Article
4 min read 18 Mar 24
What would happen to your money, property or possessions if you unexpectedly died? You may have a will, but is it up to date?
A will ensures your wishes are carried out after you die – setting out instructions around what should happen with your estate and possessions. It also contains things like who will settle your affairs, known as your executor, and even the sort of funeral you’d like. It’s legally binding – but needs to be prepared properly for it to be valid.
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.
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.
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, which 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.
There are ways to reduce the tax bill on your estate. For example, leaving your estate to your spouse or civil partner. And if you leave property to your children and grandchildren it could mean paying less tax than if you’d left it to others. Supporting a charity could also help to reduce your tax bill.
Please speak to your adviser if you think the value of your estate could be above the £325,000 threshold, as inheritance tax can be a complex area.
The tax you pay will depend on your circumstances and tax rules can change in the future.
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.
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 and if you need to provide login details along with passwords to your executor.
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%. And the same tax break applies if you leave money to a university, political party or community sports club. Always seek advice before gifting to a charity to reduce inheritance tax.
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 is happy to help.
“M&G Wealth Advice” is a trading name of M&G Wealth Advice Limited which is registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 5739054. Authorised and regulated by the Financial Conduct Authority.