Have you been considering making a will but keep putting it off? There are many reasons why it is important to have a Will in place, perhaps the most important of which is making things easier for family and loved ones after your death.
For most people, making a Will is a relatively straightforward and quick process. Despite this, approximately 53% of adults in Scotland don’t have one. If making a Will is top of your to do list this year then let us help make things a little easier by setting out 5 things you should consider when making your will.
1. What are my assets?
A good place to start is to take stock of your assets. Make a list of everything you own including property, financial investments such as stocks & shares, cash in the bank, pensions and personal belongings. As your assets will no doubt change during your life, it would be prudent to update this list periodically or as and when you acquire or dispose of assets.
2. Who do I want my Executors to be?
The role of an executor is to administer your estate and to make your assets over to your chosen beneficiaries in accordance with your Will. Executors are appointed by you when making your Will and can be individual people or an organisation such as a trustee company. Most people will appoint a family member or trusted friend, however, if this is not possible you can also consider appointing your solicitor. It is recommended that you appoint more than one executor, or a substitute, in case your original executor is unable to act for reasons such as lack of capacity or death.
3. Who do I want to leave my assets to?
Your chosen beneficiaries are the people/organisations who will inherit your assets on your death. You may decide to leave gifts (legacies) of specific assets to specified individuals, such as a sum of money, a property, or a personal item. Alternatively, you may wish to leave everything, called the residue to a beneficiary, or split between a number of beneficiaries. It is wise to include back up beneficiaries in the event of a beneficiary dying before you. If you have young beneficiaries, then you should consider at what age you would like them to inherit and put in place guardians and a trust in which their assets will be held until that age is reached.
4. Do I need to consider Legal Rights? (And what are they anyway?!)
Legal Rights are an absolute entitlement, set out in Scot’s Law, of a spouse and children. These rights prevent a spouse and children from being disinherited, even if they are not named as beneficiaries under a Will. Currently Legal Rights only apply to your moveable estate (e.g. money, stocks & shares, antiques, jewellery etc.) and do not apply to heritable property (e.g. your family home or other property). An example of when Legal Rights apply would be where an individual left their entire estate to their spouse and one child but excluded their other child from their Will. The second excluded child would be entitled to claim a share of the estate even though they have been excluded from the Will. The excluded child could choose to claim their Legal Rights or alternatively they could discharge these and in this case the terms of the Will would be followed.
5. Do I need to do any Inheritance Tax Planning?
The current Inheritance Tax rate is 40% on the deceased’s estate on their death. However, each person benefits from an allowance of £325,000 (nil rate band) and potentially an additional main residence nil rate band allowance of £175,000. In general terms, any assets falling above these nil rate band allowances will be subject to the 40% flat rate tax. There are some exceptions to this rule e.g. transfers between spouses are exempt from inheritance tax and the allowances are transferrable between spouses. Also, certain specific legacies to charities attract tax relief.
If your estate is high value then it is important to speak to your solicitor and carefully consider your individual situation to see if anything can be done to mitigate a potential inheritance tax liability. It is also important to review your position on a regular basis particularly if you acquire assets.
Contact Us
If you would like to discuss an existing or new Will our experienced private client team would be delighted to talk this over with you. Please call us on 01721 720131 or fill in our online enquiry form https://www.blackwoodsmith.com/contact-us
