If you are like the vast majority of people you have a slightly guilty conscience that comes to the surface every time you hear the phrase ‘you should review/do your will’. This is the easiest and most common thing to put off, right up there with looking at your pension planning or sitting down to do your self-assessment tax return. And yet as parents our wills are so very important because of the far reaching implications in the absence of one.
“What I will do in this article is demystify the concept of a will and also give you the required drive to get it done.”
First and foremost, I am not a will writer or a solicitor. My take on this is as a financial planner who spends a lot of time with clients, discussing and observing the life cycle that they go through. You can draft your own will, but I would recommend that you do not. This if for two simple reasons;
- If you died the people you love and who depend on you will have this one document to rely on and you want to make sure it is properly drafted and does not fail. A disturbingly large proportion of wills that have been written are not executed properly;
- You may want to talk over what you want the will to say. The best person to do this with is a professional who spends all their time drafting wills for people. You will get clear and objective advice on how to structure your affairs, and that advice is always worth paying a bit of money for. Getting a will is not expensive, but getting it wrong can be very traumatic for your loved ones.
Let us look at what goes into a will
Many people are surprised about how simple a document it is. There are essentially only three main parts to the will:
- The people you want to be involved;
- What you want to happen to your remains;
- What you want to happen to your estate on death.
If we start with the people, there can be three types of people involved:
- Executor – this is the person who will handle probate, which is the period where the value of the estate is calculated, agreed with HMRC (if you’re in the UK) and then distributed. This can be anything from a 3-6 months, or it can stretch over years if you have a very complicated estate. In the first instance you can select your spouse, that is a perfectly acceptable solution in most cases, but you should have a reserve executor. You want to pick someone younger than you, and someone who you trust to be organised. It helps (considerably) if the person is in the same country.
Do not chose your parents as they are likely to die before you, and do not chose a professional like a solicitor or, worst case, your bank’s probate office. The fees can be extraordinarily high, so you are better off choosing a layman who can then pay for advice. If you do not have or want to appoint a person you know then take care to select a reputable probate specialist with a clear fee structure that you find palatable.
- Trustees – if your children are under the age of 18 they cannot inherit in their own name. You can either create a trust or the there will be a statutory trust created under the will on death. (If you are married and only one of you dies you may have pointed the assets to the surviving spouse, in which case this would not apply). The trustees are responsible for managing the assets on behalf of the children, and can make such payments as would be reasonably made by you had you been alive. This is a very responsible job, and you should only look at people whom you can trust to handle finances responsibly. There is an argument for appointing a professional trustee here to ensure that you have independent oversight of this role.
- Guardians – if your children are under the age of 18 and both parents die you will need to have guardians. If you do not have a will the family court will appoint someone, but that means your children could end up in care during this time. This should make you sit up straight and take action. A number of my clients come from Southern Africa or other such countries. The process for a UK court to agree to send a British born child to Zimbabwe without a valid will is not pleasant. If you have guardians outside the UK it is vital that you have a proper will.
Your (umh) remains. This is relatively straightforward, typically a choice between burial or cremation, and I have nothing really to add on this topic. It is worth thinking about and documenting, however, and the will is the place to do this. You can also specify whether you agree to organ donation, but to be honest, by the time your will gets taken out of the safe you are probably better off being a card-carrying organ donor with that card in your wallet!
Your estate. This is a very big topic, and it is not possible to cover every scenario, so my aim here is simply to list out a few things to think about.
- In most young families people will point 100% of their assets to the spouse, and equally to the children on second death. This is very common, and in principle not a problem.
- On 1st death it is sensible to ensure that the survivor’s will is now updated, although a properly drafted will should still be good. But I would venture that the death of a partner is a good time to review things, including your will.
- If you want to ensure that your underage children inherit your assets, the only ways you can do this is either make a gift or setting up a trust whilst you are alive, or alternatively to stipulate in your will that your assets go into trust for your children. This will prevent the possibility of your spouse remarrying, not drafting his/her will properly and the assets then passing to the new wife/husband on death. As you can imagine this is a very common situation, often caused without malice but by failure to plan.
- Beware of assets that are outside your estate, this will include life cover set up under trust, life cover from work and pensions. They will not be governed by the will, but will instead be based on the individual trust deed. This should be reviewed at the same time as you review the will.
- You may not want the children to inherit at the age of 18, the will is the place to decide that.
- I have assumed here that you are married, if you are not married and have children then a will becomes even more important.
“This is by no means an exhaustive list, but hopefully it gives you a few more tools to think through your position before you sit down with a will writer or solicitor. “
On a final note, do not be snobbish about the choice between a will writer and a solicitor. Some people prefer dealing with a solicitor but consider that a will writer tends to be a specialist. Many solicitor’s are like GPs where they get some training on wills, whereas a STEP qualified will writer or specialist estate planner has a level of in-depth knowledge that is equivalent of being a surgeon. Regardless of choice make sure the person comes recommended, and can demonstrate a good commitment to their own knowledge and development. A will should be simple for you, but rest assured that there is a lot of complex estate planning rules that lie behind it. You want to know that the person who writes your will is highly skilled in this area.