A Question of Choice
It is a constant source of amazement to me, and I dare say to most solicitors dealing with Wills, that so few people bother to make them. Statistically, I believe that only 3 in 10 of the population have a Will. That is a very small figure indeed, and it is made worse because Wills are documents that should be reviewed on a regular basis, but I suspect that many are sitting in legal offices and banks gathering dust, and nobody even knows that they are there.
There are, of course, some compelling reasons not to make a Will. These include the “its unlucky” brigade, the “I have nothing to leave” brigade, and the lawyers favourite which is the “I know what will happen to my estate” brigade.
Do you really know what would happen if you died without making a Will. Are you aware that it depends both on the value of the estate that you leave behind, and what relatives survive you? Let me give you a couple of factual examples.
Firstly, the husband who dies intestate leaving an estate of £750,000. He has two young children. He thinks that the estate will simply pass to his widow. Well, it won’t. What in fact will happen is, that the widow will take all the personal chattels and £125,000. The rest of the estate is divided into two equal parts, one part is held in trust for the children, and as soon as they attain the age of 18, it is paid to them. The fact that, at one extreme they may be about to go to university or at the other, are roaring around on a powerful motorbike, is not relevant to the Trustees. They have to pay out at 18. The other half is held in trust so that the widow gets only the income, and on her death the capital passes to her children. Not, I think, a particularly satisfactory state of affairs.
The second scenario is where husband dies worth, say, £1,000,000, part of which could well be in business or other valuable assets. He leaves behind his widow, but there are no children. Again, he probably took the view that the law would simply pass his estate to his widow. Not true. In this instance, widow again takes the personal chattels, but this time she takes the first £200,000. She then takes half the rest, but the other half passes to her husband’s parents if they are still alive, and if they are not, to his brothers and sisters in equal shares, including that brother that nobody ever liked. It could mean a sale of the business, and it will certainly mean even more heartache for the widow.
There are many other examples. All of these issues can be resolved by you choosing to make a Will. To make a Will, what instructions do you need to give to your solicitor.
The first decision is the appointment of Executors and Trustees. These are people who will make all the arrangements to value your estate, and to obtain the Grant of Probate. The assets will then pass to your Executors, who will pay off debts, funeral expenses, legacies etc. and then will either pass the rest of your estate onto your chosen beneficiaries or will hold it on the trusts which you have declared in the Will, perhaps an interest to your wife for her life, and then onto your children. It is, I think, always sensible to appoint husband or wife to be Executors for one another. You can, of course, appoint your children, but sometimes it is better not to, and to appoint instead your lawyer or perhaps your accountant, or indeed, a family friend, but somebody who can help with the decision making. The office of Executor and Trustee is a responsible one, and does need to be thought about.
If you have young children, then you will want to appoint testamentary guardians to look after your children if both parents die before the children are 18. Again, this is a very serious appointment and it is sensible always to discuss it with the intended guardians before they are appointment. Their role will quite simply be to stand in your shoes as parents to these children, until they become 18.
My own view is that the Executors and the guardians should be different people, because they do entirely different jobs. It is important however, that they work together.
Do you want to make any gifts in your Will, perhaps some personal possessions or some cash, and if so, to whom and how much.
Then how to deal with the residue of your estate. It may simply be passed to your widow or widower, or held in trust for them, so that they get the income for their life, and access to capital, but on second death the capital passes to your children.
Finally, you will doubtless want the estate to pass to your children if you have them, and you then need to consider at what age they should take the capital. The law says that children become adults when they are 18, but more clients are now preferring the age of 25. This does not prevent the Trustees from advancing capital to children, but does provide a useful long stop. If there are no children then you may have friends or relatives that you would like to benefit, or indeed charities which, of course, are tax free.
Interestingly, gifts to political parties are also tax free. However, in 35 years of writing Wills, I do not remember ever leaving money to a political party. I wonder why?
March 2005
