The importance of having the right will

Make sure you have the right will and testament

It is estimated that 70% of people die without leaving a will. If you die without a will, then your assets will be distributed according to the law, and not according to what you really want. So people can end up benefiting from your death, when you wanted your assets to go someone else. Also without a will, there can be severe delays in the distribution of the estate.

People put off writing a will for many reasons, but usually because they don’t think they are going to die just yet! Many people also think that if they were to die, the person that they want to get the money will receive it automatically, such as their spouse or children.

The laws which determine how your assets are distributed after your death are the Intestacy Rules. In England and Wales, the detailed rules are contained in the Administration of Estates Act 1925, and this means that if you are survived by a spouse or civil partner, then all your personal possessions and up to £250,000 will be left to them absolutely. Any amount left from your estate over this £250,000 (known as the residue) will be held in a trust, and your spouse will have a lifetime interest in it. This means that they are entitled to the income from the trust for the rest of their life. The remaining capital that is held in the trust will pass to your children on the death of your spouse.

The Intestacy Rules were updated in 2005 to recognise civil partnerships, but they haven’t yet been updated to reflect co-habiting. So if you are not married to your partner and you just live together, then when you die your estate could pass to your children, leaving your partner with nothing.

Having a will also allow you to nominate who should become the primary carer for your children if you die at the same time as your spouse. However, if your family circumstances change, such as a divorce and second marriage, you really must ensure that your will is regularly reviewed to reflect your new circumstances, and your new wishes.

Finally it is important to remember that Intestacy Rules were aimed at distributing estates if someone does not leave a will. They are not aimed at achieving the most tax efficient distribution of your assets.  Tax and estate planning can help ensure that when you die, your estate is distributed in the most tax efficient way, as well as the way that you really wanted. Investing time and resources into getting your Will right will pay dividends in the long run.