protection and critical illness;
- Savings – for emergencies, medium/long term and for children;
- Pension arrangements; and
- Tax planning in particular Inheritance Tax and the use of trusts for children;
What happens if you have no Will?
If you die without a will, the law sets out how your estate should be divided. This will probably not be the same as how you wish it to be dealt with. Also, it is more likely to cause arguments among your surviving family as they, with the best of intentions, try to guess what your wishes would have been. Without a will, a surviving spouse will receive fixed entitlements. This may in effect pass the whole estate to your spouse but, depending on the amount involved, they may only receive part with the remainder passing to children. If you are unmarried but are cohabiting then if one of you dies without a will, the survivor may apply to the Sheriff Court to receive something from the estate. This is relatively new legislation. Even if the Sheriff awards the surviving cohabitee something, the remainder would still pass to children. If this is all not bad enough, even more worrying is that anything due to a child will pass to them at age 16 which is far too young.
Advantages of having a Will
By putting in place a Will, or updating an existing one, you can ensure that:-
- You provide for your spouse or cohabitee;
- Your will is as tax efficient as possible;
- Children are provided for, but assets are protected in a trust until a suitable age;
- You choose who you want to deal with your estate and any children’s trust;
- You choose who you wish to be guardian to your children if you die;
- You can specify how and when other members of your family should benefit from your estate.
What do you need to think about when doing a Will?
You should think about:-
Who should be your executors and trustees? They are responsible for administering your estate on death and then running any ongoing trust. You probably want 2 or 3 people.
- Do you have any particular bequests? For example, jewellery or other personal items, cash sums, legacies to charity, etc.
- If you are married, often the estate passes outright to the surviving spouse, but there can be situations where it is best to hold in trust for them – this is common where someone has remarried and wants to benefit their ‘new’ spouse, while ensuring the capital eventually passes to their children from a previous relationship.
- If there are young beneficiaries then you need a trust – often to hold any assets if both parents die while children are still young. What age would you feel comfortable with them receiving the capital?
- Is there a need for a trust for some other reason? For example, if there is a very valuable asset or a business interest which requires to be held in a trust or a beneficiary who cannot (or, in the parents’ view, should not) deal with financial matters themselves.
- Who should benefit if there is a family calamity? A very remote scenario but it is much better to state how you see your estate passing in this situation
- Who would you like to be your children’s guardian if you die? This is probably the hardest topic for parents to consider.
- Often, grandparents wish to review their wills to provide for grandchildren and they may even want to contribute financially whether now or saving for the future.
Having a basic will, even as a ‘holding exercise’ is better than nothing. Once a Will is signed, they are usually held in a Solicitor’s fireproof safe. At Morton Fraser, every will is logged into our review system and we then contact clients every couple of years to see if they need to change anything. Often nothing is required but it serves as a gentle “prompt” rather than waiting for that elusive “quiet moment”. At least then if you’re having sleepness nights, it’s not because you’re worrying about having your affairs in order but more likely because your little treasure has you reaching for the calpol.
For more information please contact Sarah McKinlay.
