Sunday, August 27, 2006

Make sure you have the right Wills

Most people seem to have a mental block when it comes to writing a Will. As the saying goes there are only two things in life that are certain and they are Death and Taxes. Now unfortunately science has not come up with a patent cure all that will help us evade the inevitable, but there is something you can do about the taxes.
Burying your head in the sand and ignoring the inevitable is not an option therefore everyone should have a Will.
There are three basic reasons people do not write a Will
1) Apathy - I know I should write a Will but I haven't got round to it
2) The Fear factor - If I write a Will I'm going to die
3) Bloody mindedness - Its not my problem I will be dead.

For people who fall into point 1 the answer is to make the process easier and simpler.

For this that fall into point 2 the answer or more importantly the question they should be asked is if you think your are going to die if you write a Will why do you have car insurance? - Do you think you are going to die if you have a crash? Obviously not but they have car insurance because the government makes them have it.

For those that fall into point 3 unfortunately there is no answer for these people and all they are going to leave is a financial mess for their loved ones.

Over 60% of the population of England and Wales haven't even written a basic Will!!
Those that have written a Will think it is a once in a lifetime process. Not true. They will review their mortgage, their investments and other financial products but their Will is generally out of date and bears no resemblance to their situation at present.

The trap I see people falling into all the time is "I leave everything to my wife/husband/partner and then onto the children" This is where most people have written "Mirror Wills"
The problem with this is that as their estate has increased in value including their house value then they have failed to utilise their tax allowance for Inheritance Tax purposes. What they should be looking at is to change their Will to a Nil Rate Band discretaionary trust Will. This can save a family up to £114,000 in IHT. For a full explanation of how this works click here.


Anonymous said...

My belief is that Inheritance tax is unfair. I think it would be fairer if the person receiving the bequest were to have to pay some form of income tax based on there income when they receive the bequest. This way poorer people would not end up paying the same as richer people.

I run a will writing company and see many clients who just can not believe that they will pay 40% on everything above £285k when they die. Many of them get us to write IHT wills to reduce this burden and even take out additional insurance to pay the IHT. Surely this just complicates things when we already have a tax system in place. I am sure more use could be made of income tax and capital gains tax, this would simplify sorting out estates when someone has died and relieve the burden on grieving relatives.

Until such changes are made I am sure we will continue to see a big growth in trust and other avoidance measure being used. Over time these will be taxed more and more and further complicate our tax system, but if things like IHT trust reduce the tax burden I am sure people will want to use them.

Anonymous said...

Wills and Trusts Writing a will can be a difficult procedure if you are not sure of the laws in your state and unfamiliar with how to state exactly what you want to be carried out after your passing. Your will should be simple, precise and clear to make sure there is no misunderstandings or wrongful interpretations of your desires.

Living Wills

Silver Streak said...

You will probably want a will in place if you have significant possessions or large sums of investments to leave behind. Writing a will yourself may be easy, but it doesn't guarantee it will hold up in a court of law once you are gone from this earth.
More will information

Troon said...

A person has the right to distribute their property to other persons of their choose without gaining permission from anyone; however to be for certain that their assests are dispursed accordingly they should d. You can modify your will as often as you like, but make sure it is finalized each time after you are finished making the changes.

Writing a will yourself may be easy, but it doesn't guarantee it will hold up in a court of law once you are gone from this earth. You can ensure yourself of not having an untimely demise by having your will in place as soon as you have any possessions or dependents to leave something of significance. Advice About Wills said...

I agree with all of the comments on this thread. The one thing I would state is that most people do not think about estate planning until later in life, this allows less time for Estate Planning companies like mine to work the magic and make the tax liability go away. It is possible to mitigate Inheritance Tax but the longer we have the better chance we have to make cost effective provisions for one of the largest bills your family is ever likely to face.

So please plan early.

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