Why Having a Will is Important

Writing a will is an essential part of financial planning for many, but it’s not always considered a priority. Some people feel it’s unnecessary or worry that it may be difficult to set up and some think that they still have time to think about it and put it for a later date. However, having a will in place offers numerous benefits for you and your loved ones and can make a considerable difference in how your estate is handled after you pass away.

This article explores the importance of having a will, what happens under intestacy (dying without a will), and how creating a will can be a valuable aspect of financial planning.

1. The Role of a Will in Ensuring Your Wishes Are Respected

At its core, a will is a legal document that states how you wish for your estate—your money, property, and personal belongings—to be distributed after you pass away. In the UK, having a will allows you to control who inherits what, from family members to friends or even charities. Without one, your estate may not be distributed according to your wishes.

In summary, a Will can:

• Name your Executors (the people who will distribute your estate
• Name your Beneficiaries (those who should benefit from your will)
• Appoint Guardians (to take care of your children)
• Include trusts to ensure bloodline inheritance
• Help to maximise tax allowances
• Aid in managing care fee contributions
• Ensure your business can live on after you have passed away
• Enable you to specify your funeral wishes

2. Intestacy Rules: What Happens if You Don’t Have a Will?

If someone dies without a will in the UK, they are considered to have died “intestate.” In these cases, the estate is distributed according to the Rules of Intestacy, which can be complex and may not align with what the deceased might have wanted. Here’s a quick overview of what happens under intestacy:

• Spouse or Civil Partner: If there is a surviving spouse or civil partner and no children, the entire estate will typically go to them.
• Spouse or Civil Partner and Children: If there is a surviving spouse and children, the estate will be divided. The spouse receives the first £322,000 plus personal possessions, and the remaining amount is split 50/50 between the spouse and the children.
• No Spouse or Children: If there is no surviving spouse or children, the estate goes to other close family members, starting with parents, then siblings, then more distant relatives.
• No living relatives:  if no living relatives are left, all of the assets will be passed on to the Crown.

3. Common misconceptions

It’s also important to address some common misconceptions about inheritance when no Will is in place. Without a Will:

• Your spouse will inherit everything: Contrary to popular belief, spouses do not automatically inherit the entire estate. Additionally, for people in non-traditional relationships, such as cohabiting but unmarried partners, intestacy can be especially problematic as it does not recognise partners who are not legally married or in a civil partnership. This means that without a will, your partner may inherit nothing from your estate.
• Your children will be cared for by your closest family members: If you have minor children, they could be taken into temporary care while the authorities assess and appoint guardians.
• Your inheritance will go to your step-children and/or other extended family members: Friends or extended family members are usually not included under intestacy laws, which prioritise close family members. Additionally, the step-children who were not adopted might also be excluded from the estate.
• Probate will be easy, with no disputes or delays: Without clear instructions, the distribution process can lead to disputes, causing delays that may prevent intended beneficiaries from receiving assets as you might have wished.

Creating a Will gives you control over these situations, ensuring your wishes are respected and your loved ones are protected.

4. How a Will Supports Your Financial Planning

Having a will can be an effective part of a broader financial plan in several ways:

• Tax Efficiency: A will can help you reduce inheritance tax liabilities by allowing you to plan the distribution of your assets in a tax-efficient way. For example, you can leave assets to your spouse or civil partner without tax implications, or use gifts to charities, which are also exempt from inheritance tax. Giving min 10% of your assets to charities could also decrease your overall tax bill as your IHT will reduce from 40% to 36%.
• Protecting Vulnerable Beneficiaries: If you have beneficiaries who might need additional support, such as young children or dependents with disabilities, a will allows you to set up trusts that ensure these individuals are cared for according to your wishes.
• Appointing Guardians for Minor Children: Parents of young children can use a will to name guardians, which can be essential in ensuring their children’s well-being should the worst happen.
• Reducing Family Disputes: By clearly stating how you would like your estate divided, a will can reduce the potential for family conflicts. Even if everyone has a good relationship, disagreements over money and property are common.

5. Different Ways to Make a Will

There are several ways to create a will, depending on your needs and circumstances. You can choose to:

• Use a solicitor: Many people prefer a solicitor’s help to ensure that the will is legally sound and that all assets are covered.
• Online will-writing services: These services provide templates and guidance at a lower cost and can be a quick option for straightforward wills.
• Write it yourself: It’s possible to write your own will, but you must follow specific legal requirements to make it valid.

6. Keeping Your Will Up to Date

Life changes over time, and your will should reflect these changes. Major life events—such as marriage, divorce, the birth of children, or changes in financial circumstances—can impact your wishes. Regularly reviewing and updating your will ensures it remains accurate and that your loved ones are protected in line with your intentions. Many people review their wills every few years or after any major life event.

In the UK, certain situations can render a will invalid:

• Marriage or Civil Partnership: A will is automatically revoked when you get married or enter a civil partnership unless it was made with that marriage or partnership in mind. This means that a new will is usually necessary after marriage to ensure it reflects your current wishes.
• Divorce: While a will remains valid after a divorce, any provisions for your ex-spouse will typically be void. They are treated as if they had died before you, meaning their share would pass to other beneficiaries. Reviewing your will after a divorce helps ensure it accurately reflects your new wishes.

Updating your will as circumstances change helps prevent confusion or unintended consequences, ensuring that it aligns with your current situation and intentions.

7. Peace of Mind and Long-Term Security for Loved Ones

Creating a will can help you achieve peace of mind knowing your affairs are in order and your loved ones will be cared for after your death. This is especially important for those with complex family structures or specific wishes about who should inherit their estate.

Moreover, for your loved ones, the process of probate (the legal process of settling an estate) is usually much smoother with a will in place, reducing time, stress, and administrative burden. Without a will, probate can take longer and be a more expensive process, potentially leaving dependents without access to funds during this time.

Key Takeaways

While it’s easy to delay creating a will, understanding the consequences of intestacy and the potential benefits of having a will can make it clear why it’s an important part of financial planning. From avoiding unnecessary taxes to providing peace of mind and clarity for your loved ones, writing a will allows you to secure a future that aligns with your intentions and values.

If you’re unsure where to start or have questions about specific issues, it may be worth consulting a solicitor or financial adviser who can help guide you through the process of writing a will and discuss how it can align with your broader financial goals.