While we all know it’s something we have to do, many of us put off writing a will, leaving it until later in life. In fact, new research reveals that nearly 60 per cent of UK adults (31 million people) have not yet made a will.
But putting off writing a will means that if the worst were to happen unexpectedly, your loved ones can be left not knowing what your wishes are – and potentially with a big tax bill, too.
This World Financial Planning Day, author and expert tax planner Stuart Ritchie of Ritchie Phillips LLP Chartered Accountants, rounds up four essential elements to consider when planning your will and estate.
“Financial planning is essential, especially around your estate and final wishes,” said Ritchie, author of “Who Will Get My Money When I Die?.
“When you create a will or update it, you can look after your loved ones and those you wish to benefit under your will. It can provide a pathway to follow after you pass so that your financial affairs are properly wrapped up and no loose ends are left. This can help to ease some of the strain at a very challenging time.”
1. Determine who will manage your Estate
When you write your will, you have the opportunity to name your executor, or more likely, executors. These are the people who are responsible for wrapping up your estate and should be the people you trust to carry out your wishes. If you die intestate (i.e. without a will), you will not have executors as such, but rather certain individuals related to you will be entitled to apply for what is known as a Letter of Administration. Those individuals may not necessarily be the ones you want to administer your estate, therefore naming them in advance is essential.
2. Decide who – and who does not – get your assets and property
‘Testamentary freedom’ is an important principle in English and Welsh law. This provides people with the freedom to leave their estate to whomever they choose in their will, and without any legal obligation to provide for any particular family member or other individual. You can therefore name people as beneficiaries for specific assets. You can also name beneficiaries for any property you don’t list, otherwise known as the residue of your estate. Therefore it’s crucial to spend time considering who you do – and do not – want to receive your assets and property to ensure this is carried out as you wish.
This can also be a way to leave behind a legacy. Once we are gone, most people want to leave a positive impact on the world. A great way to do this is to support the charities or causes closest to our hearts. By having a will, you can leave a legacy to the charities or causes you wish to support and any amount given will most likely be tax efficient.
3. Choose who will look after your minor children and pets
The surviving parent will usually get sole custody of any children if one parent dies, but if both parents die, you can use your will to nominate a guardian for your minor children. Failing to nominate guardians in a will means that the care of minor children will be decided by the courts, and in turn that could mean that someone you would not have chosen will be raising your children.
For some, their pets are like their children, but contrary to perception, the law considers a pet to be property, so you can name them as a legacy in your will. As a legacy, you can name a beneficiary for your pet leaving them to a trusted friend or family member. In addition, you can even leave funds to provide for your pet’s care.
Being able to make provisions for any dependents helps give many people peace of mind, making it one of the most important reasons to have an estate plan and to write your will.
4. Safeguard your digital assets
Digital accounts and purchases, such as photographs, home videos, music and video downloads and websites form part of your property. It can feel as if they have disappeared into a digital blackhole if you do not provide for access after you have passed away.
You can decide if you want any information preserved or destroyed, but to do so there will need to be a record of your usernames and passwords, often best recorded in a password manager made available to your executors. With so much of our lives now online, this is a vital step that is often missed by many.
Ritchie said: “Whilst having these conversations is not easy or comfortable, it is essential that we break this taboo to ensure that we are able to enact the wishes of our loved ones as they would like. Estate planning is a responsible, caring and loving action, to secure your legacy and the legacy of others.”
