The importance of wills - comment from Ian Dyall28 November 2016
The past few years have seen many changes to the inheritance tax laws, with more amendments being introduced in the coming months. It has therefore never been more important to ensure that you have created a will and clearly stipulated your intentions with your estate. However, once this has been created, you must regularly review the will to keep up-to-date with the latest changes in the tax law. Ian Dyall, head of estate planning at Towry, looks at how best to go about this.
Drawing up a will
“If you do not have a will, or it does not cover your entire estate, (perhaps because a beneficiary has died and the will makes no provision for what happens next) then there is a “partial intestacy” and the laws of intestacy apply to that part, which means the money is unlikely to go where you want it to. To ensure every part of your estate is fully accounted for and will be left to whom you want, you will need to draw up a comprehensive will.
“Under English law (Scottish is different), we are given significant freedom to leave the money as we wish. That said under the Inheritance (Provisions for Family and Dependants) Act if we don’t make sufficient provision for people who depend on us then the will can be contested. This can be costly and distressing for the family. It is therefore imperative to ensure a will avoids ambiguity. And while it is possible to achieve this by drawing up a will yourself, I would highly recommend you consult a solicitor. They will ensure:
- The will is in a valid form
- The will accurately reflects your wishes
- There is no ambiguity
- It is clear what should happen even if some of the original beneficiaries have died
- Sufficient provisions have been made for beneficiaries able to claim under the Inheritance (Provisions for Family and Dependants) Act
- The will is properly witnessed
- The will is drafted in a tax efficient way to make best use of the nil rate bands and residence nil rate bands (this in itself can save the cost of the legal work many times over)
“Using a solicitor will also help in cases where the testator’s capacity may be in question as they can take extra steps to try to ensure the will’s validity.
“Wills can be a very useful vehicle for mitigating inheritance tax, particularly in cases where one spouse has been previously widowed. In these cases there may be more than two nil rate bands available to the couple as the deceased spouse’s nil rate band is possibly also available. By making gifts on first death to people other than the spouse or more usually to a trust that extra nil rate band can be used saving 40% of £325k = £130k in tax.”
Reviewing your will
“Whenever there is a significant change in your circumstances, such as the birth of a child or grandchild, you should review your will, but it is worth revisiting it more regularly than that. Over time, the makeup and value of your estate will change, tax law will change and your family situation may change. With the introduction of the Residence Nil Rate Band due in April, now is a good time to ensure that your will distributes your assets to the people you wish to benefit in the most tax efficient way.”
For further information contact: Towry
Katy Moore – PR
Tel: 020 3818 6969
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