7 key financial reasons why you should think about making a will

1. Make sure your children are provided for financially

You may want to consider a trust to provide for them, for such things as living expenses, education, help to buy a home, paying off a mortgage, etc. There are different ways to set up a trust and we recommend you speak to your financial adviser if you have questions about this.

If you have stepchildren or foster children – you will need to include them in your will if you want them to inherit.

2. Protect your partner if you’re not married

Unmarried partners are not automatically entitled to anything from your estate unless specifically stated in your will, regardless of how long you’ve been together.

3. Specify what happens to your family home

You can leave a share of your property to whoever you’d like, if you wish, or a right to reside in the property (although it’s important to take legal advice on the potential implications). 

Your unmarried partner or stepchildren are not automatically entitled to inherit it if you die. This means they could lose their home if you don’t leave a share of the property, or a right to reside in the home, in your will.

4. Try to avoid paying more inheritance tax than you need to

There are ways to reduce the tax bill on your estate. For example, anything you leave to your spouse or civil partner is exempt or free from tax. However this isn’t the case if you’re not married or in a civil partnership, regardless of how long you’ve been together.

You don’t pay inheritance tax (IHT) on the first £325,000 of your estate which includes all of your assets and property.

And if you leave your main residence to your direct descendants – your biological, foster, step or adopted children and grandchildren – you could get an additional £175,000 which you don’t need to pay IHT on. So that could be a total of £500,000 which you don’t need to pay IHT on.

If a spouse or civil partner dies then any unused allowance is passed on to their partner ie £500,000. So this means you could leave everything to your spouse and they can leave up to £1m (including a house) with no IHT to pay.

Supporting a charity could also help to reduce your tax bill.

The standard IHT rate is 40% which is charged on the part of your estate that’s above the tax-free threshold. So if an estate is valued at £1.5 million including the house, and it’s passed to one spouse and then subsequently to dependents (making £1 million exempt), the tax would be 40% of the £500,000 above that, which amounts to £200,000.

Inheritance tax planning can be a complex area, depending on your personal circumstances, so please speak to your financial adviser for help to reduce your IHT bill.

Tax rules can change and the impact of taxation and any tax relief depends on your circumstances, including where you live.

5. Seek to prevent family disputes

If you’re clear about your wishes in your will, you can hopefully help to avoid any disagreements amongst your loved ones. Contested wills can, unfortunately, be costly in terms of legal fees, as well as relationships, among your family.

6. Protect your digital assets

Digital accounts and online purchases, like music and websites as well as email and social media, are part of your estate or possessions. Regardless of whether or not they are of great financial value you may want to consider if you want this information kept or destroyed. You can grant individuals access to digital assets in your will. Remember you need to provide login details along with passwords to your executor. Some online platforms have a ‘legacy contact’ which you can set up.

7. Support a charity

You may wish to leave something to a charity in your will which could potentially reduce your tax bill and it may also help the community. If you leave more than 10% of your estate to a UK-registered charity, then the inheritance tax rate on your remaining estate will fall from 40% to 36%. Always seek advice before gifting to a charity to reduce inheritance tax.

Our will writing service

Did you know that we offer a will writing service via our specialist partners. Your adviser can arrange a free legal review with them for you if you’d like. During your appointment they’ll make recommendations on which legal solutions are appropriate for your particular circumstances, and will provide you with a no obligation fixed fee quote to go ahead and write you a will.

Will writing isn’t regulated by the Financial Conduct Authority.

This information is based on our current understanding of taxation law and practice in the UK which may change.

If you have any questions about making a will, or perhaps you have a will and would like to make some changes to it, please get in touch with your financial adviser who will be happy to help.