Failing to set out your wishes in a will could mean your assets aren’t passed on to the loved ones you’d like to benefit from your estate. As a result, this could have a significant effect on your legacy.
A will is one of the main ways to ensure your assets are passed on to your loved ones according to your wishes. So, if you don’t have a will in place, what will happen?
Intestacy rules are applied if you pass away without a will
If you pass away without a valid will, also known as “intestate”, the way your estate will be distributed will follow strict rules, which could be very different from your wishes.
In England and Wales, if you’re married with no children, everything will go to your spouse or civil partner. If you’re married with children, your spouse or civil partner will inherit:
· Your personal possessions
· The first £322,000 of your estate, and
· Half of your remaining estate, with the other half being shared equally among your children.
If you’re not married and have children, your entire estate would be divided equally between your children.
If you’re not married and don’t have any children, your estate would be shared equally among one of the following groups of people in this order:
· Parents
· Siblings, or nieces or nephews if your siblings have passed away
· Grandparents
· Aunts and uncles.
Finally, if no living relative can be found, your estate will pass to the Crown. Most of these funds go to the Treasury. According to the BBC, as of November 2023, there were more than 6,000 people on the government’s list of unclaimed estates.
As you can see, intestacy rules might mean some family members or friends who you’d like to benefit from your estate are overlooked. It’s not just about wealth either, as you may have sentimental items you want to go to a particular person. Perhaps you’d like your granddaughter to inherit your jewellery, or pass on your record collection to a music-loving nephew.
Intestacy rules also don’t consider whether you’d like a portion of your estate to go to organisations or charities you might wish to support.
By not writing a will, you’re missing out on an opportunity to set out exactly who you’d like to benefit from your estate.
Despite this potential impact on your legacy, research from the IRN Legal Wills and Probate Consumer report suggests just 36% of UK adults have a will.
5 other practical reasons to write your will
Ensuring your assets are passed on to your intended beneficiaries isn’t the only reason to prioritise writing a will if you haven’t already. Here are five other practical reasons.
1. Name a guardian for your children
If you have children under the age of 18 or other dependants, you can use your will to name their appointed guardians if the worst should happen and you pass away. A guardian would take full responsibility for your children until they reach adulthood. If you have not named a guardian, the court will appoint one, who may not be the person you’d choose.
2. Set out your funeral wishes
While funeral wishes listed in a will aren’t legally binding, they can be very useful for your loved ones. Organising a funeral while grieving and putting affairs in order can be stressful, and your family may worry about making the “wrong” decision. Making a note of your preferences could provide much-appreciated guidance.
You might also decide to set money aside to pay for your funeral in your will too.
3. Potentially reduce an Inheritance Tax bill
If your estate exceeds the nil-rate band, which is £325,000 in 2024/25, it could be liable for Inheritance Tax (IHT). In some cases, your will could be used to potentially reduce the bill.
For example, if you leave your main home to your children or grandchildren, you’ll usually be able to use the additional residence nil-rate band, which in 2024/25 could increase the amount you can pass on before IHT is due by £175,000.
There are often other ways you can reduce an IHT bill. If you’d like to discuss estate planning that considers IHT, please contact us.
4. List the executor of your will
An executor is responsible for carrying out the instructions in your will and handling your estate. It can be a time-consuming task, and one that some loved ones may find difficult. So, you might want to take some time to consider who would be suited to the role and name them as the executor in your will.
You can choose a family member or friend to be an executor. Alternatively, you may appoint a professional executor, such as a solicitor or accountant, which could be especially useful if your estate is large or complex.
5. State who you’d like to care for your pets
If you have pets, you can use your will to set out your wishes regarding their care, including who will look after them. While you can’t leave assets directly to your pets, you might want to set aside some money for the person who will care for them to cover the costs.
Understanding your estate could be valuable when you’re writing a will
If you need to write a will, understanding your estate could be a valuable place to start. Considering your assets and how the value of them might change during your lifetime could affect how you wish to pass them on.
Please get in touch to talk about your estate plan, from what you want to include in your will to how to mitigate a potential IHT bill.
Please note:
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, Inheritance Tax planning, or will writing.