Regardless of the extent of assets you have built up in your lifetime, it is vital that you write a will. This will ensure that when you pass away, your loved ones or other beneficiaries will inherit your assets in accordance with your wishes for how you want your fortune to be divided. Helping you create an effective document, Turner Little outlines the mistakes you should avoid making when writing a will.
Outlining vague intentions
It is critical that you outline your intentions clearly in your will. If you do not state exactly how your assets should be dealt with, you could make it harder for your executor to manage your estate. You could also cause contention among your loved ones or other beneficiaries, over who should inherit what, potentially leading them to challenge your will in court, meaning your intentions may not be carried out.
Failing to appreciate value
If you do not understand the value of the assets in your estate, there could be consequences. Say your car is worth £40,000 and you thought it was worth much less; this could push the value of your estate past the inheritance tax threshold (currently £325,000), imposing a 40% tax on anything above this value. It is wise to get big-ticket assets, such as cars and jewellery, valued before you write your will.
Forgetting about debts
Your debts do not vanish when you pass away – they are paid by your estate instead, so if you fail to factor them in when writing your will, you could reduce your beneficiaries’ inheritance. It can be a good idea to leave bequests to beneficiaries as a percentage of your estate, rather than state an exact sum, so whatever your financial situation is when you die, your loved ones will still inherit something.
Naming no guardians
Do you have children aged under 18? If so, and you name no legal guardians to look after them, then die suddenly, your will not be able to ensure that the right people will care for your children as they grow up. Remember that it is not the job of your executor to be your children’s legal guardian, so you need to specifically state who will fulfil this role. A good tactic is to name multiple legal guardians, so if one passes away before you do, there will still be someone left to take care of your children.
Not updating your will
You should review your will every time you experience a major life event, such as the birth of a child. If you fail to do this, your wishes may not be carried out. If you get married, for example, this automatically invalidates your will, so unless you update it, your wishes will not be respected. As a rule of thumb, it is wise to update your will every two years, to reflect your changing circumstances.
Forgetting about inheritance tax
If you forget to factor inheritance tax when making a will, you could significantly reduce your loved ones’ inheritance. There are multiple ways to mitigate against inheritance tax, such as leaving lifetime gifts to individuals, which do not count towards your estate, lowering its value for inheritance tax purposes, but it is key that you seek guidance to utilise these strategies effectively.
Creating trusts without expert help
Another effective means to mitigate inheritance tax is to use trusts. When you put assets into a trust, you do not legally own them – the trust’s manager (trustee) does, so they do not count towards the value of your estate for inheritance tax calculations. However, it may prove to be a mistake if you create a trust without expert help, as UK trust law is complex, so it is wise to enlist professionals, who can ensure that any trusts you include in your will, are designed to mitigate your estate’s inheritance tax obligations. Turner Little supplies the trust creation services you require to ensure that you can write an effective will and provide for your loved ones when you are no longer here.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
