A simple guide to wills, and why you need one now

October 26, 2015

It seems as though morbidity has struck the GreenSky office lately. First, we covered Life Insurance and Private Health Insurance in our Personal Insurance series and now, here we are just a few months later, talking about planning for your death.

If you’re wondering what’s happened to morale, then rest assured that we’re our regular chipper selves here in the office, it’s just that death, in a financial sense, takes a bit of planning. Which means we have to talk about it.

Now, when we’re talking about the concept of death, you might immediately think that ‘who gets what’ after you’ve gone seems trivial or petty. But, a will is more than that. Because it not only covers the ‘who gets what’ bit in detail, it also does a lot more.

So let’s not think of it as morbid. Instead, let’s agree that it’s another form of financial planning – planning that has the potential to take away huge financial complications from the people that are left behind.

What does a will actually do?

Glad you asked. A will has broadly three functions, although throughout this series we’ll see that wills can range from the downright easy to the hugely complex. Firstly, a will is designed to name an executor. This is the person who will carry out the instructions that you leave in your will.

Sometimes this job can be quite straightforward, but keep in mind that it can involve making sure Inheritance and/or Capital Gains Tax get paid, and deciding when to sell a property, so it’s not always easy. That said, executors are usually a family member, solicitor, or in some cases an accountant. No matter who you choose, it needs to be someone who you can trust to carry out your wishes.

It’s possible, and sometimes advisable, to appoint two executors. One reason to do this might be that one of your executors may die before you do, while another reason might be that the work can be divided – difficult conversations with family can be handled by a surviving family member, while the legal bits can be covered by a solicitor.

Secondly, the will is designed to distribute your estate. When you die, everything that you own at that point is passed on. In the process of writing your will, you will need to decide who gets what from your assets. That could be the big, obvious things like your house, through to any investments or precious jewellery – and even your pets.

One point of interest is that people don’t have to accept what you leave them in your will. Perhaps your house is in negative equity? If you leave it to someone, they have the right to disclaim it.

The final, and perhaps most crucial function, is to decide who should look after your children if you die and how they will be provided for. If you have children who are under 18, or anyone else who depends on you, you’ll need to make plans that detail who should look after them (by becoming their Guardian) if you die.

Who you leave your house or jewellery to doesn’t necessarily require a chat up front, but who you would like to take responsibility for your children will definitely require a discussion. After all, it’s a big commitment, and the people you choose need to be prepared to take that commitment on.

An aspect that’s linked here involves your domestic situation. If you’re married and you die without a will, your estate will normally automatically be split between your surviving spouse and any dependents. If you aren’t married or in a civil partnership, your partner doesn’t inherit anything automatically, which could cause a lot of immediate issues.

Why you need a will: don’t leave it to chance

Dying without a will undoubtedly causes a lot of complications, and if you have dependents relying on money from your will, it could be a long time before they can get access to it if you don’t have it in order.

Not only that, but the added complexity is likely to require extra legal work, meaning extra legal fees, meaning even less will go to the people who you were hoping to leave your estate to.

The sooner, and the clearer you detail your will, the less chance there will be for hassle and problems when you’re gone.

Over the coming weeks, we’ll be taking a look at a whole host of aspects of Estate Planning. Leave a comment below if there’s anything that you’d like to see covered. And if you think it’s time you talked to someone about writing a will, please get in touch. We can help point you in the right direction.

 

This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

GreenSky Wealth Limited is authorised and regulated by the Financial Conduct Authority. FCA No. 629624. Registered Office as above. Registered in England and Wales, Company No. 07103441. The Financial Conduct Authority does not regulate Tax Advice, Wills or Estate Planning.