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 They will review their mortgage, their investments and other financial products but their Will is generally out of date and bears no resemblance to their situation at present.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.
Posted by Mark Jackson at 2:29 p.m.