Did you know that 47% of adults in the UK do not have a valid Will, and that 31% of people who are over the age of 55 are also without a [1] I must admit, I was shocked to find out that these figures are so high.
Clearly a Will is an essential document to make sure you leave your wealth, property and belongings to the right people and should also be a priority for couples after they have started a family, to cover issues such as guardianship, deciding who administers the estate and how the beneficiaries receive their wealth.
Do I really need a Will?
For those who don’t have a Will in place, it could take 16 weeks[2] for a relative to be permitted to administer your estate after death (after having first applied for a grant of letters of administration). This process could take longer if there are complications such as inheritance tax (IHT) to be paid, disputes over who receives the inheritance and the possibility of incorrectly filed forms. If six months have passed since the date of death, this issue could then be compounded by interest being accrued from any outstanding IHT liability.
Not only could this cause financial detriment to your family but, upon completing the administration of the estate, it may lead to younger beneficiaries receiving a large sum of wealth too soon (i.e. over beneficiaries are over 18 but have limited financial experience). Without a valid Will, you cannot control the distribution of your wealth, due to a set of rules known as ‘intestacy’. If married, these rules (for England and Wales, as the rules in Scotland and Northern Ireland each differ) are as follows:
- all personal property and belongings (chattels) are passed to the surviving spouse
- the next £322,000 of the estate is also passed to the surviving spouse
- the remaining estate is split 50:50, where the surviving spouse would receive 50% and any children would receive the other 50%, split equally between them
What other impacts could not having a Will have?
In some cases, it can lead to potential inheritance tax (IHT) issues, which could have been mitigated by having a Will in place.
For example, Mr Smith is married to Mrs Smith and they have three children, who are all below the age of 18. Mr Smith has an estate valued at £2 million, which includes an unencumbered main residence valued at £500,000, that is owned on a joint tenancy basis. Unfortunately, Mr Smith passed away in December 2024.
His estate could be distributed as follows, depending on whether he had a valid Will in place.
Scenario 1: Valid Will in place where Mrs Smith inherits all of Mr Smith’s assets
The entire estate is passed to Mrs Smith, completely free of inheritance tax and, better yet, she inherits his nil-rate band and residence nil-rate band!
Scenario 2: No valid Will in place
The main residence (as it is jointly owned by joint tenancy) and any personal belongings would be passed to Mrs Smith; however, the remaining estate of £1.5 million would be distributed as follows:
- the first £322,000 of the savings goes to Mrs Smith
- 50% of the remaining estate (£589,000) goes to Mrs Smith
- the remaining £589,000 of savings is split equally between their children, who receive £196,333 each
As £325,000 of Mr Smith’s estate is exempt from IHT due to his nil-rate band, the amount that is subject to IHT (the children’s inheritance less the nil-rate allowed) is £264,000. This could lead to an IHT liability of £105,600.
This situation could have been prevented by writing a Will that passes his estate to Mrs Smith, who would benefit from spousal exemption. This also saves the headache of their young children receiving a huge sum of wealth at an early age.
Further planning that offers a philanthropic element can be leaving a gift to charity in your Will. Not only is this free of inheritance tax but if you gift at least 10% of your taxable estate to charity, then the rate of inheritance tax charged drops from 40% to 36%.
Finally, where there are children, a Will sets the boundaries of guardianship and could help avoid family disputes.
I already have a Will in place, why is it so important to update it?
If your Will is not up to date, your wealth may be passed to those who you do not wish to inherit, such as a separated spouse or an estranged family member. Some people may intend to pass their wealth to a long-term partner, but unless the partner is stated as a beneficiary in the Will, they (the partner) will likely not receive anything.
Furthermore, if you have divorced and remarried since the last written Will, this nullifies any existing Will (except in Scotland). Therefore, it is essential to review your Will periodically.
A Will should be a ‘must’, rather than a ‘maybe’.
Every individual should have an up-to-date Will to help avoid any of the above scenarios. This is an area we address (in conjunction with our legal contacts) as part of any financial planning for our clients, as it helps to safeguard their family from financial distress in the event of a worst-case scenario.
Therefore, the question should not be ‘Should I get a Will?’, but rather “How quickly can I get a Will in place?”
Content correct at time of writing.
