The Importance of Writing a Will and Guidelines for Crafting One Without Expense

The Importance of Writing a Will and Guidelines for Crafting One Without Expense

Writing a will can be a simple way to minimize your inheritance tax bill, making it a great tool against the taxman. Yet, most people haven't gotten around to writing one.

If you pass away without a will, your estate becomes subject to the laws of intestacy. If you're married, jointly-held assets will go to your spouse, but the rest of your estate will be divided between your spouse and your children. Your spouse gets the first £250,000 plus half of the remainder, with the rest split among your children.

The issue here is that if everything goes to your spouse, no inheritance tax is due, but if the amount passed to your children exceeds £325,000, they will face a tax bill. A will helps you avoid this predicament.

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Another reason to have a will is to ensure your money goes to the people you care about. Without one, your money might go to an ex-partner you haven't divorced yet, or a distant relative instead of your long-term partner. In the UK, unmarried partners are not included in the laws of intestacy - common-law marriages do not exist here, so your partner would receive nothing by law unless you've made a will.

Lisa Caplan, director of advice and guidance at Charles Stanley Direct, advises, "While facing our own mortality is something we'd rather avoid, it is important to factor it into our wealth planning, inheritance, and loved ones we might leave behind."

She continues, "Inheritance can be a complicated labyrinth to navigate, no matter how much wealth you have. Speaking to a financial adviser can help clarify things and put effective estate planning strategies in place to structure your estate so your beneficiaries receive as much as possible when you die. A will is an essential part of this inheritance planning and can help establish some certainty that your wishes will be carried out after you're gone. It can also help your family manage your affairs more quickly, avoid infighting, and ease the process at what will be an incredibly difficult time for them."

Writing a will doesn't have to be complicated. You could even get one free of charge.

Free Wills Month

Every March and October, Free Wills Month happens. It's a campaign that allows people aged 55 and over to have a will created or updated for free by a solicitor. Hundreds of law firms across the UK participate, with customers encouraged to leave a legacy to a charity in their will in exchange for the free legal advice. Charities involved include The British Heart Foundation, Samaritans, The Salvation Army, and Oxfam. There's no obligation to leave a gift to one of the featured charities.

To take part in this month, book a slot before 5 pm on the last day of the month (although the appointment can be later than the month itself). Enter your postcode on the Free Wills Month website to find a participating solicitor near you with available slots. The appointment is free and could save you several hundred pounds in legal fees.

If you missed Free Wills Month or are too young to participate, don't worry because Will Aid runs annually in November and is open to everyone aged 18 and over. In a UK-wide campaign involving seven charities, hundreds of solicitors offer to write basic wills for any adult. They waive their usual fee and instead ask for a donation to Will Aid - the charity will-writing scheme. The suggested donations are £100 for a single will or £180 for a pair of basic "mirror wills." The donations go to the charities.

Unsurprisingly, free wills are popular, so if you're interested in either scheme, act fast to secure a slot.

Tips for Writing Your Will

Olly Cheng, financial planning director at Rathbones Group Plc, shares his top tips on writing a will:

1. Plan for the Long-Term: If you have children, ensure they are financially protected from any obstacles in the future. Determine who you would entrust to care for your kids until they turn 18 and decide how you wish to divide the estate.
2. Gift to Charity: Anything left to charity is exempt from inheritance tax, so consider this as a way to reduce the tax due on your estate while supporting a good cause. Additionally, if 10% of your net estate is left to charity, the rate of inheritance tax applicable on death is reduced to 36%, saving the taxman a larger share of your estate.
3. Pass Assets Without IHT Charge: On death, assets can pass tax-free up to the amount of your nil rate band (£325,000). However, if you leave your entire estate to your spouse or civil partner, you won't have to pay any inheritance tax.
4. Legally Bind Your Will: Make sure that your will is properly signed by two adult, independent witnesses - not beneficiaries or those married to anyone who stands to benefit.
5. Give Early Inheritance: Passing on wealth while you're still alive can help reduce a future inheritance tax bill, give you more control over how your inheritance is used, and let you see your loved ones benefit from your generosity.
6. Watch Out for Pension and Gifting Changes: Labour targeted pensions in their Autumn Budget last year, with Chancellor Rachel Reeves announcing that unused pension funds would no longer be exempt from inheritance tax come April 2027. Keep an eye out for changes in the Spring Forecast to see how these changes will work in practice.

Update Your Will Regularly

Once you have written your will, remember to keep it up-to-date. Marriage invalidates any previous wills, but divorce does not. Also, make sure your will is stored somewhere safe where it can easily be found when you die.

"It's important to review your will regularly to make sure it matches your current wishes, particularly after significant life events like marriage, divorce, and births of children and grandchildren," says Cheng at Rathbones.

Affordable Ways to Write a Will

• Do It Yourself: You can pick up a do-it-yourself will-writing kit on the high street for around £20. However, this is only suitable for people with very simple financial affairs, and it's easy to make mistakes that could render it invalid.
• Fixed-Fee Services: Prices for fixed-fee will-writing services start from £150. If you have a premium bank account, check if a will-writing service is included. You could also be entitled to a free will through your home or car insurance policy if you chose to include legal cover.
• Online Services: Sites like Farewill.com or Make A Will Online let you answer questions online to create your will. It is then checked by a specialist before you receive a link to download, print, and sign. The prices vary, with online services charging anywhere from £60-100 for a single will to £90-160 for a joint will. An added benefit of online services is that you can easily update your will whenever you like, sometimes for a small additional fee.

1. To ensure that your personal-finance decisions are well-structured, consider seeking advice from a financial adviser. They can help clarify complex inheritance matters and implement effective estate planning strategies, such as writing a will, to ensure your beneficiaries receive as much of your estate as possible upon your death.
2. Consider including property, pensions, and business assets in your will to safeguard them for the intended recipients. A well-drafted will can also help minimize inheritance tax, direct the distribution of your assets to the people you care about, and provide a clear plan for the management of your affairs after your death.

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