People ask this a lot. What’s the point of writing a will? Why do we do it?
Making a will is a really personal matter. It’s not for me to convince anyone that they should make a will. Personally: I made a will because I think it is an act of care and love for people that I will leave behind when I die. Other people have other motivations. We have written about some of these reasons to write a will elsewhere.
Rather than dwelling on what I think I thought I would look at what the experts think. The Society of Trust and Estate Practitioners (STEP) have published their take on what key reasons exist to make a will.
Here they are:
Avoid the distribution imposed by law on an intestate estate
If you don’t write a will then the rules of intestacy will apply. This might not be something you want to happen. You may not want Long Lost Cousin Bertie inheriting everything if there aren’t any closer relatives. The Crown will inherit your estate if no relatives are found. By making a will you can set out who inherits. You can also leave a “wipeout” clause if everyone you want to remember dies before you. People often remember a charity here.
Your will can ensure that your estate is dealt with fairly. If you have made substantial gifts during your lifetime to one child or relative over another you can use your will to redress the balance.
Finally if you are an unmarried couple then your partner will not receive anything on your death. There were 3.5m unmarried couples in 2019. That’s over 10% of the population of the UK.
Make more comprehensive provision for those with additional needs
You may have one beneficiary who requires more financial assistance than others. This may be down to your beneficiaries’ earning capacity or family circumstances. It might also be due to additional support required by a particular beneficiary.
If one of your beneficiaries is disabled or has special educational needs you can set up a Disabled Person’s Trust in your will. There are various benefits for the beneficiary. The main benefit is that if you set up a well constituted trust rather than an outright gift you can avoid a negative effect on the beneficiary’s benefit payments. If necessary then the trustees can have a greater say in how the beneficiary’s money is used.
If you want to set up a trust for one of your beneficiaries please ensure you consult a traditional solicitor.
Take measures for the protection of family enterprises
Wills are part of succession planning in inter-generational businesses. You can use a will to pass business assets, shares and property to intended beneficiaries. Make sure that the will you make ties in with other corporate documentation. For example there could be confusion or dispute if your will does not have the same wishes as your Shareholder Agreement or Partnership Agreement.
If you have a business, business property or agricultural property and your estate could be worth more than the inheritance tax threshold you should take tax planning advice.
Plan an orderly devolution of wealth through the generations in a family
In a similar vein to transfer of your family business. For the lucky (or at least – wealthy) a family’s wealth can be it’s business. A will can set out rules for the custodianship of that wealth for future generations. More complex wills set out rules to ensure that money is distributed as you would like it to be. You can set out guidelines for trustees to follow. These can prefer the most in need or other criteria for decision making.
If you are considering complex trust arrangements like this please ensure you speak with traditional solicitor and take comprehensive tax advice.
Another wish may be to pass your estate down two generations. If you have adult grandchildren (and even great grandchildren) you can skip a generation. There may be other tax planning benefits to doing this too.
Use of discretionary trusts to bring flexibility into future distributions
As mentioned above – a will can set out how money is distributed. You can also take care of future generations that aren’t yet born. Discretionary trusts are a type of trust arrangement. A discretionary trust can benefit any class of beneficiaries (e.g. children or grandchildren) in a manner that the executors think is reasonable. Alternatively you can set out rules around how you would like the trustees to exercise their discretion.
Discretionary trusts are also often used by unmarried couples to stop paying unnecessary tax (see below).
If you want to set up a discretionary trust you should speak with a traditional solicitor to ensure that your needs are met. A badly or improperly constituted discretionary trust can lead to all sorts of problems, upset and expense.
Avoid unnecessary levels of taxation.
Again – a tax planning point. A will allows you to set out your wishes. You can do this in the most tax efficient way if your estate is subject to inheritance tax.
If you have any tax planning concerns you should consult a specialist solicitor and get a bespoke will drafted.
