Estate planning can be fairly complex, and most of us put off important decisions. But writing your will is the single most important thing you can do to ensure that your assets are passed on to your loved ones.
Even with the best of intentions, there are a number of pitfalls to avoid during this process. Below are some of the more common mistakes people tend to make during the estate planning process.
Putting it Off
Even when you have decided to create your will, decisions around who should receive what, and who should be responsible for administering the estate can be tricky. This is particularly the case with blended families or where you don’t have any close relatives.
If you don’t have a will, the laws of intestacy will apply. The rules are different depending on where you live in the UK, and the outcome will depend on the size of your estate and your family situation. Broadly, your assets would be passed to your family in a strict priority order, starting with your spouse and children. If you aren’t married and don’t have children, your other family members would benefit. If you have no living family, your estate would pass to the Crown.
Intestacy rules do not account for unmarried partners, stepchildren, friends, charities, or carers. Additionally, the court would need to appoint someone to deal with your estate, and this may not be the person you would choose.
Even if you have not made all of the decisions yet, it is far better to have a basic will than none at all. It can easily be changed at a later date.
Not Following the Correct Legal Process
There are a few essential legal points that must be taken into account when writing your will.
- It must be signed by independent witnesses.
- Witnesses should be UK citizens over the age of 18. They must also not be in a position to benefit from the will in any way.
- After you sign the will, you can’t directly change it. Any amendments must be done via a ‘codicil,’ or an addition to the existing will. Alternatively, you can write a new will.
- An original copy of the will must be kept as photocopies can’t be used for official purposes.
A professional will writer or solicitor can guide you on the correct process. If any of these important aspects are missed, your will might not be legally valid.
Appointing Inappropriate Executors
An executor is responsible for administering your estate. This means that they will gather valuations of your assets, pay any tax due, and arrange to distribute your assets to the beneficiaries. It is a significant responsibility, so you should only appoint executors who are willing and able to act for you.
Legally, an executor can be anyone who is over 18 and resident in the UK. But in addition, you should appoint someone you trust, and who will have the time and the capability to deal with your estate correctly. You also have the option of appointing a professional executor if you wish.
Ignoring Major Life Events
It’s a good idea to review your will following any major life events. For example, if you get married, this automatically revokes any previous will you may have made. If you get divorced, your will remains valid, but your ex-spouse can no longer benefit. Births and deaths should also trigger a review of your will, as the people you would like to benefit may change over time.
Second marriages and blended families can complicate your estate plan. For example, if you get married, and have children from a previous relationship, you should make sure your will accounts for this. There have been situations where children from a first marriage are accidentally disinherited, as all assets pass to the second spouse, and subsequently to their children.
Whenever your family situation changes, you should read over your will again, and seek an expert opinion if necessary.
Being Unclear About Assets
If you want to make specific gifts via your will, you need to be clear about your intentions. However, it’s also important to include flexibility to allow for your situation changing. For example, it’s usually sensible to avoid mentioning a particular address or vehicle, as the gift will only be effective if you still own the same asset at the time of death.
For heirlooms such as jewellery or antiques, it’s better to be as specific as possible to avoid confusion.
Reviewing your will regularly can help avoid these issues as any major changes to your assets can be accommodated.
Focusing on What Happens After Death
Your will is only part of the picture when it comes to making sure your wishes are carried out.
It might be a good idea to make gifts during your lifetime. As well as allowing you to make the gift when it’s needed most, it can also help to reduce your estate for Inheritance Tax purposes.
As well as writing your will, you should also make sure you have powers of attorney in place. This allows you to nominate someone you trust to make important decisions about your finances and medical care if you become incapacitated.
Having your will and powers of attorney professionally completed is fairly simple and inexpensive. There are even some charities that will do it for free if you make a donation. The consequences of not having a legally valid will could be significant. It’s worth taking some time to make sure your estate plans are in order and that your loved ones won’t have to deal with any unnecessary stress at a difficult time.
Please don’t hesitate to contact a member of the team to find out more about estate planning.
The Financial Conduct Authority does not regulate will writing or estate planning advice.
The content in this article was correct on 07/03/2023.
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